Estate Planning is often challenging because there are so many issues to consider. We are often distracted by our fears of death, loss, and conflict. For more about what we are planning for, please see The Mystery of Estate Planning Revealed.
This post is more about the assumptions we make about our own family members, and how they will behave once our estate plan goes into action. We strongly recommend that you explore all of your options for who will serve as your successor trustee with your qualified estate planning attorney.
Natural Conflicts of Interest
It should be no surprise that your descendants have their own conflicts of interest where your wealth is concerned. As professional trustees, who serve as a neutral third party, we are never a beneficiary. We have seen the struggles for control amongst family members time, and time again. You may think your family is an exception, but to make sure you get the care you need as you age, and to be assured that your wishes will be followed after you pass, please read on.
The Only Child
You may have solved the question of “Who will be my successor trustee?” because you have just one child who will be your only beneficiary when you pass away. This is a good time to consider that you will likely be incapacitated for some period of time before you die, making your child the one fiduciary in charge of your tax, legal, financial, and medical decisions while you are alive. Be honest with your attorney about your feelings about being unable to participate in the decision making at this time of life.
Very few adult children have experience in accounting for expenses in the proper way as a successor trustee should. When an adult child is in charge of what you spend, the shift of power from parent to child can be quite uncomfortable, even though nothing is “wrong”. Because you have granted this power to your child, would you ever feel good about correcting anything your child does? If the child does not account to you, would you be ok with that? What if the child ends up in a bad financial situation and uses your funds without any benefit to you?
We have seen situations of miscommunication turn into toxic relationship, and then we have been asked to replace the child in the fiduciary roles. Few relationships heal after such missteps.
“Money may not buy love, but fighting about it will bankrupt your relationships”
When you have two, three, four, or more kids, are you expecting them to all happily work together when you are no longer capable of managing your Life alone? Might they have careers and demanding lives of their own? Do you feel closer to one child, and distant from others?
We have often seen two or three children work together for an elderly parent’s benefit until a difficult decision comes up, such as, it is time for Mom to move to an assisted living residence because her needs have changed so much. One child feels Mom should stay home (especially if that adult child lives with Mom). Another might feel that any care arrangement costs too much (thereby reducing their eventual inheritance). These are the same kids who used to fight over the front passenger seat, or the last piece of cake. This element of their relationship doesn’t go away as they age, and sometimes old wounds intensify with the addition of spouses and children of their own.
Talk with your attorney about what you enjoy in the relationships with your kids, and how to maintain the best aspects of your family togetherness. Giving your children responsibilities, such as your care, may put too much pressure on these relationships without saving you any money in the long run. In our experience, the legal fees are often much higher for families who want to do trust administration themselves. You can keep your family close and enjoy them more by having the “Business of Life” attended to by someone with experience and systems in place, who will treat all of your beneficiaries equally.
Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.