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Estate Planning: Who Makes the Best Executor or Trustee? ^ | January 16, 2013 | Carrie Schwab Pomerantz

Posted on 01/16/2013 3:26:45 PM PST by Kaslin

Dear Carrie, I'm refining my estate plan and am uncertain about which of my four children to name as executor and trustee. I feel like it should be my oldest son, but my youngest daughter is an accountant and has more financial knowledge. What would you do in my situation? --A Reader

Dear Reader, Choosing the right person or people to handle the management of your assets after you die merits a lot of thought. While it's pretty common to appoint a family member or friend, that's not your only choice. A lot depends on your personal situation -- both the complexity of your estate as well as family dynamics.

Appointing a family member can be seen as a symbol of love and faith. However, in the case of multiple siblings, it could be interpreted as an expression of trust in one child over another. So I can understand your dilemma. But while there's an emotional component to this choice, you need to try to keep sentiment in check. To me, it's really about who will do the best job.

Of course, you want someone you trust implicitly to be fair to all your beneficiaries. However, you also need someone with the expertise and personality to handle a myriad of financial details over time. Being an executor (of your will) or trustee (of your trust) is a big responsibility that can go on for years. One or another of your children may well be equipped for the job. But before you make a choice, I'd step back and give some thought to the following questions.

What type of management will your estate require?

The bigger your estate, the bigger the job. An executor or trustee's responsibilities can involve not only the settling of accounts and distribution of assets, but also the ongoing management of those assets for current as well as future beneficiaries. There are tax and legal documents to file, records to keep, and ongoing financial decisions to make. If your assets are extensive and your estate is complicated, this person may need the help of outside advisors to carry out your wishes.

(SET BOLD) Who is most suited professionally? Emotionally? Practically? (END BOLD)

On top of having financial savvy, an executor or trustee must be responsible, practical, organized and able to handle potential pressure from beneficiaries with different needs and requests. Which of your children best combines these traits?

For instance, while your eldest son may have the most authority in the family, would he need more help with financial management? And while your daughter may have the financial knowhow, does she have the temperament to deal impartially with her siblings?

On a purely practical level, which of your children actually has the time to devote to ongoing management of your estate?

What's the potential for family misunderstanding?

When one person in a family is given authority or power over others, there's always the potential for problems. Your kids may all get along now, but when money is involved or issues of control arise, will that change?

To help avoid future problems, speak directly with your family about what the job will entail and why you're considering appointing one or another of them. They may have no idea of the responsibilities. In fact, once they do know, you may find that the child you think is most suited may not want the job at all.

Would a corporate trustee be a smart choice?

Another option is to appoint a corporate trustee, such as a bank or trust company, to manage your trust. On the plus side, a corporate trustee can potentially provide all the investment and legal expertise under one roof. A corporate trustee can also be impartial in assessing requests and distributing assets. On the negative side, your heirs would be working with an impersonal institution and have to deal with the possibility that the staff or even the ownership of the company could change over time. Another negative is that fees for a corporate trustee are often higher than for an individual trustee.

A few more considerations

Appointing two or more people can invite trouble. When there are only two beneficiaries, for instance a brother and sister who get along well, it could work fine. But when there are multiple beneficiaries, I think it's best to have one person or entity making the decisions and handling the details.

Compensation can be another trouble spot. Being a trustee, in particular, is a time-consuming job that can go on for years. While a fee is certainly warranted, a family trustee might feel awkward taking a fee or other beneficiaries might question if it's being earned. To avoid problems, it would be wise to specifically designate in your trust how trustee fees will be determined. Your estate-planning attorney should be able to provide some guidance.

Finally, once you make a decision, talk to all of your kids again. I encourage you to be open about your estate plan, what they can expect and why you've chosen one or more of them to be responsible for your estate. Speaking from personal experience, I also recommend stipulating that you want all of the beneficiaries to meet with your attorney as a group when the time comes. That simple step can provide an important buffer against potential hard feelings.

