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How to Navigate Your Role as a Trustee or Executor

For many years, we advised a hard-working couple, the Smiths, who had, over many decades, come to own several small LLCs, multiple real estate holdings, and a range of investment accounts. Despite their prodigious balance sheet, they did not see themselves as high-net-worth individuals, though they had been more successful than they had ever hoped. As part of their estate plan, we, in collaboration with their lawyers, established two different trusts in order to ensure that their assets would be distributed according to their wishes. Like many people, they designated a child to serve as their trustee. And they chose well. Their son, Michael, was responsible, committed, and diligent, and he was honored that his parents selected him for the role. He was eager to help his family members benefit from their good fortune.

However, when the couple passed away within a year of one another, Michael discovered that he had little practical preparation for his new role. He needed to change legal ownership of multiple accounts and vehicles, and he was facing several important decisions about initial disbursements. Michael did not have much direct experience with the entities he was now responsible for. His own financial situation was still relatively straightforward, and his parents had never talked to him that much about their financial accounts. Plus he still had his own life to attend to—including a career, a spouse, and three teenage daughters to care for.

I can still recall phone calls with Michael that stretched late into the evening, as I walked him through the accounting requirements of a trust, helped him complete legal documents, and laid out some of the decisions he needed to make. He was as dedicated to his role as time would allow. But he did not have a burning desire to learn the complexities of estate law or the ins-and-outs of real estate titling. He wanted to make sure his parents’ wishes were fulfilled, but he did not want to spend so much time on paperwork and bureaucracy.

Planning for Wealth Transfer and Stewardship

A lasting legacy is an achievement that you should be tremendously proud of. It creates opportunities for loved ones and enables charitable gifts that can support important causes for years. But passing on wealth also means new responsibilities, new decisions to be made, and a series of administrative tasks to execute.

While some beneficiaries are well prepared for their new roles, many—like Michael—are not. We created Truepoint Fiduciary Services to answer our clients’ requests for more hands-on help with wealth transition and stewardship. We assist clients with a range of detailed, complex, and repeatable tasks, including retitling inherited assets; combining and streamlining funds and accounts; providing accounting, record-keeping, and reporting services; and handling disbursements and payments.

How to Select a Trustee

A trust is often the appropriate vehicle for clients with multi-generational wealth. It enables you to pass wealth on to individuals and institutions, provides multiple tax-savings opportunities, and gives you flexibility and authority over your assets. But trusts have administrative responsibilities that your family members may be unaware of. Because trusts are separate legal entities, they must follow specific administrative, accounting, and reporting requirements. So although a trust might be the right fit for your assets, your financial plan, and your beneficiaries, it may entail a set of administrative responsibilities. This shouldn’t dissuade you from a trust; it simply means you should consider how to structure your estate plan so that your goals are achieved and your family members benefit.

You can choose an individual or a third-party to administer your trust. Either approach has distinct advantages and drawbacks, and like most aspects of estate planning, the right strategy depends on your situation. Regardless of your trustee arrangement, Truepoint can help you and your beneficiaries every step of the way, so that you can focus on the goals of the trust, not its administrative requirements.

Individual trustee: Most people traditionally choose an individual, often a surviving spouse then a child, to serve as their trustee. The advantage to this approach is that the person often knows you well and deeply understands your values, your family dynamics, and your vision. They are usually personally motivated to see your wishes carried out and want the family as a whole to succeed. They see the role of trustee as a calling, not a job. As a result, they often do not charge a fee for their trustee services. This does not mean, however, that there are not costs associated with appointing an individual trustee. In practice, individual trustees frequently must confer with experienced professionals, such as lawyers, accountants, and investment advisors. So, although the individual trustee does not collect a fee, there are still costs associated with administering the trust.

Corporate trustee: Another option is to appoint a company as your trustee. An advantage of this approach is that a group of professionals, typically well versed in legal, accounting, and reporting processes, are responsible for trust administration. Companies also have the necessary resources at their disposal, including support staff, technology and tools, and office space, which individuals are often lacking. While a corporate trustee cannot have the same personal investment as a family member, this can have its upsides, too. For example, if a favorite nephew claims that his trip to Bermuda should qualify as an “educational cost” covered by the trust, a fellow family member does not have to deny his request. The corporate trustee can make that judgment instead. A corporate trustee can make decisions more objectively and consistently, ensuring that the plan is carried out according to your wishes.

How Truepoint Plays a Role

For three decades, we have helped wealth creators, business owners, entrepreneurs, and philanthropists—and their family members—as they transfer wealth from one generation to the next. Because we provide a full suite of integrated services to our clients, our estate planning team works side-by-side with our tax, investment, and financial planning teams every day. This regular collaboration makes our trust administration services more efficient and effective than a siloed approach. We don’t need to track down the accountant who prepared a certain year’s tax filing. We don’t have to contract with an outside attorney to consult on specific legal filings. We can hit the ground running, execute efficiently, and resolve issues before they become barriers.

Estate administration is truly a coordinated function. It requires an in-depth knowledge of not only legal structures, but investment strategies, accounting techniques, and financial planning. More than this, it requires knowing you, our client. We listen and learn—to what you aspire for, what drives you, and what you value. We are able to provide personalized trust administration services because we see each client as a distinct individual, and we know from experience that there is no such thing as a one-size-fits-all approach to your legacy.

Creating the right estate plan takes time, consideration, and care. And through it, dreams can be realized and purposes fulfilled for generations to come. Yet the plan only lays a foundation. It must also be executed appropriately, efficiently, and with integrity. The right guidance should give you peace of mind not only that your wealth will grow and thrive over time, but that your beneficiaries will, too.

Truepoint Wealth Counsel is a fee-only Registered Investment Adviser (RIA). Registration as an adviser does not connote a specific level of skill or training. More detail, including forms ADV Part 2A & Form CRS filed with the SEC, can be found at TruepointWealth.com. Neither the information, nor any opinion expressed, is to be construed as personalized investment, tax or legal advice. The accuracy and completeness of information presented from third-party sources cannot be guaranteed.

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