estate planning

As a Child-Free Elder, Who Will Be On Your Team?

“Who will take care of you when you’re old?” someone once asked me when I told her I had no children.

It seemed like an old-fashioned kind of question. Nevertheless, it caused a mini panic attack.

Knowing the statistics, I had made the vague assumption that I would need to make arrangements for care, but something about her question made that statistical probability more real.

About 14 percent of 40- to 44-year-old women had no children in 2018 – up from about 10 percent in 1980, U.S. Census data shows. This is and will be an issue for millions of Americans.

As anyone who has served as a caregiver knows, there are four main questions to ask from the beginning. Answering these can lead to the formation of an elder care support team. The team members may come from two areas – friends and family, professionals, or both.

  • Where will I live?
  • Who will make medical decisions for me?
  • Who will handle my finances?
  • How will I get transportation?

Team Member 1: Where will I live?

The first part of figuring out the team is to know where you will be living. The vast majority of Americans want to age in their homes. For some people that home might be the place they have lived for several decades. If so, then the team member will likely be a home health care company.

For others, home might be a place they move to – with a supportive community, but not a facility (perhaps at first). If that’s you, building a network of friends and professionals in the community can be one of the best ways to reinforce your support team.

Although it’s not in many people’s plans, sometimes aging at home isn’t an option. For people aging without children, it’s more important to get to know assisted living and continuing care facilities, and figure out how you would pay for them. (For myself, I purchased a traditional long-term care policy. But that doesn’t mean that is the right solution for everyone.)

Team Member 2: Who will make medical decisions for me if I can’t?

Preferably someone close by. Ideally this person could be available at a moment’s notice and will not have to travel far to attend appointments with you.

Having a strong primary care physician relationship is also highly beneficial. Some doctors, especially those who specialize in concierge medicine, can and will serve as your legal health care surrogate.

Team Member 3: Who will handle my financial affairs?

Many attorneys recommend having a different person named for financial matters than for health care decisions. As aging progresses, it’s a lot to ask of one person to handle bill paying, money management, and doctor appointments (as anyone who has served as a sole caregiver can attest).

Money management involves several duties. To name a few,

  • Paying bills and making renewal decisions (such as memberships, subscriptions, and/or insurance policies)
  • Making gifts
  • Making transfers between accounts, such as taking IRA withdrawals
  • Managing investments

Your financial team might involve two members – someone who does the day-to-day management, plus a professional investment manager. Most professional investment managers do not provide billpaying and cash flow management. Professional investment managers may charge a fee that is a percentage of the amount they manager, or a flat fee. If a friend or family member is taking over the day-to-day, it’s important to pay that person a fair fee, too.

Or you can find a fiduciary who will cover it all. Trust companies are one example of fiduciaries who will handle all financial duties if they are named as trustee or co-trustee on your documents.

My choice for now is an independent fiduciary. She happens to have a law degree and serves in this capacity full-time. Her services won’t begin unless I’m alone and losing the ability to handle things myself. Hopefully that’s a very long time from now, if ever.

Team Member 4: How will I get transportation?

If you move to a community with many transportation alternatives, you might not need a separate team member for transportation. This is my goal – a walkable community with good public transportation alternatives. The EPA even publishes a National Walkability Index.

But if you are staying in a home or community without many alternatives to your own car, and you don’t want to use ridesharing with strangers like Uber or Lyft, you could assemble a network of friends and acquaintances on whom to rely. So together they will be your transportation team member.

How can I make my affairs easier to manage for the team?

Consolidate and simplify with one financial institution. It will be far easier for your financial surrogate, and the institution may even show you some extra appreciation. Some people are concerned that this is not being “diversified.” Nowadays, most institutions can hold a diversity of cash and investments all under the same roof. Just make sure to keep under the FDIC limit in any bank accounts.

Use the health apps provided by your healthcare providers to give easy access to your electronic medical records.

Have all of your digital passwords in one digital password manager. Most people don’t realize they have on average over 200 accounts with passwords. See “Document Your Digital Assets.”

