Choosing Your Executor or Trustee

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.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personal investment advice. KF Advisors is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. 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. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request or by clicking here. Please read the expanded disclosures in the linked report.