If you’re in the process of preparing your estate plan or already have one in place, you may have heard the term fiduciary. Having a fiduciary is often of great benefit when executing your estate. So what exactly is a fiduciary? To explain it simply, a fiduciary has a legal obligation to provide the highest standard of care on behalf of another, which requires trust, honesty and loyalty.
A fiduciary, or corporate trustee, is responsible for collecting assets, paying off debts, completing and filing tax returns and distributing assets according to the trust language—either to an individual, a charity or in continued trusts. Additionally, a fiduciary or corporate trustee works with beneficiaries to keep them informed regarding the trust or estate process.
If a fiduciary is someone with your best interests in mind, you may think that one of your children or another family member would be your best fiduciary. While this may be true for some, it’s important to consider the role of a fiduciary and their responsibilities before assigning this important task to a loved one instead of a corporate trustee.
One of the key benefits of selecting a corporate fiduciary is alleviating stress on family members. If you select one of your children, it’s key to remember that they will be grieving your loss when they are asked to step into the role of trustee. You need to consider if that individual will realistically be in the position to carry out the necessary fiduciary duties. Ask yourself if this individual has the time and expertise to carry out this very important task.
For example, one client described being a Trustee on his father’s estate as an extremely stressful experience. Not only was he mourning the loss of his father but he had to put his father’s house on the market while trying to close out his father’s accounts in other countries. The role of fiduciary ended up being more responsibility and time than he had expected.
Additionally, by naming a corporate trustee, you help alleviate possible family conflict. For example, if you have multiple children and only name one as fiduciary, it may create conflict between family members when you pass on. Corporate trustees often have a more objective view and are in a better position to decline a distribution request from a beneficiary, compared to a sibling or other family member. It can be difficult for a family member to remain objective if they are tasked with administering their own family’s inheritance.
Who you select as a fiduciary will depend on your assets and family dynamics. When selecting a fiduciary, it’s important to ask the question of whether the named fiduciary has the time and desire to perform the duties now and years down the road. We recommend having an honest conversation with family members to consider if they have a desire to perform the role or if they would prefer a corporate trustee.
For example, we recently heard a daughter describe her relief when she found out she didn’t have to handle the administration of her parents’ estate. She had been stressed about the responsibility and was thankful to find out she would have professionals handling the estate.
It’s also key to know that collecting assets and administering an estate takes time, effort and expertise. If you chose a corporate trustee, you will have a clear picture of the process and procedures in place for administering your trust.
You also have the option to select multiple fiduciaries for different responsibilities. For example, you could select a corporate trustee but have an individual family member work alongside the corporate trustee as co-fiduciary. This is a way to have the best of both worlds but it’s important to remember that it can take longer for decisions to be made because there are multiple parties involved. However, whether you have one or multiple fiduciaries, it’s important to make sure you have successors named in your trust or estate planning documents in the event that a fiduciary would be unable to perform their duties.
Trusts and estate planning play and important role in ensuring your family’s legacy. FNBO’s Wealth Management team has the expertise and resources to make this process easier for you and future generations. As a corporate trustee, we assume the responsibility of managing your trust assets according to your specific instructions. This alleviates time-consuming and burdensome tasks from your friends, family and loved ones. Learn more about our trust services.
About the Authors
Amanda is a Director in Trust Services at FNBO and is responsible for administration of estates, trusts, and investment accounts. She oversees the Illinois market for Trust and Estate Administration in addition to sitting on the Discretionary Action and Unique Asset Committees. Amanda and her team focus on helping individuals and families desiring generational planning and preservation of wealth.
Brooke Smithberg is a Director with the Wealth Management group’s Personal Trust team at FNBO and handles the administration of trusts, estates, conservatorships, agencies and investment management accounts. Brooke's clients include high net worth individuals requiring investment and trust services.
As a Director in Trust Services at FNBO, Laura serves the Kearney, Grand Island and North Platte markets. With an extensive background in estate planning and asset management, she is well qualified to help others plan their financial future. Working with the customers she serves is what Laura likes best about her job.