How do I make it all legal?

Once you have decided who you would like to name as your surrogates, have either a durable power of attorney (DPOA) or living trust drafted by a board-certified estate planning attorney. (See “Do I need a trust?” for more on the topic of trusts.) The same attorney will often also draft your living will and healthcare power of attorney, too. For qualified attorney recommendations, check for your local chapter members of the National Association of Estate Planning Councils.

For more information on planning for aging, check out the e-book, How Does Your Money Flow? A Guide to Common Saving, Spending, and Sharing Decisions (Porchview Publishing, $3.99, available in e-reader-friendly formats). Or, join the list for our free award-winning monthly e-letter, “The View From the Porch.”

Continue ReadingAs a Child-Free Elder, Who Will Be On Your Team?

Document Your Digital Assets

document digital assets

Document your digital assets. Imagine you have a nearly $1 billion empire of music, movies, and royalties. Sound good? Now imagine you have no will, aren’t in a committed relationship, and have no children. Where and how do you begin to decide what should happen to your empire? Prince’s untimely death in 2016, and his lack of estate planning, brought to mind that the more we have, the more we have to plan for it.

Celebrities’ attorneys, accountants, and financial advisors try to keep up with constant changes to their clients’ property, especially when it comes to protecting intellectual property like music and videos. The longer a celebrity waits to address an ever-growing empire, the harder the decisions are to make for everyone involved. They find it’s better to address changes as they happen, even it means more frequent revisions.

Back in the Real World

So what does this have to do with little ol’ you? While you may not feel as though you have a digital empire, your online life might be more complicated than you think. It’s estimated the average American has between 30 and 80 online accounts with passwords.

For example, an attorney had a father-in-law who ran 3 businesses from his Blackberry. When he died suddenly in 2011, she was shocked at how difficult it was to access his emails, accounts, and online life. Every online provider had different requirements. This was her introduction to the concept of the “digital asset,” and, as a result, she became an expert in that niche.

Keeping track of digital assets can be overwhelming, but you can begin with 4 main types – personal, financial, business, and social:

Digital Personal Assets

Photos, Movies, Books, E-books, Music, and Podcasts. Unlike your Simon and Garfunkel records, Michael Jackson CD’s, or Rocky DVDs that the kids will get whether they want them or not, there are some e-libraries you can’t leave to anyone. For example, access to Kindle and iTunes libraries die with their owners.  For all your photos and videos stored in the cloud, make sure you have a backup, especially if it’s iCloud. Upon proof of death, all content in an iCloud account is deleted.

Digital Financial Assets

Bank, Brokerage, PayPal, Frequent Flyer, Bitcoin, etc. Did you sign up for paperless statements? Good for you, but make sure you have documented somewhere that the accounts exist. If no one can get into your email, and you haven’t kept good notes or a plan somewhere, they may not know you opened a new Treasury Direct account or I-bonds account.

Digital Business Assets

Blogs, E-books, Books, E-commerce sites. Intellectual property is often housed digitally. Have you inventoried any copyrighted works and addressed them in your estate planning documents? Can someone get to them in a way that will continue to produce revenue or royalties?

Digital Social Accounts

Email, Text messages, Facebook, Twitter, Instagram, Pinterest, LinkedIn, etc..  An elderly friend of mine passed away 6 years ago but his face and profile still pop up occasionally as someone “I might know” on my Facebook and LinkedIn. I am guessing his family either aren’t involved with social media, or simply were not able to log in and post a nice memorial tribute to a wonderful man. What do you want your online presence to look like, if at all, and for how long, once you’re gone? 

With all of these different accounts, it seems like you might need a digital asset will and executor. It turns out there are such roles now, and 47 states, including Florida, have ratified them through passage of the Revised Uniform Fiduciary Access to Digital Assets Act (UFADAA). (You can read all about it here: https://my.uniformlaws.org/committees/community-home/librarydocuments?communitykey=f7237fc4-74c2-4728-81c6-b39a91ecdf22&tab=librarydocuments). In the act, you can name a digital executor – someone to access your email, text messages, and social media accounts, in your will or trust.

