Regardless of whether you use Revocable Living Trusts, Wills, and Powers of Attorney to accomplish your estate planning, a key decision is who to trust to make your financial and medical decisions.
The person who makes your medical decisions is your medical power of attorney. The person who makes your financial decisions is either your trustee or financial power of attorney and who handles the estate when you die is the executor. Generally, to avoid court interference, we vest all of these individuals with broad discretion to handle you or your estate’s affairs without court oversight. It sounds entirely positive to avoid court oversight, and legal expenses to go with it, in drafting an estate plan. However, by granting broad discretion to a person, you have to ask yourself “who do you trust?” If there is a family member who is trusted? Your spouse, responsible child, or benevolent uncle are often ideal choices. They will serve you and your estate selflessly and usually without expense, but many lack some close family member they can trust.
The main alternative is to appoint a trust department of a major financial institution. Obviously, they want to be paid for their services, and they perform their services based on their interpretation of their legal obligations and the documents drafted, not based on family history or personal relationships. Which is better for you?
If you do not know a family member or other individual to trust, the only sensible alternative is a corporate trustee. You may not trust them either, but a trust department has procedures and oversight to assure proper handling of the trusts. Believe me, trust departments hate to be sued. Yes, a trust department will charge a fee, which may not be that much more than professional management of investable assets. But regardless, with few exceptions, trust departments follow the law, do their job diligently, and without complaint.
So, while a family member or other trusted individual may be your first choice, where there is no trust, no trust should be given. You cannot make someone you do not trust the trustee of your financial affairs.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
