I Was Trustee for My Mom
And Now My Brother Won't Speak to Me
Story by Jacqueline Skay

"Our mom died six months ago and my sister who is the trustee still has done nothing about the trust. She won't even give the rest of us a copy. We're afraid she's spent all of mom's money. What can we do to make her get going on this?"

"I need to take my son's name off as successor trustee. He's getting a divorce and I don't think he'd be able to pay attention to my business if I needed him. But, my other son has never been good with money. I don't know who else to name."

"I named my accountant as successor trustee but he died. Then I named a friend from church and now she died. I'm beginning to feel like the Angel of Death."

These are just a few comments I've heard recently that illustrate one of the most critical issues we face every day in estate planning. Selection of someone else to handle your finances if you become incapacitated or die is a subject that deserves serious consideration. Traditionally, people name their oldest child to handle their affairs if they were unable. Sometimes, people want to name more than one child so they will keep each other honest. If your children were arguing about who broke which toys when they were little, it probably won't be any better today. Honest. Those old rivalries are still there. No matter how politely and civilly they try to handle it, there will come a time in the trust administration when it will all fall apart.

For example, one child is the trustee. He calls our office and tells us they have all agreed the house is to be sold. He says the realtor suggests they make some minor repairs before putting the house on the market. He says he has someone who can do most of the work cheap, thus saving the estate some money. Is that okay?

Long ago, we would have said yes. Now we know the next call will be from a beneficiary shouting, "Did you tell my brother it was okay to hire his dead beat son to do the house repairs?" Now we ask questions and we urge the trustee to use a licensed contractor with no familial relationship to the trustee.

Or, one child is trustee and she comes in for a meeting and tells us she is under tremendous pressure from her sister to receive an advance on her inheritance because (you can fill in the blanks here...her husband is ill, her business is failing, her son is starting college...).

When I was first in practice I rarely questioned my clients' choices of trustees and executors. As time has gone on I have seen over and over a myriad of problems created by choosing adult children as trustees and executors. Even if you only have one child and that child is your only heir, he or she may not be business savvy or may not have the time available to handle your affairs properly. Further, that child has a conflict because, on the one hand, he or she wants to see you receive the best care and quality of life possible. However, on the other hand, any money spent on you during your lifetime is that much less he or she will inherit. This can be a cause of real concern and guilt for the child as well as the obvious concern of the parent.

The point is, more often than not, you do not do children any favors by naming them as trustee or executor. There are other and better options: your accountant, a friend with a good business background, a private professional fiduciary, a trust company, a trust department of a bank are all options you should seriously consider. People often hesitate to name a professional fiduciary for fear the fees will be too high. The fact is, all trustees are entitled to "reasonable compensation" which is generally calculated at 1-2 percent of the gross estate, recalculated annually. I regularly have trustees start out saying they are not going to charge their family members trustee's fees. By the end, most have changed their minds because this is a huge and time-consuming responsibility with a lot of legal and accounting requirements. If you have named one or more of your children as trustees and executors and in your powers of attorney, I urge you to reconsider those choices.

Jacqueline M. Skay, Attorney at Law
701 Palomar Airport Road
Carlsbad, CA 92008

220 South Broadway
Escondido, CA 92025
(760) 745-7576

(Travel & Real Estate 2006)