Take a Few Minutes

Take a few minutes to consider how easy, or not, it will be for someone to take over for you. If you aren’t the paper notebook type, or just ready to reduce paper, check out either The Beneficiary Book at Amazon, or www.everplans.com.

For more tips on the psychology of money, subscribe to the award-winning monthly e-letter, “The View From the Porch,” at https://bit.ly/3t2uwfn.

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Channeling Jeff Foxworthy – You Might Want a Trust If….

“Do I need a trust?” Although it’s a legal question, it’s frequently asked of financial advisors. What do they say? 

“Hey, I’m not an attorney,” is one possible—but maybe not the most helpful—answer. 

“Hey, I’m not an attorney, but I can play one,” may be polite, but inadvisable. 

“That’s interesting you bring that up. I’m curious how you heard about trusts.” This reply seems a little better. It keeps the focus on the questioner, and it’s pretty safe legally. 

Pros and Cons of Trusts 

Answers people may give range from, “I dunno,” to citations of articles, websites, conversations with friends, family members, or even an estate planning attorney. All of those mixed messages can get pretty confusing. 

For some people, trusts are a mysterious-yet-evil domain of the ultra-rich. This belief isn’t surprising. When was the last time you saw positive media coverage of a trust? It typically pops up when a billionaire’s “trust fund baby” is arrested. 

There are dozens of kinds of trusts. For this post, “trust” means a revocable living trust. They tend to be the most common and relevant. 

Trusts aren’t for everyone. They are costly to set up. Some people have difficulty implementing and maintaining them. They are powerful. Scary powerful, sometimes.

 Rather than answering, “Do I need a trust?” directly, I prefer to channel comedian Jeff Foxworthy’s famous phrase, “You might be a redneck if …” (anyone under 40 may have to look him up). It seems to help people discover for themselves whether a trust might be useful.

 You Might Want a Trust If….7 Reasons

 1. If you own property in more than one state or country, you might want a trust.

 Trusts avoid probate—if drafted, executed, and implemented properly. Property in two states/countries means probate in two states/countries. In many states, probate attorneys charge a percentage of the probated asset value. Dollars spent now on a trust could seem small compared to the dollars spent on lawyers and court fees in two places later.

2. If you are concerned about a grown child’s ability to handle money, you might want a trust.

 The child gets the money, no strings attached, if left through a joint account, will, payable-on-death (POD) designation, or beneficiary designation. Trusts let you build strings. One common example is to pay one-third of principal at age 30, one-third at age 35, and the remainder at age 40. As your family ages and changes, you can revise trust provisions like these. Revocable living trusts are amendable.

3. If you have a concern about a child’s current marriage, you might want a trust.

Trusts can be written so that inherited assets can be protected in a divorce. Assets inherited other ways, especially if commingled with other marital assets, can be harder to protect.

4. If you have a concern about a child’s future marriage, you might want a trust.

Trust provisions can be written for future spouses, too.

5. If you aren’t as concerned about dying as living a long time with chronic illness or dementia, you might want a trust.

What happens if you’re unable to manage your finances? People often don’t consider that a will only applies upon death. That’s why they should have a power of attorney (POA). Although much work has been done to get institutional agreement on POAs, your designated POA person might still face a custodian, attorney, or title company who won’t recognize it, or will at least give your person a hard time about it.

If an asset is in a trust, your person—the trustee or co-trustee—generally faces fewer roadblocks than with the POA.

6. If you are in a second (or later) marriage and have children from a previous one, you might want a trust.

Let’s say you both agree that the spouse gets the house, but the kids get the money you brought to the marriage. With a will and beneficiary designations, this basic idea can be accomplished. Sometimes life (and death) work out that simply, yet sometimes they don’t. (See last point.)

It’s possible your spouse could be left without enough money to live in the house, or the kids could be left with nothing. If either of those scenarios bothers you, a trust can allow for changing circumstances as you both age.

