Choosing a Compassionate and Professional Fiduciary Over Family and Friends

Each year we ask, “How we can better serve our clients?”

As our company reflects on this, we find a common theme among a majority of the situations in which Northwest Trustee is appointed as Trustee or Personal Representative—being asked to “step-in” to assist or replace a family member or friend who was named to serve.

As we share a few stories of trusts and estates we’ve received, the risks of naming a family member or friend as Trustee or Personal Representative are highlighted. We hope these stories assist you in selecting the best fiduciary for your plans. 

When families have conflict, a trust often exacerbates that conflict.

In an all too familiar scenario, a mother and father named their daughter and son as co-trustees of several trusts and co-personal representatives in their wills upon their deaths. The siblings were empowered to make discretionary decisions about the distributions, but they carried anger and bitterness towards each other and could not agree on anything. To complicate matters, the assets included investments, lake property in another state, various boats, and valuable collections. The two children were entitled to equal shares of the assets, but didn’t agree on which specific assets they should receive or how they should be divided. Upon the death of both parents, and at the recommendation of an estate planning attorney, both children resigned and appointed us. Our role greatly reduced the families’ conflicts because both parties knew we were impartial in our approach and would serve them equally. 

Alternatively, instead of siblings acting in a “co-relationship,” we often see a “good” child appointed as Trustee or Personal Representative over a “wayward” brother or sister. Inevitably, one child may feel slighted and angry, causing discord, animosity, and fighting between family members. Parents could spare their children much angst and save significant legal fees by avoiding the simple mistake of naming an adult child as Professional Representative or as Trustee for another sibling with whom there are deep-seeded problems. 

Trust management takes time, expertise and often the named family or friend ultimately declines to serve or reluctantly serves. 

When a professional passed unexpectedly, her assets were titled in a trust where she was the trustee and a friend was her successor. The friend had a busy life, a full-time job and no experience in managing trusts or serving beneficiaries. She sought out a professional, resigned as Trustee, and appointed us as she felt we were a good fit to carry out her late friend’s wishes. We took over the management of her securities portfolio, several annuities, many bank accounts, as well as 11 rental properties with extensive maintenance needs. 

As Trustee, in our first year alone, we assisted two of the children with moving to better accommodations, acted as the trustee for a “special needs” trust, created a management plan for property maintenance and consolidated over ten separate investment and bank accounts. This long-term trust continued for the life of the deceased’s three children and grandchildren.

Complex asset management

A few years ago, we were brought into a situation where two trusts held extensive real estate, including forest land, timberland, pastureland and Native American reservation land. The liquid assets of the trusts were quickly diminishing
and insufficient to support the beneficiary — a widow living
in a nursing home. The issues were:

  • A grandson without fiduciary experience was named as the trustee;
  • No management plan was in place to manage the extensive real estate to cover the on-going medical and nursing costs of the widow; and 
  • A dozen heirs — all with fractional interests in each parcel of land did not have a plan in place. 

Without intervention and the appointment of a professional,
the widow could have been forced into a much less desirable and less competent facility. To remedy the situation:

  • The grandson was removed as fiduciary,
  • We were named as Trustee,
  • We sold a home to generate a cash reserve, and 
  • We obtained a written agreement among the heirs for an equitable property disposition after the widow passed away. 

A good trustee needs expertise to create cash flow budgets, manage real estate and communicate with all required parties throughout the process.

People believe that having a Corporate Trustee will mean they lose control, because they are unaware of the fiduciary relationship options. 

Oftentimes, estates are so large or complex that they require a great deal of management and expertise, yet the grantor does not want to lose control. Frequently, the client has extensive wealth and complex assets and may need assistance. Thus, running the risk of the assets being mismanaged and important administrative details being overlooked. This common problem can be overcome with an agency, co-trustee or directed trust agreement. We work together to simplify banking arrangements, create and implement a plan to reduce investment risk, distribute collectibles to family members, and review and pay all bills. The clients receive professional management and can maintain control.

The best choice

As these stories show, the “common” solution of naming a family member or a friend can turn out to be a costly solution.
In sharing these experiences, our goal is for you or your clients to:

  • Circumvent conflict within the family; 
  • Prevent unnecessary burden on a family member or friend;
  • Avoid loss of income (or principal) due to mismanagement of assets;
  • Avert legal expenses required to solve mistakes made
  • by family or friends; 
  • Protect the needs and interests of vulnerable loved ones; and
  • Provide peace of mind.

Equipped with over 30 years of experience, Northwest Trustee & Management Services provides hands-on, personalized services with the care and compassion of a family member or friend, while providing the expertise and knowledge of a professional fiduciary.  

If you or someone you know are in need of a neutral, third-party fiduciary in an estate plan, please contact us for a complementary consultation.

Published April, 2023