The concept of “estate planning” is more than simply determining what family member may “inherit” a coin collection or ensuring that whatever money may be remaining after your death is split evenly among your children. It is much more complex; requiring both education and professional legal assistance to do properly.
While this article is not meant to provide a comprehensive examination of all the different types of estate planning documents or provide any sort of legal advice, it is meant to provide some insight and education from my experience as an attorney and trust officer so you can make your own conclusion about who to name in certain fiduciary roles as part of your estate plan.
What is a fiduciary?
In short, a fiduciary is a person or entity that has not only the power, but the affirmative duty, to act on behalf, and in the best interest of, another individual, trust, or estate. In the context of estate planning, there are a few different types of fiduciaries commonly appointed: an executor is named in your will and is charged with properly administering your estate; a trustee is named by a trust (or in a will) and has the duty to properly administer a specific trust; and an agent is appointed through a power of attorney document and is responsible for acting on your behalf with respect to a great number of specific personal activities (typically dealing with your personal finances).
Who should be named in these roles?
When working as an attorney, I received this question countless times when drafting estate planning documents for my clients. I always explained the answer to that question is specific to you and you alone. You can name an individual you trust or a corporate fiduciary (i.e. a bank or trust company).
Clients would frequently come prepared with the names of individuals they trust and whom they wanted to name as their executor, trustee, and/or agent; whether it be a brother who is a CPA, their friend who is an attorney, or even mixing/matching/splitting these roles among their children. While these individuals may do a fine job, naming an individual comes with its own very significant perils that need to be considered, including:
-Individuals do not typically have an understanding of trust/estate law, federal and state tax implications, investment duties, or how to interpret legal documents.
-Individuals may not properly document distribution decisions or have a process for making such decisions.
-An individual may not fully comprehend the personal financial liability for acting as trustee which may not even come to light for many years.
-Individuals are typically entitled to take their own fees for acting in a fiduciary capacity with no oversight and would likely hire a separate investment company to invest estate/trust funds resulting in even more cumulative fees.
-Finally, individuals are able to be influenced and coerced by beneficiaries into making poor decisions, or they are put in a very difficult personal positions when there are disagreements between beneficiaries.
That being said, it was very rare that I suggested the use of a corporate fiduciary, simply because I was not properly educated on the true benefits they provided. Many estate planning attorneys assume that a client’s estate/trust is not large enough for a trust company to agree to serve. Or they are concerned about high fees, and a lack of personal attention and communication. While this remains true for some banks or trust companies, there are other banks and trust companies, such as Univest Bank and Trust Co., that are much more accommodating to every-day clients.
Naming the right corporate fiduciary not only alleviates all of the above-mentioned dangers it also provides a higher degree of accountability, compliance and expertise. A corporate fiduciary also provides continuity for the beneficiaries and serves as a neutral third party able to make objective decisions.
Univest Bank and Trust Co. is able to serve in any of these fiduciary roles, and has been for more than 140 years. Providing the personal attention and service that you or beneficiaries need is a top priority. If you are interested in speaking with Univest Bank and Trust Co. regarding the benefits of utilizing our fiduciary services as part of your estate plan, please reach out to us at 215-721-2414.
Investments offered by Univest Bank and Trust Co.’s Trust Division are not insured by the FDIC or any federal government agency, are not a deposit or other obligation of or guaranteed by the depository institution, and are subject to risks, including the possible loss of principal amount invested.