I'm so glad to hear that you are exploring these issues now. By trusting your family with this important information about your estate, you are passing on your legacy in the truest sense of the word.

TOPICS: Business/Economy

1 posted on 01/16/2013 3:26:52 PM PST by Kaslin
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To: Kaslin

I was executor of my mother’s will. She lived in a different state from me. She died suddenly. The undertaker (who knew mum) recommended a older man as a lawyer to help me out. He was invaluable (and slightle expensive) He got the death certificates, handled the estate inventory for the state, helped find a real estate agent to sell her house (for half his usual rate) and sat in on the closing. In short who ever you choose, get them a lawyer to help them. My lawyer was semi retired. It took about 9 months to get everything squared away.

2 posted on 01/16/2013 3:36:44 PM PST by Citizen Tom Paine (An old sailor sends)
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To: Kaslin

No matter what, parents if you love your kids HAVE A WILL!!!

When I was a teenager, my Mom said “I want you to be my executor” (a lot of reasons, but she trusted my judgement).

Well, she passed (too young but that is a story for a different post or a known story for people here that know me well). I walked into a morass of no will, no financial trail, no nothing! I had to reconstruct years of her life and then convince my siblings how I felt the proper distribution of assets should be based on a series of equity weights I assigned based on my Mom’s discussions and her latter life.

It was weeks of pure hell. Trying to do right and doing right in a vacuum is Herculean (and I am not patting myself on the back). Thank God my brothers and sisters deferred to me with no pushback — they wanted what Mom wanted as well. But I had to do the heavy lifting and I had never done it before and her estate was large enough to need a lot of attention but too small to get a lawyer (who could not have fathomed the equities anyway).

It ain’t hard, you can get the forms online for almost free. PLEASE show your kids you are thinking ahead (my Mom loved me and all of us but walking up to end-life decisions was a bridge a bit too far).

My wife and I don’t even have KIDS and we have a will (we travel a lot and you never know if that trip has destiny written on it).

Please don’t make them do what I had to do.

3 posted on 01/16/2013 3:37:05 PM PST by freedumb2003 (MOLON LABE)
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To: Kaslin
You'd be surprised how many kids don't want to be the executor.

Talk to your kids!!

Why do folks think they have to sneak around.

4 posted on 01/16/2013 3:37:20 PM PST by Sacajaweau
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To: Kaslin

I would say that the person least invested in your will is the best choice. If I had any substantial assets, I’d probably use a trustee, over any family members.

5 posted on 01/16/2013 3:37:37 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: Citizen Tom Paine

See my post below... (almost a smilie as we shared an experience but the death of my mom still saddens me so many years later as I am sure yours does).

6 posted on 01/16/2013 3:39:18 PM PST by freedumb2003 (MOLON LABE)
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To: freedumb2003

I’ve reduced myself to my furniture, clothes, car and a mattress.

7 posted on 01/16/2013 3:40:29 PM PST by Sacajaweau
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To: Kaslin

I’m grateful for this info. We’re re-doing our wills and trust soon. We’re satisfied with our Trustee, but the Successor Trustee has us in a quandry. We’d considered my niece and/or nephew (possibly sharing the duty). Now that we know they voted for Obama, we don’t trust their discernment, so for them it’s a big, fat “NO!” I think a lawyer is a good idea.

8 posted on 01/16/2013 3:53:17 PM PST by MayflowerMadam
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To: Sacajaweau

LOL.... Smart. You just saved the govt alot of trouble. We all may be going there if O gets his way.......

9 posted on 01/16/2013 3:56:09 PM PST by LaineyDee (Don't mess with Texas wimmen!)
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To: Kaslin; All
When my father's unmarried brother died (no will), I volunteered to administer his estate. There wasn't much there — principally, some life insurance, a modest checking account and a beat-up old station wagon. There was just enough to cover all the final expenses plus a modest amount left over, which according to the state's intestacy laws, was distributed to my uncle's siblings.