7. If you care about a loved one’s vulnerability in their time of grief, you might want a trust.

Probate is public. If you’ve ever known someone who has been through it, then you are familiar with the annoying phone calls and direct mail received after losing someone. If you haven’t, you might be shocked to know that … people troll public records.

Some trolls, I mean, people, especially like the records that declare which investment account(s) and which beach house go to whom. Then, out of the goodness of their hearts, they find the grieving loved one and offer to provide assistance and support in their time of need. (Ahem.)

Unlike probate, transferring property through a trust happens privately.

Ask Your Attorney

In summary, these are only seven of several reasons you might want a trust. But the best person to ask is a board-certified estate planning attorney. Find one through your local estate planning council (www.naepc.org) or ask your financial advisor for references.

Continue ReadingChanneling Jeff Foxworthy – You Might Want a Trust If….

How To Choose Trustees? 3 Factors

A former boss of mine used to say choosing a trustee comes down to 3 factors: talent, temperament, and time. There are a variety of reasons to set up a trust; so each factor’s importance will depend on the trust’s purpose. For some people, naming a family member will be the best option. Others might benefit from a large corporate trust company. Still others may want something in between, perhaps an independent fiduciary or an attorney or CPA. Before making the trustee decision, consider the 3 factors.

Talent

How much talent does a trustee need? Talent may be necessary, or just nice to have, in 4 areas: legal, accounting, taxes, and/or investments. For example, if the beneficiaries are apt to question the trustee’s decisions, legal talent would be especially beneficial. When it comes to accounting talent, some trustees must provide an annual report to beneficiaries showing all sources of income, expenditures, and (here’s where many get tripped up), expenses paid from income or principal. Trustees may be accountable to and liable for decisions made on behalf of all beneficiaries, both current and future. Therefore, if a trustee is managing a trust for a current beneficiary (say a widowed spouse), they might also have to look out for future beneficiaries (say, children). That can feel like a delicate balancing act when it comes to tax and investment strategies. If the trustee does not possess talent in one or more of these areas, then which talent(s) may need to be hired from outside advisors? How will the trustee decide how to make those hires?

Temperament

Does the trustee have the temperament? Honesty, objectivity, and maturity are three qualities that are a good litmus test of a trustee’s capacity to handle the responsibilities. If a trustee has other beneficiaries, do those beneficiaries know and trust the trustee already? Can the trustee be completely impartial among all beneficiaries? How adept is the trustee at managing emotional reactions, both their own and others’, when it comes down to decisions about money?

Time

What kind of time is required and does the trustee have it? What if something happens to the trustee? Is there a backup team available? How long will the trustee most likely be around?

More Than One Trustee

These 3 factors need to be considered for all trustees. Some people choose to name co-trustees. Co-trustees can be family members (say, all siblings); or a family member(s) and a professional or corporate trustee. Co-trustees can provide checks and balances on each other, but can make changes and some decisions burdensome. In a worst case scenario, co-trustees may have to go to mediation or court to resolve their differences. Another strategy is to name a “trust protector,” who does not have the powers of a trustee, but has oversight to fire and hire trustees.

Consult a Knowledgeable Attorney

The good news is that trusts are very flexible instruments that can be custom designed to reflect your wishes. The bad news is that flexibility can lead to a confusing array of choices. To sort through it all, it’s best to have a thorough discussion with your lawyer. Find one who is board-certified, or practices full-time, in wills, trusts and estates.

If you would like to learn more about the responsibilities of a trustee, start with the Florida Bar’s consumer information page on revocable trusts: https://www.floridabar.org/public/consumer/pamphlet028/#WHAT%20ARE%20THE%20TRUSTEE’S%20RESPONSIBI​

Continue ReadingHow To Choose Trustees? 3 Factors

Dig Those Digital Assets

How many digital assets do you have? While it’s tax time and you are pulling the details of your financial life together, give this some thought: if necessary, how could someone easily step in the shoes of your digital life? Increasingly our financial lives are all online. Could someone you trust find your digital paper trail?

