Should I Designate a Corporate Fiduciary?
When selecting fiduciaries to manage a will, trust, estate, etc, there are a few different options for filling these roles. Some people opt to designate individuals they know personally, some name corporations such as bank trust departments or trust companies, and some people select their trusted advisors.
How do you know which option is right for you?
Individual Friends or Family
When naming executors and trustees, most of our clients first think of a family member or a close friend in whom they have the confidence to make discretionary decisions concerning the welfare of their beneficiaries. The upside here is that these fiduciaries know the Grantor well and likely have an emotional investment in seeing that his or her wishes are carried out properly.
However, those people typically don’t have the time or the financial/legal expertise to properly handle the technical and administrative requirements of the estate and trust. Additionally, the emotional investment mentioned before can quickly become harmful as they may not remain “neutral” with respect to the interests of the various beneficiaries.
Other clients who may not be as confident in their family or friends’ abilities to fill these roles can select banks and trust companies to provide administrative expertise. This removes any fear of emotional bias or personal relationship interfering with how the will or trust is carried out. Corporate fiduciaries are also better organized to handle the complex responsibilities and coordinate various issues. They can offer a broad scope of expertise in numerous areas, and they are held accountable for their actions by their institution on top of their legal fiduciary duty.
The main reason we see clients opt out of selecting a corporate fiduciary is that they aren’t comfortable with an “institution” making discretionary decisions concerning the welfare of the beneficiaries. It requires a lot of trust to name an executor or trustee, and some clients feel more at ease knowing that someone they love and know on a personal level would have their back.
Last but not least, some clients ask their professional advisors (lawyers, accountants, financial advisors) to serve as executors and trustees to provide the required technical expertise. This can be the “best of both worlds” scenario, as this individual has earned the client’s trust over the years and they have no stake in the claim when it comes to the interest of the beneficiaries.
In some cases, clients select two or more of these options to serve together as co-executors or co-trustees, creating a “checks and balances” system to ensure the decedent’s wishes are carried out correctly. In addition, one should probably designate successors or alternate choices in case the primary selections are unable to serve.
No two clients are the same — each with different family histories, assets, financial outlooks, etc. If you’re unsure of who to name as your executor or trustee, the best thing to do is speak with your estate planner so they can advise you on the safest option for your specific situation.
Estate Planning with Lefkoff-Duncan
Lefkoff-Duncan is here to help. Our experienced team will assist you in all of your estate planning endeavors so that you’ll never again need to wonder if you’ve done enough to take care of the ones you love. Give us a call at your convenience at 404-262-2000 to get started.