What is a Fiduciary?

When you create a trust or a power of attorney, you have to choose a person or entity to act on your behalf – your “agent” or “trustee,” depending upon the document. More generally, these people are called your “fiduciaries” because they have a fiduciary duty to you or your beneficiaries to act only in your best interest. Typically, a fiduciary’s duty involves managing money properly and making sound financial decisions. Choosing your fiduciary is a very important decision because they have significant power and control over your assets upon assuming their position.

A poor fiduciary may mismanage money, cause delays and extra fees, or even steal from you. While your fiduciary is liable for any mistakes made during the course of their duties, we want to avoid such a situation in your estate plan in the first place. A good fiduciary will manage your family’s expectations, pay valid bills promptly, coordinate with your financial planner, CPA, and other members of your financial team, make prudent investments, and safeguard your assets.

TuckerAllen is now offering fiduciary services, so that we may act as your fiduciary in a will, trust, or financial power of attorney in order to carry out your wishes.

Why Have a Corporate Trustee?

An important part of drafting a trust is picking a successor trustee. As the Grantor or creator of your trust, you will typically serve as the initial trustee until you pass away or lose capacity. At that point, your successor trustee will be responsible for administering your trust. Trust administration involves several responsibilities, including protecting, liquidating, and distributing assets in your trust, as well as paying any taxes and managing creditor claims. You should choose a successor trustee who you can trust to administer your estate correctly and efficiently.

Most of our clients will choose a family member or close friend as their successor trustee. If your family members are responsible and generally get along, you have uncomplicated assets, and you have a simple estate plan, choosing a family member or a close friend to administer your trust may be the best option for you.

However, for some people, choosing a corporate trustee like TuckerAllen to act as a fiduciary is the best option for their estate planning needs. The following are examples of situations where a corporate trustee may be in your best interest:

Special Needs Beneficiary

If you have a beneficiary who is or will likely be on government needs-based benefits like Medicaid or SSI, you need to have a Trustee who is well-versed in that area of the law. This is essential to prevent against a well-meaning misstep by a trustee which could disqualify your beneficiary from their current aid, or worse yet, have his or her inheritance taken by the government for reimbursement of prior care.

Contentious or Blended Family

Unfortunately, sometimes you need to protect your beneficiaries from each other. If you believe there is any possibility of your beneficiaries disagreeing over your estate, if you have a blended family, or if you have beneficiaries with large personalities who may cause tension, a neutral third party who cannot be swayed by either side may be a good option.

Large Estate

Money and assets from large estates can often be passed down to multiple beneficiaries, spanning generations, for years after you pass away, and the trustees you name will be responsible for administering any continuing trusts you create with those distributions. If you have a large estate, choosing a corporate trustee to administer your legacy trusts may be advantageous to ensure continuity and proper asset management.

No Suitable Family or Friends

You may have no close or trustworthy family members, no reliable friends you wish to burden, or maybe your only living family members are the same age as you. In any of these situations, we can take on the role of successor trustee and handle administering the trust for you.

Irrevocable Trusts

You may have a special type of trust, such as an Irrevocable Life Insurance Trust or asset protection trust, where you need a trustee who is not yourself or anyone you have control over or a relationship with. In these situations we can act as an independent trustee and exercise all the necessary powers and responsibilities to meet your goals behind this type of trust.

Why Have a Corporate Agent?

While successor trustees have control over trust assets after your death or incapacity, your agent under a power of attorney agents may have control over assets in your personal name while you are alive. Therefore, your power of attorney agent should be somebody you trust to manage your money responsibly for your benefit. This includes things like paying your bills, managing your retirement assets, selling your house, and handling medical bills.

You may consider a corporate agent if you have:

A Contentious or Blended Family

Whether they have good intentions or poor, sometimes family dynamics make a neutral third party the best option to handle your finances and prioritize your needs and those of those dependent upon you.

Large or Complex Assets

If you have many investments, rental properties, closely held business ownership, or significant assets, hiring a corporate agent to be your power of attorney and work with your team of financial experts, like your financial advisor and CPA, is a good idea to ensure your complex situation is handled properly. We can make sure businesses run smoothly, rental income continues to flow, and any plans for annual gift tax exclusions are executed.

No Suitable Family or Friends

You may have no close or trustworthy family members, no reliable friends you wish to burden, or maybe your only living family members are out of the state or out of the country. In any of these situations, we can take on the role of your agent when need help.

Needs Where Timing & Correctness Are Essential

If you choose a law firm or corporation to serve as your agent, you guarantee somebody will be available to handle your finances in case of emergency. Law firms and corporations have multiple people on staff whose job is to handle your needs. You are not relying upon someone who has a full time job, a family, and other obligations to make time for your needs on top of their own. Instead, you get a professional who is trained and prepared to handle your needs as part of their job.

How Corporate Fiduciaries Work

In many situations TuckerAllen will be happy to serve as your corporate trustee or agent under a financial power of attorney. We will discuss your estate plan, family situation, and assets to make sure we are a good fit for one another.

When drafting your estate planning documents, we simply have you nominate TuckerAllen or its attorneys to serve as your trustee or agent. We can serve as your initial agent or trustee, or we can be your last resort if the family member or friend you listed cannot serve. If and when we are called to serve, we step in and begin administering your trust or acting under your power of attorney.

Individuals who serve as your successor trustee are entitled to “reasonable compensation,” which is usually 0.75% of the net value of the trust. Most corporate trustees will charge 1-3% of your net trust value per year while serving. Most corporate trustees will also charge a minimum fee, anywhere between $5,000-$25,000 per year. Oftentimes we are able to offer our services at a much lower rate than other corporate fiduciaries, since we have prepared your documents ourselves and are familiar with your situation.

Generally, we do not prepare powers of attorney that allow for an individual agent to receive compensation for assisting you with your finances, given the heightened potential for financial abuse. They can receive reimbursement for any fees they pay on your behalf, and can receive milage for transporting you, but their time is unpaid. When we act as Agent we must be compensated for our time, but we are licensed, insured, and trained to ensure your finances are properly used for your benefit.

Fiduciary Services