Digital assets and estate planningA Near Miss

Shortly before a relative died in 2008, he showed me where and how he kept his financial life organized. He had accounts in more places than I could keep track of in my head. So we wrote them all down. Between the visit to his home office and our written instructions, I thought I was all clear on what he had and how to get to it. But when it came time, I still nearly missed one. It was the only account for which no statement came in the mail – an online-only account (known as a “digital asset”) at Treasury Direct.  I uncovered it, 11 months after his death, as I was clearing out the file cabinet. It was in an empty manila folder with a scribbled label. A userid and several crossed-out passwords were written on the inside flap. It turned out to be a five-figure account.

Many Kinds of Digital Assets

Nowadays, it’s estimated the average American has between 30 and 80 online accounts with passwords. Of course, not all of them have money in them, but they still might be “assets.” Have you thought about the value in Paypal accounts, frequent flyer accounts, Amazon accounts, eBay accounts, and any kind of points-earning sites? Membership sites – AAA, AARP, fraternities, sororities, national professional associations, etc. might hold some kind of group life or accidental death policies. A blog or YouTube channel might bring in a little advertising revenue. Even if the site or account has no potential for ever producing money, most people have some kind of online presence, even if it’s simply their Facebook page, that they might not want hanging out there if they’re no longer around.

One Solution – A Password Manager​

One app I have been using is a password manager app called Dashlane. It sits on the hard drive and remembers sites and passwords. All someone needs to do is enter my Dashlane password, and they can see what I’ve got and how to get to it. Scary? Perhaps. To play it a little safer, I choose not to use the “cloud ” version of Dashlane to share among all devices. There seem to be arguments for and against this strategy for using a password manager.

What’s your digital asset plan should something happen to you? Share a comment here.

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Mind Your 4 Digital Asset Types

An attorney I met had a father-in-law who ran 3 businesses from his Blackberry. When he died suddenly, she was shocked at how difficult it was to access his emails, accounts, and online life. Every online provider had different requirements. This was her introduction to the concept of the “digital asset.”

Digital Assets

Have you ever given thought to your digital assets and how someone else would step in your shoes? It’s estimated the average American has between 30 and 80 online accounts with passwords. Keeping track can be overwhelming, but we can begin by naming 4 main types – personal, financial, business, and social:

1) Personal assets:

Photos, Movies, Books, E-books, Music, and Podcasts. Unlike your Simon and Garfunkel records, Michael Jackson CD’s, or Rocky DVDs that the kids will get whether they want them or not, there are some e-libraries you can’t leave to anyone. For example, access to Kindle and iTunes libraries die with their owners.  For all your photos and videos stored in the cloud, make sure you have a backup, especially if it’s iCloud. Upon proof of death, all content in an iCloud account is deleted.

2) Financial assets:

Bank, Brokerage, PayPal, Frequent Flyer, Bitcoin, etc. Did you sign up for paperless statements? Good for you, but make sure you have documented somewhere that the accounts exist. If no one can get into your email, and you haven’t kept good notes or a plan somewhere, they may not know you opened a new Treasury Direct account. 

Additionally, once the bank or brokerage company learns of your demise, they may lock out the online account, preventing anyone from accessing statements. Statements are essential for understanding how much was in the account at date of death, but primarily, how your assets are titled.

3) Business assets:

Blogs, E-books, Books, E-commerce sites. Intellectual property is often housed digitally. Have you inventoried any copyrighted works and addressed them in your estate planning documents? Can someone get to them in a way that will continue to produce revenue or royalties? 

4) Social accounts:

Email, Text messages, Facebook, Twitter, Instagram, Pinterest, LinkedIn, etc..  An elderly friend of mine passed away 6 years ago but his face and profile still pop up occasionally as someone “I might know” on my Facebook and LinkedIn. I am guessing his family either aren’t involved with social media, or simply were not able to log in and post a nice memorial tribute to a wonderful man. What do you want your online presence to look like, if at all, and for how long, once you’re gone? 

