Berman & Asbel, LLP

Thoughts to consider when choosing an executor or trustee

When you make a will or a trust, one of the choices you will have to make is who will be responsible for carrying out the directions in those documents - the executor for a will and the trustee for a trust.  There is no one right answer in every case but here are some ideas to think about.

It is not essential to pick someone who has a professional background in accounting or finance.  In my experience, most of the people who are chosen to be an executor of a will or the trustee of a trust are not professionals in finance or related fields.  It is perfectly acceptable for an executor or trustee to retain the services of lawyers, accountants, financial planners and other professionals to assist in carrying out the terms of the will or trust.  The fees for these services can be paid from the estate or trust.  In some cases, it is appropriate to use an institutional executor or trustee but that is generally only appropriate in cases where there are large sums of money to be managed - $250,000.00 or $500,000.00 or more - because such institutions charge as their fee a percentage of the principal that they are managing.  In the case of serving as executor of a will, it may be a one-time fee.  In the case of a trust, it could be an annual fee as long as the trust exists.

Geographic proximity does not have to be the primary consideration.  It is more important that the person chosen to serve as an executor or trustee be diligent, responsible and trustworthy.  Much, if not most, of the transactions and tasks required can be accomplished by mail.  Physical presence may be important when dealing with the contents of a house and selling a house which may require some visits if the executor lives at a distance.  Of course the reasonable expenses incurred for such necessary travel can be reimbursed out of the estate.

Consider carefully before choosing co-executors or co-trustees.  Sometimes parents, out of a desire to treat their children equally, will want to name all of their children as equal, co-executors.  While this desire is understandable, in some cases, it can create a danger of conflict and deadlock.  There are some cases where the co-executors cannot agree on how to handle the estate or trust and the administration becomes paralyzed to the point that intervention of a court is required.  I generally recommend that there only be one executor or trustee at a time with an order of succession designated if the first executor or trustee dies, resigns or is otherwise unable to serve.  If you are going to have co-executors or co-trustees working together, be very sure you are confident that they can work together cooperatively.

If there is a trust for children, should the trustee be the same person as the guardian?  This scenario comes up in the event that both parents are deceased and an inheritance for children is being held in a trust until the children reach a designated age set by the parents in the will.  The children will have a guardian who will be responsible for raising the children if the parents are deceased.  There are two ways to look at the question of whether or not the trustee for the children should be the same person as the guardian.  One view is that the guardian is the person who will generally be spending the money and there ought to be a check and balance with a different person as trustee.  The other view is that the guardian will be most familiar with the needs of the children and having a different person as trustee could be cumbersome and inefficient and a source of conflict.  Another reason to choose different people for these roles is that the parents may consider one person better at parenting and caregiving and thus a better choice for guardian while someone else may be better at financial management and thus a better choice for trustee.  In some cases, the same parent may have good skills for both roles.    I don't think there is only one right answer to this question.  It really depends upon the individuals involved.  The parents should consider this issue carefully when planning their estates.

Perhaps the most important thing to do is to have conversations with the people you are considering for these different roles so that they understand what are your values and you can explore whether they are willing and able to handle matters as you would like.

Readers should not solely rely on this note for planning but should consult with a competent attorney licensed in their state. You can also find more information in my firm's websites on Family Law and Wills and Estate Planning and Administration.

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