Being a trustee is a job

Dear Readers:

We’re going to step off of the beaten path of questions and answers and pay some attention to the questions that our clients and readers don’t always think to ask. Today, we are going to write about one of the biggest mistakes you can make in creating an estate plan - naming the wrong person as trustee or executor.

Many clients do not put much thought into it - some of the more traditional families tend to name the eldest male child as successor trustee. After all, he’s the prince of the family. 
We’ve learned the hard way that this isn’t always such a good idea.

The decision as to who your successor trustee (or executor if you just have a will) is critical. Being a trustee is a job. Some people are better at it than others. Some people can’t handle the responsibility or can’t really be trusted.

The job of a trustee is to manage a trust for the benefit of the beneficiaries, the people who will inherit your trust when you die. Selecting a trustee who doesn’t get along with the rest of the family, or one who isn’t very organized, or who can’t even manage his or her own money, is a recipe for disaster.

We have seen trustees (not our clients, mind you) pay out their shares while maintaining control of everyone else’s inheritance without authority. We have seen trustees fail to inform beneficiaries of the existence of a trust. We have seen trustees liquidate and distribute assets without providing any information at all to the beneficiaries other than giving them a check and claiming, incorrectly, that if the beneficiaries want an accounting, they’ll have to pay for it themselves.

You can imagine the effect of all of this. If there’s smoke, there’s fire. And there’s plenty of smoke when a trustee refuses to be informative and isn’t organized enough to even know for himself or herself what’s going on. The worst trustees are the ones who are both ignorant and arrogant. They believe they are correct in all things, when they are not, and they aren’t willing to listen. These are the trustees who create animosity in the family and who wind up getting sued.

Who should you pick as trustee? You want a trustee who is diplomatic - who tries to make nice with the beneficiaries and who won’t strike out against the beneficiaries who are not running on all cylinders. You want a trustee who is moderately organized. If one of your children is better at managing his or her own finances than the others, then that child may be a good candidate to be trustee. Finally, you want a trustee who is smart enough to understand that he or she can’t do it alone, if only because most people do not understand the legal requirements of managing a trust.

Len & Rosie

Looking for a needle in a hay stack

Dear Len & Rosie,

My wife’s father passed away recently and she and her siblings are not on best terms. They would like to see if there was a will but don’t know how to locate the executor. Her father had told her it was someone outside the family. How does one find out who the executor of a will is, and for that matter how does the executor find out someone has died?

Mark

Dear Mark,

You’re looking for a needle in a hay stack. Your father-in-law’s will, assuming he made one, could be anywhere. He could have named anybody as executor, but it’s more likely than not that he named one of his children, or maybe one of his friends. Ask them.

You also touched on the problem of an executor learning of the death. If the executor isn’t close to your father-in-law, how’s he or she going to know? Consider that your father-in-law’s executor may not actually know that he or she is named as executor in the will. Did your father-in-law even inform this person?

One place to check is with the local bar association where your father-in-law lived. They can send out an email to their member attorneys asking whether or not any of them made a will for your father-in-law.

You will likely have to undertake a morbid scavenger hunt. Your family will have to sort through your father-in-law’s belongings to see if there is a copy of a will lying around, or maybe even a canceled check made out to a local attorney. If you can’t find a will, then the estate will pass by intestate succession equally among your father-in-law’s children, with the share of an already deceased child passing to his or her living descendants, assuming he wasn’t survived by a spouse.

Any of the children may petition the court to be appointed as administrator of the estate, which means this could lead to a fight over who gets to be administrator.

This is a cautionary tale. Many people want to keep their estate plans confidential, but they should not be too secretive. Some of you may go so far as to make extra copies of your wills and trusts and pass them out to your children. If you don’t want to do that - if you wish to protect your privacy, then just give your children or other beneficiaries your attorney’s business card with a note telling them to contact the attorney upon your death or incapacity.

Len & Rosie