Warning: Your Selection Does Matter
When creating an estate plan, especially in your will and/or trust, an important decision you must make is the selection of a fiduciary. A fiduciary is a fancy legal term for the person you select to take care of your property and assets if you are unable to do it for yourself. Examples of a fiduciary of your estate are the trustee of your trust or an attorney-in-fact under your power of attorney. Your first instinct might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best choice.
When naming a fiduciary, it is important that you trust this individual, which is why people often name family members. However, problems can arise when a parent with two or more children names one child as a fiduciary. I recently spoke on the issue of family harmony at an estate planning seminar and suggested a child is often not always the best fiduciary for several reasons:
- It is hard for a child to be completely objective.
- Children often disagree over many things, including how long the estate should take to complete, when to sell assets and at what price, and the process of dividing personal property.
- Children often don’t communicate with each other well.
An alternative is to hire a professional fiduciary. A professional fiduciary can be a bank or investment firm with trust administration experience, a certified public accountant, or a small trust company. A professional fiduciary will charge a fee, but the fee can be explained ahead of time. In addition, because a professional trustee is experienced in managing money and property, your assets are more likely to increase in value under this person’s or institution’s guidance.
To ensure that your family has some input, you can include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as a fiduciary.
For further information and advice in any estate planning matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Administration and Probate Attorney