BY: CHRIS KELLY, JD
Market President, Nashville
(615) 599-9863
In today’s world, estate planning can be an intense and complex process. These issues can be caused by many factors, such as federal and state tax laws and the types of property or assets a person owns. If you layer on unique family dynamics (e.g. a blended family, estrangement, etc.), the process becomes even more challenging.
Because of these considerations and others, a practitioner may recommend utilizing the services of a trustee or executor to best accomplish a client’s estate planning goals. One of the most important decisions a person can make is choosing and naming the person or organization who will serve in this role. A fiduciary can be a family member, a friend, a trusted advisor such as an attorney or accountant, or a bank that offers fiduciary services.
As with many choices, there are advantages and disadvantages to each of these options. A family member or a friend both probably know the family members for whom the trust is being established. A trusted advisor may also know the family while additionally possessing unique skills that may be valuable in managing the trust. Additionally, these individuals may often serve without the expectation of being compensated for their service.
For certain situations, an individual may serve well in this role, but a corporate fiduciary may be a better option when unique family situations exist, significant tax implications are at stake, the estate includes complex assets, or the estate plan involves techniques or strategies that will take a number of years to accomplish.
So what does a corporate fiduciary offer to navigate these situations? Here are a few factors to consider.
1. A corporate fiduciary is not influenced by sensitive family issues or past experiences.
One of the benefits of naming an individual as a fiduciary — the fact that she knows the family — may also be a detriment. A fiduciary has an obligation to be unbiased and objective. An individual serving in this role may have difficulty being unbiased as she deals with the beneficiaries because of their past personal history, whereas a corporate fiduciary will make necessary and critical decisions free of these biases.
2. A corporate fiduciary has the expertise and the experience to fulfill its duties.
A corporate fiduciary understands the various facets of fulfilling its duties. It is apprised of current tax laws. It knows how to manage investments. It understands how to invest to meet the various, and many times competing, interests of the beneficiaries of a trust. It has dealt with complex assets, such as retirement accounts, closely held businesses and real estate. Furthermore, a corporate fiduciary has experience interpreting legal documents, preparing accountings and working through complex family situations. An individual serving as a fiduciary can often unintentionally breach his duty simply because he may not understand the particulars of the duties of a fiduciary or may not even understand what resources he even needs.
3. A corporate fiduciary has the systems and infrastructure in place to fulfill its responsibilities as a fiduciary.
Not only does a corporate fiduciary understand the various components of effectively serving in a fiduciary role, but it also has a professional practice comprising the necessary people and systems to best accomplish its duties. If an individual is named, the person may not readily have available the resources she needs to properly fulfill her role, which often leads to inefficiencies and possible liability on her part.
4. A corporate fiduciary will exist beyond the natural lives (and health) of people.
If the effective implementation of an estate plan requires a fiduciary to serve for many years, as in a multigenerational family trust, a corporate fiduciary offers a higher probability of being able to serve from beginning to the end of the strategy. An individual, depending on his age and health, may not be able to serve through a full term of service, thus requiring a new fiduciary to step in midway through the life of a trust. While the employees of a corporate fiduciary may change over the same span of years, having an organization in this role brings continuity to the office of the fiduciary that an individual may not offer.
Even the most detailed, specific estate plan may fail in its implementation if the appointed fiduciary does not properly fulfill its responsibilities, either intentionally or unintentionally. Utilizing a corporate fiduciary may be the best way to ensure a client’s estate planning goals and expectations are accomplished.
Take the next step:
If you’d like to discuss in more detail the benefits of having Argent serve as your corporate trustee, give me a call at (615) 599-9863 or call our main number at (800) 375-4646 to talk to one of our many expert trust professionals. We look forward to hearing from you.
