A Fiduciary is someone responsible for acting in the best interest of others.

A Trustmaker is usually the trustee of their own trust, but if they decline to serve, become incapacitated or die then a successor trustee or fiduciary, needs to administer the trust. Being a trustee is not a privilege or an honor, it’s a very difficult job that most people are not qualified to do well.

Successor trustees have two major duties: Trust Administration and Asset Management, and high net worth estates require experienced fiduciaries to carry out these tasks.

When it comes to choosing successor trustees everyone has the same 3 choices:

  • Friends and Family – Adult children, siblings, relatives and friends
  • Corporate Trustees – Trust and Investment Companies and Bank Trust Departments
  • Private Fiduciaries – Licensed professional fiduciaries, CPAs and Attorneys

Friends and Family:

Friends and Family are fine for simple estates where the assets and planning are not too complex and everyone gets along, but emotions around money often run high so it can be problematic to name adult children as trustees over their parents and siblings, especially if they don’t get along, are not financially equal or one sibling has a history of behavioral or mental challenges. It is usually better to have a third party be the trustee so the siblings stay equal.

Corporate trustees:

Trust and Investment Companies and Bank Trust Departments are staffed by trust officers who manage assets and administer trusts. Corporate trustees are interchangeable which gives banks and trust companies perpetual life but no heart because trustees manage over 100 files and may be located in another city or state. Banks and trust companies charge management and trustee fees in addition to earning income from investing the trust assets. This is why banks and trust companies move all trust assets in-house to manage. This not only destroys any portfolio diversity the trustmakers had by not having all assets with one advisor, but it creates a conflict of interest between maximizing returns for the corporation versus spending assets for the benefit of trust beneficiaries.

Private fiduciaries:

Private fiduciaries are individuals licensed by the state of California to serve as trustees and agents, and include CPAs and attorneys. Private fiduciaries can provide much better service because they have fewer clients and have access to resources for family and legal issues that friends and family do not. Since private fiduciaries are not as attached to the family dynamic their objectivity helps maintain relationships with and between beneficiaries especially if mom and dad get sick and after they’re gone.

A local private fiduciary will give more personalized one to one service then will a corporate trustee sitting in an office hundreds of miles away.