By Michael S. Teramoto, CTFA and Senior Trust Officer, BECU Trust Services
The importance of having an estate plan cannot be understated. But equally important is who you select to manage the implementation of your plan.An estate plan provides for the management and distribution of your assets upon your incapacity or death. If your plan is based on a will, you will need to name the Personal Representative who will be responsible for performing the necessary tasks required by the probate process. If your plan is based on a revocable trust, you will need to name the Successor Trustee to handle the responsibilities of the trust after you are no longer able to do so. Whether your estate plan is based on a will or a revocable trust, the proper administration of your plan should be a priority. Naming the right fiduciary to administer your estate plan can allow it to be properly implemented in a timely and efficient manner, while naming the wrong fiduciary can leave even a well-crafted plan in a mess. You owe it to yourself to ensure that you name a fiduciary that understands the requirements of the role and will do the job properly, providing you and your loved ones with the peace of mind you all desire. For many people, naming a corporate trustee might be the right choice for the administration of their estate plan for the following reasons:
Experience – Corporate trustees have an experienced team of professionals that are familiar with the administration of trusts and estates. They can handle the administration of a simple estate or trust, while also being familiar with the many problems that can arise. They have the resources that can be accessed to solve even the most challenging issues. They likely have experience working with unique assets, dealing with challenging beneficiaries and solving fiduciary, tax, and legal issues that may arise.
Perpetual Existence – You can count on a corporate trustee to be there when needed, now or many years into the future. There is no need to worry about the possibility that your named fiduciary may get sick, move away, or possibly die.
Unbiased Decisions – Naming a family member as a trustee could potentially create conflict within a family. Naming multiple family members as co-fiduciaries can create administrative complications. A corporate trustee is legally obligated to follow the terms of the will or trust in a fair and consistent manner. When a discretionary decision is needed, a team of experienced professionals, typically known as the Trust Administrative Committee, would make the decision, without the influence of family relationships.
Burden Elimination – Administering a trust or an estate is a job, it takes time and is not always enjoyable. Taking on this role could be a significant burden for the person you name as your fiduciary. If you don't want to be a burden to others during your lifetime, why would you want to be a burden to others after your death? It is possible the family member or friend who you've named may already have their hands full with a family to care for, a full-time job, and may not really want the burden of this responsibility.
Professional Investment Management – Many corporate trustees offer investment management services as part of their services. Being able to integrate trust administration with investment management of trust assets can result in a better outcome with improved investment performance that is the result of appropriate allocations based on the unique risk profile of the trust.
Regulatory Oversight – Corporate trustees are subject to state or federal regulators and may also have internal auditors. This oversight provides assurance that corporate trustees are performing their responsibilities in a sound manner in accordance with laws and regulations. Individuals serving as fiduciaries often have no oversight.
Liability – A single mistake by an inexperienced fiduciary can easily cost hundreds or thousands of dollars. Corporate trustees have procedures to prevent or minimize errors, but when an error does occur, insurance is in place to cover the potential loss. Individuals typically do not have any insurance to cover the cost of any mistakes they may make.
Cost and Efficiency – Naming a corporate trustee can be affordable. Fees typically are charged based on an hourly rate schedule or as a percentage of the value of the estate or trust. Timely administration can result in reduced legal, tax preparation, and other professional fees. Regardless of the method used to calculate fees, using the services of a corporate trustee can provide for a compelling value proposition for all the above reasons and more.
Do yourself and your loved ones a favor. Take a moment to consider whether your estate plan should include the services of a professional fiduciary. As a full-service corporate trustee, BECU Trust Services can provide you and your loved ones with the peace of mind that you need and want. And if you don't yet have an estate plan, now is the time to start the process.
BECU Trust Services is a full-service corporate fiduciary federally regulated by the Office of the Comptroller of the Currency.
Trust services provided by Members Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency. Trust and Investment products are not federally insured, are not obligations of or guaranteed by the credit union or any affiliated entity, involve investment risks, including the possible loss of principal. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant.