When people engage in estate planning, there are many issues that must be considered. One consideration that often receives too little attention is the appropriate selection of a fiduciary to make important decisions regarding the management and disposition of a decedent’s estate. The most typical selection is a family member, such as an adult child. While the selection of a family member might make sense, there are potential issues that could favor the choice of a professional fiduciary. This two-part blog post discusses a range of issues that should be weighed when deciding between a close family member and a financial institution, attorney, or other professional fiduciary.
Preservation of Family Harmony
When a family member is selected as a trustee or estate administrator, the choice result in significant animosity and conflict. When an adult child is made your fiduciary, his or her siblings might view this designation as a slight. Further, the conflict can make it more difficult for the selected sibling to adhere to the instructions in a will and trust, which might include terms and dispositions that are unpopular with other family members. Depending on the terms of the will or trust, the animosity created by the selection of a particular family member as a trustee or administrator could be intensified by preferential provisions or restrictions regarding particular family members.
The impact on the family dynamics of surviving loved ones can be a critically important issue for many people developing estate plans. A large number of individuals developing estate plans place a greater value on the preservation of family harmony than maximizing the value of the possessions passed to loved ones after passing away. Nonetheless, estate plans and their accompanying documents often fail to give significant consideration to the important issue of avoiding the disruption of family relationships. Ironically, a fair number of generally accepted estate planning strategies and the conventional wisdom that serves as a foundation for such strategies significantly undermine family harmony.
It is worth noting that the goals of promoting amicable family interactions and relationships does not need to be an objective that conflicts with maximizing the value of a legacy passed to surviving loved ones. In fact, the conflict created by an estate plan that does not take into account potential family animosity can diminish the value of an estate because of litigation costs and increased estate administration fees.
Common Areas of Disagreement Creating Problems for Family Fiduciaries
There is a multitude of administrative tasks which a family fiduciary must handle that can foster disagreements and animosity among family members. Some common areas that constitute a fertile grounds for conflict include:
- Distribution of tangible items like family heirlooms and valuables
- Inconsistent Communication by the fiduciary with beneficiaries and heirs
- In-kind distribution of assets to satisfy family members’ proportionate share of a trust or estate
- Interpretation and validity of testamentary instruments and their interpretations
- Timing of estate administration and distribution issues
- Proper settlement of claims and liabilities against the estate
- Comprehensive nature and accuracy of accountings and inventories
- Decisions regarding disposition of estate assets
- Equitable distribution adjustments to offset the disproportionate effect on beneficiaries of tax limiting elections or the tax basis of property distributed in satisfaction of shares
- Consideration given to inter vivos gifts and loans made to beneficiaries or heirs
This is only a small sampling of the types of problems and issues that can pose difficulties for a family fiduciary. While a civil lawsuit for breach of fiduciary duty can provide a remedy for misfeasance or negligence by a professional fiduciary, this approach might seem less attractive when the fiduciary is a parent, sibling, or other family member.
If you have questions about estate planning, estate administration, or the probate process, we welcome the opportunity to talk to you and answer your questions. We invite you to call the Kansas Estate Planning Lawyers at the Weber Law Office at (316) 265-7802 or to submit an inquiry form through this website to schedule your initial consultation.