Selecting your fiduciary is critical. Your fiduciary might be your Personal Representative named in your Will, your Successor Trustee named in your Living Trust, or an agent named in a Power of Attorney.
Many people choose a close friend or a family member. The best fiduciary is someone who is scrupulously honest, capable, pays attention to detail, and will hire professionals when necessary. The worst fiduciary is someone who is missing one of those characteristics.
Your sister, Sue, is a working mom. While she is scrupulously honest, she just doesn’t have time. Your brother, Bob, is a freelance professional who works at home and watches the kids at the same time. He doesn’t have time to pay attention to detail. Your uncle, Harry, is a wonderful guy. But Uncle Harry has some financial pressure that he might be tempted to solve borrowing some of your children’s money. In each of those, problems may arise. In each of those instances, you have named an amateur.
Every lawyer, CPA, and investment advisor can tell stories of fiduciary appointments that have been disasters. Every one of those professionals also has stories where a family member or friend has been the perfect fiduciary. However, sometimes you need to consider a corporate Trustee
A corporate Trustee can provide the following:
1.Experience – The administrators at the corporate Trustee have likely dealt with hundreds of Estates and have faced the various management, legal or tax issues in the past. The administrator likely has all of the forms and correspondence that would be appropriate to utilize. For example, in Arizona, a Successor Trustee has certain notices that should be provided to keep the beneficiaries better informed and minimize creditors.
2.Reduce Family Disputes – Sometimes a beneficiary might be upset if their sibling is named as the fiduciary. That sibling might be managing their money and there might be a level of distrust from prior actions. Sometimes there may even be a conflict of interest with the fiduciary who is also a beneficiary of a portion of the Estate.
3. Remove Burdens – The family member acting as a Successor Trustee may be busy running their own business or taking care of their own families. Demanding careers, community responsibilities, or needs of their children should have priority.