by Buddy Thomas
If you are like many families today, you probably have a living trust as a keystone of your estate plan. It is also likely you named you and your spouse as co-trustees. In doing so, you took on the formal role of trust fiduciaries.
However, because your trust is revocable (living), you have almost unlimited flexibility to do whatever you want with the trust assets while you are both alive.
As family leaders, you are also moral and ethical family fiduciaries; a self-imposed responsibility to act in the best interest of your family members and your family unit. Your guidelines are your family values and the social mores you have grown to accept…which can also change with time.
Even with all this flexibility, as family fiduciaries you are in a difficult position with dual accountability to both your family, and the terms of your trust. Though relatively simple at first, keeping a balance between family dynamics and family money becomes more and more a concern as your family and family wealth grows in size and complexity.
From a practical standpoint like most people, you just don’t put that much thought into it because, after all, you can change your mind and modify things to meet your changing needs. Even when you do think about it, there is no family fiduciary guidebook or training to fall back on beyond your own life experiences and those of the few people you trust.
This all makes it perfectly normal and customary to go with your gut feeling and do whatever you think is right when faced with any major decisions and potential conflicting interests.
But this informality changes when you become successor trustee after your spouse dies.
Typically half of your joint estate will then be earmarked to an unchangeable, irrevocable trust (often called a B Trust). Due to the nature of trust law, your fiduciary responsibilities then become much more stringent and the scope of your options much more limited.
To give you an idea of how complicated things get, a major West Coast trust company published a list of trustee duties that includes eight major categories and 24 different tasks that must be completed in order to be compliant…and the list is not all inclusive.
To make matters even more onerous, family dynamics also change with the death of a spouse. Whatever contribution your spouse made to the emotional, intellectual and political balance of the family is also gone…and it is up to you to carry on.
Here are just a few of the many questions you may face:
- What are my obligations as both family fiduciary and trust fiduciary?
- Where can I turn to get help organizing everything in a way that is legally compliant and also in my best interest of that of my family?
- How can I provide an ongoing forum for family member engagement, discussion, decision-making, and conflict resolution?
- When will I know if someone is overstepping their boundaries and what to do about it?
- Who can I trust and depend upon to assist me in this challenging unfamiliar role?
Successor trustee is a big job, and most family members who inherit it don’t know what they are getting into; even those who do, rarely have the training and expertise necessary to go it alone without making serious and costly mistakes.
Aiding and supporting trustees and family fiduciaries are among the primary reasons people have a family office: an experienced staff, comprehensive systems, and the resources to facilitate the role. A place you can turn to for context, clarity, guidance, and confidence when facing difficult family dynamic and challenging trustee issues and decisions.
Buddy Thomas is Founder and Chief Planning Officer of Superior Planning. He can be reached at buddy@superplan.com
