Sometimes you may have more than one person in mind to help with the administration of your estate. For example, one person may be very good with numbers but not have much time to devote to estate administration, while another may have ample time but be terrified of preparing accountings or tax returns. Perhaps you have two children and fear that one will resent the other if you designate one but not the other. A possible resolution is to appoint them as joint administrators of your estate.
There’s no limit on how many people can jointly administer your estate, although at a certain point, a saying comes to mind: “Too many cooks spoil the broth.” Don’t unnecessarily complicate the administration of your will or trust by appointing a panel of administrators. Also, as hard as it is to find a trustee or personal representative who is both qualified and willing, the more people you add, the more likely it is that you will end up including somebody who is not an appropriate choice.
The biggest concern in appointing more than one person as trustee or personal representative is that conflict will occur.
Even if you’re sure that your choices will get along, include a mechanism for dispute resolution. Your dispute resolution mechanism may involve assigning tie-breaking authority to one person, providing for mediation or arbitration, or even tossing a coin or drawing the high card from a deck of cards.
One factor you may have in mind when choosing a trustee or personal representative is whether she’ll work for free. That expectation may be reasonable if your trustee or personal representative is a primary beneficiary of your estate or if your estate is simple. But working for free is otherwise a lot to ask of somebody. For a larger or more complicated estate, either task can become a part-time job and in some cases a full-time job. Compensation makes it much less likely that your trustee or personal representative will resent the job or will resign when she realizes just how much work is involved.
Choosing a successor
It takes two, baby. Or more. Your first choice as personal representative or trustee may not be able to fulfill that role for many reasons:
Your first choice may become ill or die.
Completing the tasks involved may take more time and effort than your first choice is willing or able to give.
Despite your prior discussions, your first choice may simply change her mind and decline the appointment.
Your first choice may not be sufficiently competent or capable and may have to be replaced by a court.
By designating a successor (or more than one successor), your trust or estate will continue to be managed by somebody you choose.
If the person you chose as trustee or personal representative becomes unwilling or unable to serve, unless you have designated a successor, the probate court will choose somebody to take over the job. The person appointed may be a complete stranger who has no familiarity with your goals and wishes and will charge fees that may significantly exceed what a friend or relative would agree to accept.
Discussing your estate plan with your helpers
After you have chosen your trustee, personal representative, and successors, you need to make sure they understand your wishes. You should sit down with them and have a conversation about your estate plan and goals.
Go over your will or trust and explain what each provision means. Encourage your helper to ask questions.
Finding Professionals to Assist You
The more complicated your estate plan, the more likely it is that you will require assistance when preparing and implementing your plan. Common situations in which professional assistance is recommended include
You’re planning for business succession.
You’re using estate tax avoidance strategies.
You’re doing estate planning for second marriages.
You’re leaving assets to a disabled heir who receives public assistance.
You’re disinheriting an heir.
If you’re doing anything unconventional with your assets within the state of Louisiana, you can easily run afoul of that state’s forced heirship laws. You should consult a lawyer to make sure that your estate plan is properly formulated and that it will be upheld by a court.
Getting help from a lawyer
Your first task in getting help from a lawyer is finding a responsible estate planning lawyer. Your ideal lawyer will be experienced not only with planning estates but also with planning estates that are similar to yours. Similarity goes beyond size and extends to similarity of assets. If you have a small business, you need a lawyer familiar with business succession issues. If you’re on your second marriage, need to create a special needs trust for a disabled child, or want to disinherit an heir, seek a lawyer who is experienced with those issues. You may want a lawyer who has
probate experience and whose estate planning documents have stood up in probate court.
Easier said than done? Certainly. You won’t find that type of detail from a Yellow Pages ad, and if you call a law office and ask, you’re almost certain to hear that the lawyer you have contacted has qualifications that far exceed your needs (whether or not that is true). So what do you do? Try to get referrals from people you know who have hired estate planning lawyers. If you have an accountant you trust, request a referral. You can also interview members of the American College of Trust and Estate Counsel (ACTEC), using its online directory (available at www.actec.org).
Hiring an accountant
Just as when you hire a lawyer, referrals are very useful when you need to hire an accountant.
Your friends, family, business associates, and your lawyer may have suggestions. You can also consult your state’s CPA Association. You can find a directory of CPA Associations on The American Institute of Certified Public Accountants website at
www.aicpa.org/states/stmap.htm.
When you have selected some possible CPAs, you should interview them. Questions to ask include
How long have you been in practice?
What are your qualifications and credentials?
What is your experience with situations like mine?
Do you specialize in servicing people with situations like mine?
Will you personally handle my needs, or will the work be performed by somebody else within your office?
How much do you charge, and does that price include all costs and fees?
What services will I receive for that payment?
When you choose an accountant, consider the condition of the accountant’s offices. Are they neat and organized? That’s what you should expect. You can also rely on your instincts. Do you trust the accountant and feel comfortable with the idea of working with the accountant? If not, it’s a big world. You have a lot of other accountants to choose from.
Using professional trust services (institutional trustees)
Your first thought upon hearing the words institutional trustee is probably, “that sounds expensive.” The most common institutional trustees are banks, brokerages, lawyers, and trust companies. They typically charge annual fees between 1 and 3 percent of the value of the trust.
An institutional trustee is thus likely to charge more than a friend or relative who serves as trustee, and you can’t expect that an institutional trustee will waive its fees. Unless your trust is valued at
$400,000 or more, using an institutional trustee is probably not financially prudent. In fact, many institutional trustees will decline to service smaller estates.
Using an institutional trustee provides the benefit that your trustee is likely to be in operation for the entire life of the trust. At the same time, responsibility for your trust may be handed off from
employee to employee, due to staffing changes or employee turnover. You should inquire about continuity issues when you interview potential trustees.
You should consider having the trust periodically reviewed by a third party, to make sure that assets are being properly invested and maintained. This review adds an additional cost to your trust but helps protect your heirs from mistakes or misconduct. Your institutional trustee should carry insurance to protect you from losses resulting from any such problems.
An institutional trustee is likely to be objective when managing your estate. Except as clearly authorized by the trust, pleas from your children for the extra disbursement of funds will probably fall on deaf ears. An individual may be swayed by a family relationship or feelings of friendship.
Similarly, while your children may decide that it makes no difference whether they spend the money that they’re supposed to hold in trust for your grandchildren, your institutional trustee will do exactly what you instructed and make sure that your grandchildren receive your gift. Your
institutional trustee will also not go through a period of grieving after your death or shy away from recovering trust assets from your friends or relatives.