So you and your family have read our blog and now either no one wants to be a fiduciary listed in your estate plan, or you don’t want to burden anyone with that task, or – you realize you don’t know of any unicorns! Now what?
© 2020 Kirby Myers
This is a common problem for many people. Aside from the numerous particular criteria and potential pitfalls that we mentioned in our last post, “No Good Deed Goes Unpunished”, some of us may not even have extended family or very many trusted friends to begin with. People in these circumstances are often unsure of what to do or who to rely on and understandably this can be very unsettling for something as important as administering your estate (or making financial/medical decisions if you are unable to speak for yourself).
Luckily, there are professionals and companies who will administer trusts and estates and act as agents on Financial Powers of Attorney. However, each type of trust company has its own structure and model, so before you include a corporate trustee in your documents, it is important to understand the differences and each trust officer’s practices.
As with searching for any qualified professional, there are a number of criteria to consider before you settle on a corporate trustee. For example, you also might consider asking a few different organizations or trust officers the following questions:
· Will you accept illiquid assets? (For example, your home.)
· How would you handle conflict between family members?
· How large does a trust estate need to be for you to agree to serve as trustee?
· Do you have local trust officers?
· Are you bonded? Insured?
· How do you charge your fees?
· How do you decide whether to grant a beneficiary’s request for a distribution from a trust?
· How long does it take for a beneficiary to get an answer after a beneficiary asks for a distribution?
One final question you might ask is: How will you handle investment of my assets if I am incapacitated or deceased? This is often one of the biggest differentiating factors between different corporate trustees and it’s an issue that requires careful consideration.
1. External Investment Management
Some people may already have a trusted financial advisor who has performed well and knows the family. They probably speak with or meet with their financial advisor regularly, and they may even consider their advisor a friend. In that case, some may prefer to have their assets continue to be managed by their current financial advisor. For these types of individuals, there are trust companies that will keep your accounts as they currently exist and rather than liquidating the accounts and investing the assets on their own, the trust company will act as more of a facilitator and supervisor of the investment manager. These types of trust companies can be good options for individuals who want more attention to personal trustee services for their beneficiaries (for example, pets, operating businesses that will stay in trust, children who may need more guidance or assistance, etc.).
2. In-House Investment Management
Many companies, particularly larger financial institutions, will manage the investment portfolio of their clients. If the company is already managing the other aspects of your trust/estate administration, it can be convenient and efficient to have the investment management done in-house. Sometimes the fees will be lower as well. However, trust companies structured this way may have higher minimum liquid asset requirements. While national financial institutions that are structured this way may not have as many local trust officers, local trust companies may have sufficient trust officers and may also be more willing to oversee illiquid assets (such as real estate or an operating business).
For those of you who are considering naming corporate trustees in your estate plan, you may also be wondering what to do if you don’t have any trusted family or friends to name as your agent for health care decisions. Fortunately, there are also professionals who will act as agent for your Health Care Power of Attorney. (Stay tuned for a future blog post on this topic!)
If you would like more information about how to appropriately designate agents and fiduciaries in your estate planning documents and whether a corporate trustee or professional health care agent might be appropriate for you, please contact our law firm or another qualified attorney.
Post by: Madison R. Jones, J.D., M.B.A.
Disclaimer: These materials are designed as a general overview and should not be relied upon for legal or tax advice. Please consult a qualified attorney and/or tax advisor for compliance and up-to-date information and advice specific to your circumstances.