The administration went smoothly or so I thought. I found out some months later that one of my uncle's nephews started some horse manure that I had stolen funds from the estate. He kept insisting that my uncle had more assets than what the estate's accounting showed. I invited him to have an accountant look over the books and even take me to court if he had the evidence. At that point, he backed down and I never heard anything from him again. But it caused some bad blood between me and others on that side of the family, which never really mended.

My uncle probably assumed that since he didn't have much, he didn't need a will. But I'm telling you now — no matter how much or how little you have — prepare a will and whatever other estate documents you need. You will save your loved ones a lot of grief.

10 posted on 01/16/2013 3:57:22 PM PST by fatnotlazy
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To: Jonty30
"I would say that the person least invested in your will is the best choice."

Amen! Preferrably someone that does not stand to benefit in any way.
IMO- Worst-case scenario is one kid doing the work, with other siblings that also benefit.
11 posted on 01/16/2013 3:57:41 PM PST by 45semi (A police state is always preceded by a nanny state...)
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To: fatnotlazy

I’ve heard enough stories like that to determine that I would never serve as an executor of anyone’s estate ... and my goal in life is to either die broke or leave a pile of cash in a mattress to someone I happen to consider trustworthy at the time I have my last lucid thought.

12 posted on 01/16/2013 4:08:26 PM PST by Alberta's Child ("I am the master of my fate ... I am the captain of my soul.")
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To: Sacajaweau

what? No guns? . . . :-D

13 posted on 01/16/2013 4:11:23 PM PST by GOP Poet
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To: Jonty30

I agree with the Fiduciary Trustee. We have been in court 2 years now because Hubby’s sis tricked Dad into changing his trust while he had dementia to change the trustee from Hubby to her. And then she stole almost half a million dollars.
Dad is still alive.

14 posted on 01/16/2013 4:32:08 PM PST by sheana
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To: sheana

My grandfather didn’t have that much in assets, but my uncle did the same thing to my mom. He went into the house and absolutely rummaged through everything.

My mom estimated that he probably stole about $30,000 worth of stuff.

15 posted on 01/16/2013 4:34:15 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
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To: freedumb2003
No matter what, parents if you love your kids HAVE A WILL!!!

Actually, my financial advisor told us NOT to have a will. We set up a trust. A will will have to go through the courts (if I remember correctly).

16 posted on 01/16/2013 5:09:21 PM PST by FrdmLvr (culture, language, borders)
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To: FrdmLvr
Can you expand on that?

Inquiring minds want to know.

17 posted on 01/16/2013 5:23:28 PM PST by Sarajevo (Don't think for a minute that this excuse for a President has America's best interest in mind.)
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To: Alberta's Child

It’s fine to be an executor or administrator if you are working with rational people. The troublemaker nephew always was a pain in the posterior. We haven’t spoken since and I don’t miss him, but I do regret that he mucked up my relationship with other family members.

Fights over money have wrecked more families and friendships than anything.

18 posted on 01/16/2013 5:27:55 PM PST by fatnotlazy
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To: Kaslin

Must have lawyer.
It can take a long time.
Don’t pick someone out of state or even a long way away.
The law is not simple, nor is the process, don’t pick a dummy.

19 posted on 01/16/2013 5:49:38 PM PST by WriteOn (Truth)
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To: Sarajevo

I’m not sure, I only remember sitting at my kitchen table with my financial advisor and him explaining to us why a will is not a good idea - maybe in our situation - maybe it’s different for different situations. It made sense at the time. Anyway, it was either because of taxes or courts that he told us not to get a will. It was a while ago. As you may have guessed, I am not a financial planner or an estate lawyer. Anyway, here’s something I looked up on Legal Zoom that might be helpful.

20 posted on 01/16/2013 6:47:43 PM PST by FrdmLvr (culture, language, borders)
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