By Jeffrey R. Wolfe, Senior Vice President, Manager of Wealth Planning Strategies
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As National Estate Planning Awareness week continues, we are going to focus on successors. If your main planning document is a will, you have named a personal representative to serve in this capacity. If you have a trust, you have named a successor trustee to serve on your behalf. If you have a power of attorney, you’ve named an agent to serve for you. Do you remember who you named? Do they know about their appointment?
It’s important to select the right person to serve on your behalf when you either can’t serve any longer, or for when you pass away. You need to select someone that is not only capable of handling the role, but who also has the time and desire to serve in this position. It’s important to remember that these appointees are held to a fiduciary duty, one of the highest levels of responsibility – and liability – under the law. There are numerous state and federal laws governing these matters. Trustees, for example, are responsible for distributing trust assets, making investment decisions, following administrative requirements, filing tax returns, maintaining beneficiary communications, and performing accounting responsibilities all while upholding confidentiality requirements. In short, there’s a lot of work to be done. It can be an arduous task fraught with risk and frustration.
Many people name their spouse to serve in these roles, followed by their oldest or “most responsible” child/children. If you’re not married, often a sibling or close friend is named. However, these folks may or may not have the skill set or bandwidth to accept the responsibility. If you’ve named a contemporary, they may be in the same shoes you are when it’s time to serve. You should review your plan to make sure your appointees are willing and able to handle the role.
While these decisions may be daunting, there is help available. Our firm does not provide tax or legal advice, but we do have relationships with professional trustees. Those trustees can serve initially to make sure your legacy goals are implemented exactly the way you intended while relieving your family of these burdens, they can partner with your selected individuals to achieve these goals, or the professional trustee can be the “backstop” as the last listed fiduciary to provide a permanent solution should others be unable to serve. Why use a professional? Professional fiduciaries can:
- Relieve relatives and friends from legal liability
- Avoid or minimize the burden to an individual trustee/personal representative to manage the paperwork and responsibility
- Maintain family harmony by being an objective decision maker
- Ensure prudent, professional investment management
- Provide permanence and stability
- Deliver services with a dedicated staff of trained specialists: investments, administration, taxation, legal, accounting, special assets, etc.
Take a moment to go back and review your fiduciary appointees. Make sure you have made the appropriate selections. Work with your financial advisor and your legal advisor to make sure your plans are solid, to make for a smoother transition when the time comes.
This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards & Co. is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.