With all of these different, it seems like you might need a digital asset will and executor. It turns out there are such things now, and 10 states, including Florida, have ratified them through passage of the Revised Uniform Fiduciary Access to Digital Asset Act (RUFADAA). (You can more about it here: https://www.onefpa.org/journal/Pages/APR18-Estate-Planning-for-Digital-Assets-Understanding-the-Revised-Uniform-Fiduciary-Access-to-Digital-Assets-Act-and.aspx. In the act, you can name a digital asset executor – someone to access your email, text messages, and social media accounts, in your will or trust.

If you have been reading or watching for a while, you know I am a fan of having a Notebook. But if you aren’t the paper Notebook type, or just ready to reduce paper, check out www.everplans.com. For $75, you can have a plan and inventory of your digital estate, easily accessible to those you trust. If you give it a try, let me know how it works out, and I’ll post feedback here for future readers. 

Continue ReadingMind Your 4 Digital Asset Types

Dig Those Digital Assets

Shortly before a relative of mine died in 2008, he showed me where and how he kept his financial life organized. He had accounts in more places than I could keep track of in my head. So we wrote them all down. Between the visit to his home office and our written instructions, I thought I was all clear on what he had and how to get to it. But when it came time, I still nearly missed one. It was the only account for which no statement came in the mail – a “digital asset” at Treasury Direct.  I uncovered it 11 months later as I was clearing out the file cabinet, in a manila folder with a scribbled label. The folder was empty, but a userid and several crossed-out passwords were written on the inside flap. It turned out to be a five-figure account. 

Nowadays, it’s estimated the average American has between 30 and 80 online accounts with passwords. Of course, not all of them have money in them, but they still might be “assets.” Paypal accounts, frequent flyer accounts, Amazon accounts, eBay accounts, and any kind of points-earning sites might be worth a little, or a lot. Membership sites – AAA, AARP, fraternities, sororities, national professional associations, etc. might hold some kind of group life or accidental death policies. A blog or YouTube channel might bring in a little advertising revenue. Even if the site or account has no potential for ever producing money, most people have some kind of online presence, even if it’s simply their Facebook page, that they might not want hanging out there if they’re no longer around. There are 4 categories that our digital assets can fall into. Next week I’ll go into more detail and how to plan for them.

But while it’s tax time and you might have all of your financial life pulled together, give it some thought: how could someone easily take over my digital life if necessary? One app I am using is Dashlane – it sits on my hard drive and remembers all my sites and passwords. All someone needs to do is enter my Dashlane password, and they can see what I’ve got and how to get to it. Scary? Perhaps. To play it a little safer, I chose not to use the “cloud ” version of Dashlane to share among all my devices.  I’ll be providing lots of other resources in an upcoming e-book on end-of-life planning and digital assets (Porchview Publishing, $7.99). If you would like to be on the pre-order list for a coupon, become a subscriber to the free monthly e-letter, “The View From The Porch,” at https://www.hollydonaldsonfinancialplanner.com. 

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Letting Indecision Delay Your Estate Plan

The best reason I ever heard for not seeing an estate planning attorney came from a late client who, upon learning that over half of his estate might be taxed, said, “I don’t mind. The government has a lot of good programs.”  (I responded, “Ok. How can you be sure your money will go to the programs you like?”) I don’t believe, despite his political views, that he really wanted to leave half of his money to the government. I do believe it seemed better than addressing his mortality, though.
Talking and thinking about our own death is stressful, so it’s no wonder many people avoid it, deny it, and don’t want to deal with it.
But what if your reason is simply, “It’s too hard to decide”? No doubt about it, estate planning can involve gut-wrenching decisions, like choosing a potential guardian for your minor children. (Ugh.) Or figuring out what’s “equal” vs. what’s “fair.” Who to include and who to exclude? Which charities will handle a bequest most responsibly? Leave money in a lump sum, or spread it out over time? In-laws, multiple marriages, step-relatives, girlfriends, boyfriends….today’s families are complicated. Perhaps you and your spouse or partner disagree. Or you and your children do. The more you delay, the more the questions, and their unknown answers, multiply. You might want to brush it off, like my client, since you “won’t be around anyway to worry about it.” But until then, it can still eat at you.
A lot of people think they must make all the decisions before they go see the attorney. But when you think about it, estate planning attorneys deal with such decisions all the time. Many of them are actually pretty good at suggesting alternatives you might not have considered. Attorneys are more than just note-takers; they are advisers and advocates. The good ones are smart people who love to come up with creative solutions to legal questions. So when I hear someone can’t decide, I encourage them to make the appointment anyway. Addressing our mortality may not be pleasant, but it’s better than being eaten alive by indecision.
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Selecting a Trustee: Talent, Temperament and Time

