An essential part of establishing your estate plan is nominating certain fiduciaries. These are people who will serve in positions of responsibility, such as Executor and Trustee, and will help ensure that the wishes contained in your estate plan are carried out.
Many people simply name a spouse or an adult child to serve in one or more fiduciary roles, but this isn’t always the best option. Sometimes, you know from the start that your close family members will be too emotional to take on the burden of serving as Executor or Trustee after you’ve passed away. Sometimes, there just aren’t any loved ones available who are experienced or responsible enough to faithfully serve as a fiduciary. And if you have a large or complicated estate, sometimes you just need an expert to serve as Executor or Trustee.
When this is the case, an option is to appoint an institutional fiduciary. This is a professional or business entity, like the trust department of a bank, or an attorney, who steps in and fulfills the duties of Trustee or Executor, for a fee.
Appointing an institutional fiduciary to fulfill one or more roles in your estate plan can be a smart choice, for the following reasons:
- Unlike a family member or friend, an institutional fiduciary is experienced at handling estate matters, and won’t have to learn “on the job”, at the risk of making expensive mistakes.
- An institutional fiduciary has access to multiple experts, often in-house, to help handle the details of your estate or trust.
- An institutional fiduciary can be impartial and unbiased when it comes to dealing with beneficiaries. And, having an expert instead of a family member in the role of fiduciary just might inspire trust in your beneficiaries and head off any squabbles.
- Institutional fiduciaries carry insurance. So, in the event a mistake is made, your beneficiaries have some recourse to recover any losses they may experience.
So, if you’re at a loss when it comes to appointing family members to fiduciary roles, talk to your estate planning attorney about what other options are available.
Stephen A. Mendel, Estate Planning Attorney
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