As we wrap up our series during National Estate Planning Awareness Week, we are going to focus on your successor fiduciaries. These fiduciaries can wear many hats. If your main planning document is a will, you named a personal representative to serve. If you have a trust, you have named a successor trustee to serve on your behalf. If you have a power of attorney, you’ve named an agent to serve for you. A simple question, do you remember who you named? Do your selected fiduciaries know about their appointment?
It’s important to select the right person to serve on your behalf when you either can’t serve any longer, or for when you pass away. You need to select someone who is not only capable of handling the role, but who also has the time and desire to serve. It’s important to remember that these appointees are held to a fiduciary duty, one of the highest levels of responsibility (and liability) under the law. There are numerous state and federal laws governing these matters. In short, serving in one of these roles is very important, carries significant responsibility, and if things don’t go exactly as planned can carry potential legal obligations on the person you’ve named. Accordingly, you not only need to select the right person, you also need to let them know of their pending responsibility.
Nothing shows the weight of this ongoing responsibility more than serving as a trustee for an ongoing trust. For example, many plans create trusts that last for the beneficiary’s lifetime, or often assets stay in trust to benefit multiple generations. Doing so allows one to take advantage of the fact that such trust planning, properly drafted and administered, can protect trust assets from future estate taxes, potential creditors or even spendthrift beneficiaries. All great planning advantages, but they also lead to potential animosity.
Many people name their oldest or “most responsible” child/children, or a trusted friend, to serve in these roles. This can work fine, but it can also ramp up sibling rivalries and lead to problems, or even litigation. A recent article surveyed 640 civil suits involving trusts and found that 75% of the cases involved management of ongoing trusts, and one in four of those involved siblings as trustees being sued by their family members.[1]
Another common problem is naming a family friend or a colleague to serve as trustee. Perhaps the most famous case with this issue right now comes from the singer Jimmy Buffett’s trust plan. Jimmy Buffett passed away with an estimated $275 million estate. In his plan he set up a trust for his wife Jane, with Jane serving as a co-trustee of the trust along with his long-time accountant Richard Mozenter. Unfortunately, within a year of Jimmy’s death the co-trustees were suing each other for excessive fees, acting in self-interest, mismanagement of funds, and “openly hostile and adversarial” trust administration.
This isn’t to say that ongoing planning is a bad thing, or that having family or other individuals serving as trustee can’t work. But thoughtful consideration is necessary when you select a trustee. You must weigh not only whether your selection has the time and expertise to manage the trust but also think through unintended consequences like resentment or animosity from your beneficiaries with that person serving as trustee. Defaulting to the “oldest” or “smartest” or choosing someone based on your personal relationship may not lead to a trustee who has the capacity or capability to fulfill their fiduciary duty in the role.
While these decisions may be daunting, there is help available. Benjamin F. Edwards does not provide tax or legal advice, but we can help. For example, many look to “professional trustees” like trust companies to serve as an independent, non-biased fiduciary. At Edwards, we have relationships with professional trustees you could consider. These professional trustees can serve initially to make sure your legacy goals are implemented exactly the way you intended while relieving your family of these burdens. They also can partner with your selected individuals as a co-trustee to achieve your goals, or the professional trustee can be the “backstop” as the last listed fiduciary to provide a permanent solution should others be unable or unwilling to serve.
Why use a professional? Professional fiduciaries can:
- Relieve relatives and friends from legal liability
- Avoid or minimize the burden to an individual trustee to manage the paperwork and responsibility
- Maintain family harmony by being an objective decision maker
- Ensure prudent, professional investment management
- Provide permanence and stability
- Deliver services with a dedicated staff of trained specialists: investments, administration, taxation, legal, accounting, special assets, etc.
Take a moment to go back and review your fiduciary appointees. Make sure you have made the appropriate selections. Work with your financial advisor and your legal advisor to make sure your plans are solid. It will make for a smoother transition when the time comes.
[1] David Horton, Reid Kress Weisbord & Christopher J. Jyan, Jr. Trust Litigation, 104 Wash. U. L. Rev. 1 (2026)
IMPORTANT DISCLOSURES: This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards & Co. is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.
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