Professional advisor or trustee

Selecting a trustee: talent, temperament, and time. Sometimes an estate planning attorney will recommend setting up a trust. One of the decisions to make in setting up a trust is selecting a successor trustee.  Who is the best person or persons to step into this role if you are unable to? Should it be a family member or a professional trust company?

The requirements for this role often boil down to talent, temperament, and time.

Following this outline, here are some questions to ask when considering a person, or an institution, as a successor trustee:

Selecting a Trustee: Talent

First, talent. Is the potential trustee detail-oriented? For example, trustees are required to provide annual accountings to beneficiaries.

Are they familiar with keeping track of which money is considered “principal,” and which is considered “income”? This can make a difference when there are both current beneficiaries and remainder (future) beneficiaries.

How familiar is the trustee with the spectrum of investments? Does he, she, or it understand the risk factors of all kinds of investments? Would he, she, or it know which investments are in the best interest of the beneficiaries? Trustees are “fiduciaries,” which means they are liable if their investment choices are not considered to be in the beneficiaries’ best interests at all times.

That said, would the trustee understand when it is wise to watch pennies, and when it is “pound-foolish”?

Selecting a Trustee: Temperament

Next, temperament. Will naming this person cause family tension?

Will they have conflicts of interest?

Do they have problems dealing with other family members?

Can they be sensitive to family dynamics and unbiased in decision making?

Will this person put my interests ahead of his or her own?

Selecting a Trustee: Time

Finally, time. Will serving as trustee pose a time burden on a person? Trustees must have time to:

  • review and pay bills,
  • review investment decisions (jointly or with professional investment managers), and
  • communicate with beneficiaries as necessary.

How is the health of the potential trustee being considered? Will the beneficiaries likely outlive this person?

Further Questions

For shortfalls in any of these areas, an estate planning attorney should be consulted on whether any of the following may help:

  1. Naming two or three people as co-successor trustees.
  2. Considering a current co-trustee or –trustees.
  3. Considering a “trust protector,” a third-party person who oversees the trustee and can replace them if they are doing an unsatisfactory job.
  4. Having a family meeting to discuss the  provisions of the trust with the successor trustees, attorney, financial planner, and accountant.

For some, a corporate trustee has distinct advantages. Corporate trustees have entire staffs of trust officers and lawyers. They have accounting systems set up to provide accountings and pay bills. Most have salaried staff investment managers with performance-based bonuses. They purchase stocks, bonds, and funds at institutional pricing with no markup to clients.

Additionally, trust companies operate as unbiased professionals, with experience handling reasonable and unreasonable family members. They have loads of liability insurance. Finally, beneficiaries can’t outlive (most) corporate trustees. If the corporate trustee goes bankrupt, client accounts are protected and can be transferred in-kind to another corporate trustee or custodian.

Of course, corporate trustees come with a price. Normally the fee is a percentage of the assets being managed. A family member may not charge anything although by some state statutes, they can. The decision to make is whose talent, temperament, and time is worth it.

For a listing of local estate planning attorneys, look up your local Estate Planning Council at https://www.naepc.org.

Continue ReadingSelecting a Trustee: Talent, Temperament and Time