Should you appoint a professional to handle your trust or estate? A crucial part of estate planning is selecting the right individual to make decisions for you when you are unable to, whether due to your death or incapacity. This may be under your trust, will or powers of attorney for financial or health care decisions. It is a major responsibility—it can be time-consuming, difficult, and stressful. You need someone you can trust who will honor your wishes.
Why a Professional Trustee?
The common belief is that family member or close friend should act as trustee of a family trust. However, there may be reasons to appoint professionals instead, such as:
- There are not any suitable options among their circle of family or friends,
- You prefer not to burden your families or friends with that responsibility,
- There may be potential disagreements among your family or friends, or
- The complexity of your situation may warrant the use of a professional.
Corporate Trustee vs. Licensed Fiduciary
Once you determine to appoint a professional trustee, the next question is which type of professional you prefer. In Arizona, there are corporate professionals, such as banks or trust companies, and there are licensed fiduciaries, who are private individuals regulated by the Arizona Supreme Court. Which type is best for you depends on your preferences. Here are a few distinctions between the two options that may help you decide:
|Distinctions||Corporate Trustee||Licensed Fiduciary|
|Regulation (in addition to their removal by you, your beneficiaries, or a court)||Ongoing oversight by Federal and State agencies and regulations||Arizona Supreme Court; complaints heard by a Fiduciary Board.|
|Fees||Flat fee based on percentage of assets under their management, and may be additional fees for irregular services||Hourly|
|Personal||Nationally-based trustees may have different departments to handle different tasks or be more removed from the situation because they are located in another state||Usually fewer individuals involved; able to provide personal attention and in-person observations.|
|Response time||Sometimes review committees and more regulatory hoops to jump through may delay response time||Few or no others to approve decisions may mean faster response time.|
|Roles||May be limited – some only manage trust property and investments (perhaps only within their financial institution); others are also able to act as agent under power of attorney (manage IRAs/401ks, credit cards, other obligations) or to probate an estate||Can handle all roles, including trustee, powers of attorney, probate of estate, etc. No limitations with whom they invest.|
|Succession||Corporate trustees do not retire or are less likely to go out of business.||May retire or go out of business; however they should have a succession plan for another fiduciary to take over their practice.|
These distinctions are general and may not apply to all corporate trustees or licensed fiduciaries.
We are happy to discuss this with you further or to help you weigh your options with your unique situation and preferences. Contact us today to schedule a consultation.