3 Considerations Before Choosing a Private Fiduciary

A private fiduciary is a person or institution who has the legal duty to act and manage your assets once you die or become incapacitated. While there are many different types of roles a professional trustee can play, they will always be the one to handle the accounting and bookkeeping of your estate.

Choosing who this person or institution is going to be is one of the most important decisions you are going to face when doing your estate planning. It is important that you consider the following to ensure you are making the right decision.

As always, if you have any questions about choosing a private fiduciary, please don’t hesitate to contact us.

Clients are often inclined to choose one of their children to serve in these roles based on birth order, gender, or geographical location.  These are generally not good criteria for selecting a fiduciary. Here are three things to consider when deciding who to name to fiduciary positions.

3 Considerations Before Choosing Your Fiduciary

1. Evaluate their Personality Traits

Since a fiduciary has the duty to act in good faith and fairness when dividing up your estate, you want to find someone who embodies good personality traits that point to their true objective. You want to be sure that who you choose as the private fiduciary of your trust, estate, or conservatorship is doing so legally, ethically, and accurately.

Look for someone who has all of the following character traits:

• Ethical
• Caring
• Organized
• Responsible
• Diplomatic
• Even-tempered
• Objective
• Diplomatic

2. Consider the Level of Experience

Ideally, those named as fiduciaries should also have a certain level of financial expertise – or at the very least have the ability to determine when a professional advisor is needed. We find that most of our clients enjoy working with our organization because we already have the expertise to take action in the event that your beneficiaries take your trustee to court. Unfortunately, since the family pressures and responsibilities are high, this is quite a common occurrence. When this happens, it is good to have that peace of mind that your family members have the expert support they need to solve the problems in the least painful way possible.

3. Longevity

In most cases, your trust will continue during the lives of your children and then your grandchildren, so you need to consider the longevity of your private fiduciary carefully. You may not want to name someone who is unlikely to outlive the term of the trust. Your trustee could also get hit by a bus which would require a successor trustee.

Ask yourself the following;

• How old is that person?
• How long will he or she be able to serve as Trustee competently?
• Who will serve when that person cannot?
• Will you give your children the right to appoint a successor Trustees?  
• If they fail to do so, how will your successor Trustee be appointed? 

Now, since there will always be unforeseen changes in the circumstances, we always recommend you build in flexibility into your trust. Some fairly simple steps could help ensure that you still decide who gets appointed next if any of these unlikely situations were to occur.

Making the Right Decision

Further considerations may also be needed if your estate includes a business, or multiple pieces of real estate, or a very large investment portfolio. These all contribute to the difficulty of the accounting and bookkeeping associated with your trust, requiring more expertise to manage correctly.

After careful consideration, most people choose an individual: a family member, close friend, trusted advisor such as a CPA firm like ours. Others choose an institution: a trust company or bank trust department.  For some family situations, a combination of individual and institutional fiduciaries makes the most sense for their situation.  

If you are not sure what is best for your family, we encourage you to contact us to help guide you to the right decision.

Click here to access our contact form.