Imagine you named your daughter as executor under your will. She can’t stand up to her husband and you worry he’ll spend her inheritance. You could leave the money in trust, but if she’s the trustee, the money will still find its way to him.

Or suppose your children would make perfect executors, but they are so successful and busy that they prefer to delegate.

In either case, a corporate fiduciary might be the answer. Rather than friends or family, you may name a qualified company as executor or trustee under your will.

As executor, the corporate fiduciary would go to probate court, pay your debts, file your final tax return, and distribute what’s left. Fees start at 3% of the estate. If family might fight, this can be an efficient way to split the pot. The expense is finite and predictable, because the executor’s job is done once the assets are distributed. The money can go directly to the kids, free of trust.

If the children are young or unreliable, a trust may be necessary. As trustee, the corporate fiduciary holds the money and makes distributions (“No. You may not have $50,000 for a new car.”). Fees may be 2%, more or less, per year. A trustee serves until the money runs out. Over time, the expense can be considerable.

Is it worth it? Many trust companies don’t think so unless you leave $1 million or more, though some trust companies will accept as little as $300,000. Even a $5 million estate can be uneconomical, e.g., undeveloped land with no cash for taxes and insurance.

Discounts are available when the trust company serves as a management agent rather than a fiduciary. A real person is named executor or trustee, but the trust company does all the work. This can be a good solution for the children who are successful, but busy.

Every trust company will review the family and the estate and will reject assignments that appear unsuitable. Is there an ongoing business that’s difficult to manage? Too many beneficiaries in prison or rehab?

If naming a corporate fiduciary, meet with them to confirm your family is a good fit. Better yet, consider funding a trust in your lifetime, to test drive the fiduciary and fine-tune your plans. Whatever the cost, it’s often less than estate administration by ungrateful or incompetent heirs.

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