October 23, 2020

Tips for Successor Trustee Selection

When it comes to selecting the important role of a successor trustee, there are many factors and choices for one to consider. Family members and close friends are most often chosen to be the successor trustee. In the eyes of the trustor, this might be because it is an honor to be selected or because there is an expectation that it will be less expensive. This article explores some of the myths about selecting a family member or close friend as your successor trustee.

1. The person may simply not want the position. Typically, a trustor selects someone who is successful in life already—career, financial worth, solid family relationships, etc. That person’s life may already be full to the brim with commitments, especially if he or she is working, owns a business, has children or grandchildren who need significant attention and or resources. Most of the time, this person may not want to admit it or cause hurt feelings, but the reality is that he or she may be dreading his or her trust administration role.
2. In general, many trustors expect the trust administration work performed by a family member or friend will be free. However, any trustee may charge for their services and frequently the charge is a percentage similar to professional trustees, which is one percent. In addition, if this is not the trustee’s main work, he or she may be less efficient than a professional trustee, and he or she may need to engage the services of the attorney or outside resources for different types of guidance needed.
3. A family member or close friend knows all the family dynamics and history and this knowledge can prevent absolute objectivity and impartiality. In addition, the trustee is frequently a beneficiary, which may draw suspicions from other beneficiaries that the handling of affairs is biased, regardless of whether there is any truth in these suspicions or not.
4. There also may be sensitive issues that arise when handling trust administration. For example, assume the family home needs to be sold in order to distribute to the beneficiaries, but one of the children lives in the home, because he or she cared for the trustor while she was alive. Negotiating a move out can require a tremendous amount of sensitivity, as well as skills that may not be the forte of the family/friend trustee. Sometimes it is said that being a trustee requires social work and counseling, as well as the usual financial skills.
5. The nature of the assets may require special expertise that the family member or friend may not possess. In this case, they may have to rely more heavily on the attorney for assistance.

As a mother of six children of various ages, I am predisposed to want all my children to get along with each other.  In fact, I’d be very happy if they would all become best friends. Many parents share this feeling. However, the reality is that children in a family are all distinctly different individuals who have different strengths and weaknesses, and we know they will not always agree. After their parents are gone, this dynamic becomes more magnified and small hurts that occurred years ago, can become the basis for infighting in some families. Controlling this dynamic such that it does not destroy the estate plan, can become a challenge for the trustee.

Frequently, an independent professional trustee who acts rationally and without emotion, can move the trust administration process ahead more quickly, with less drama, and without any legal action. Again, as a parent, I identify with all parents who want to believe that after they have passed, the trust administration process will be smooth sailing and for many estates, it will be just that. For those of you who already know there may be friction, consider appointing an independent trustee.

We look forward to exploring various ways to support you during this time and please reach out to us at 949-200-9712 or info@hitchmanfiduciaries.com.

Author: Lee Ann Hitchman, CLPF/MBA and Licensed Professional Fiduciary