Choosing Your Executor or Trustee

Published: April 10, 2017

Your life rarely stands still. Marriage, children, and other events directly impact your financial life. You may need to update your will, establish new trusts, or dissolve estate vehicles that no longer address your goals or intentions. Experts typically recommend reviewing your estate plan every few years or whenever there is a change in your personal or financial circumstances or a change in the law that may affect your plan.

One of the most important decisions you will ever make is deciding whom to appoint as your executor and/or trustee. After all, these are the people and entities that you depend on to administer and distribute your assets according to your wishes. There are typically two types of executors/trustees that people consider. An individual executor/trustee is usually someone you are close to personally and often receives no compensation for his or her services. This may be a family member, close friend or trusted business colleague or partner. An institutional or corporate executor/trustee is an entity, often a lawyer, bank or trust company, with expertise and experience in trust and estate administration that receives payment for serving as executor or trustee. 

An (E)state of Mind
Your executor has the task of administering your estate through probate. Some of the responsibilities involved may include identifying, locating and inventorying assets, addressing any claims for or against the estate, paying taxes, and, of course, ensuring the distribution of assets to the beneficiaries according to your will. Estates can range from simple to extremely complex, and the time commitment required to deal with all aspects of the administration can be significant. So how do you choose an executor (or executors) and should they be personal or institutional? First, whomever you choose should, in your view:

  • Have a high level of financial responsibility, as well as being stable and trustworthy
  • Be able to commit the time as there may be a good deal of paperwork, questions and other tasks involved
  • Use common sense, particularly if it is a personal executor, knowing when to involve the experts
  • Be someone you think will be available for quite a while as estate settlement takes time; as we get older, choosing an age contemporary may not be the wisest choice

 

Your Trusted Trustee
Your trustee is likely to be needed for a much longer period of time than your executor.  Estates are generally settled within a few years, whereas a trust may be in existence for decades or even longer. Fulfilling the duties of a trustee may require a certain level of expertise in the areas of managing assets, bill paying, filing regular accounting statements and distributing assets according to the terms and timing of the trust. 

If you do choose a personal executor or trustee, it can be a delicate decision. While your inclination may be to select the oldest child or your spouse, this may not always be the best choice. Consider carefully who may be the most mature, effective and objective in helping to ensure that your wishes are met, even if this means selecting an executor or trustee that may not seem to be the obvious choice. 

 

Diversifying your Choices
Some people choose to have more than one executor or trustee, and sometimes they choose a mix of personal and corporate to benefit from the strengths of both approaches. What you decide to do will depend on your personal situation and preferences, as well as the complexity of your will and trust structures. It is also important to designate a successor executor and trustee, in case something happens to your primary choices. This is especially important with trusts to ensure longevity, which is why many individuals who choose a family trustee as primary, choose an institutional trustee as successor. 

These decisions can be difficult to make, as they can involve a high level of emotion combined with the strong wish to ensure the future of our loved ones. Klingenstein Fields Advisors welcomes the opportunity to meet with you and discuss trust and planning strategies and considerations that may be appropriate for your unique circumstances. For more information or to arrange a meeting, please contact us at (212) 492-7000 or info@klingenstein.com

Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.