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One effective solution to the executor or trustee dilemma

Learn how you can receive trustee and executor support through an agency agreement with a corporate professional.

Being asked to serve as the executor or trustee under a will or trust for a family member or friend can be a tremendous honor. It is a big responsibility that involves a wide range of administrative and financial duties. It can take a lot of time which might interfere with the individual’s own career and time with family.

 

Individuals sometimes agree to become an executor or trustee without fully understanding the role and the duties into which they are stepping. When this happens, they can quickly become overwhelmed by the complexity of the job — which may include filing fiduciary tax returns, paying outstanding taxes and debts, managing assets on behalf of beneficiaries, and determining when and what distributions should be made.

 

Your fiduciary duty

If you agree to serve as an executor or trustee, you will be accepting what’s known as a fiduciary duty to settle and administer the will or trust in accordance with the legal documents involved. As such, you must act and make decisions that are in the best interests of the estate and the beneficiaries – and do so with impartiality. A fiduciary duty is the highest standard of care known to law.

 

It’s important to understand that the law makes no distinction between the duties expected of an individual fiduciary and those of a corporate fiduciary. Once you accept the duties, you become obligated to fulfill these responsibilities competently. Compliance requires knowledge of the Texas Trust Code and the Internal Revenue Code.

 

If problems arise while you are serving as executor or trustee, just saying that you “did your best” will not be a legally defensible excuse. And there can be serious monetary consequences for such. A Texas bank was recently hit with a $4 billion judgment for breaching their fiduciary duties to an estate. Those are a lot of zeroes and goes to show the job is not a simple undertaking or a role to take lightly.

 

The agency agreement

Fortunately, there is a way to honor the wishes of a friend or family member, even if you aren’t sure you are equipped to handle all the responsibilities. You can receive trustee and executor support through an agency agreement with a corporate professional. You then have the option to delegate those roles that you want an experienced professional to handle. You and your agent can decide together which tasks would best be delegated.

 

This solution gives you the best of both worlds, serving in the position while delegating responsibility and liability to a third party. The agent should work closely with the rest of the team, including the attorney and accountant, to make sure that every aspect of estate settlement and trust administration is handled promptly and accurately. You are now the quarterback.

 

Perhaps most importantly, the agency offers professional management services. By having a corporate trustee handle this responsibility, you can be confident that the prudent investment requirements of state law are being met and that accounting records accurately reflect allocations of income and principal. The beneficiaries can receive financial statements on a regular basis and that aids in avoiding conflict, which quite often results from the failure to timely communicate and provide clear information.

 

The assets over which you are responsible might include oil and gas, farms, ranches, commercial real estate, collectibles, and even an operating business enterprise. Are you ready to handle the assets which can make up a family’s wealth?

 

Choose your agency carefully

Entering into an agency agreement could be the right solution. However, you should be diligent in choosing an agent to serve.

 

In particular, find an agent that provides a full range of estate and fiduciary services, professional investment and asset management, along with custodial and escrow services. You will work very closely with the agent, so it’s smart to spend the time upfront carefully researching your options before making a final decision.

 

The old-adage that two heads are better than one is certainly true in this arena.

 

 

For more information about estate planning, download our free e-book, “Estate Planning: Why It’s Important and How to Get Started.” Or contact Cadence Trust & Asset Management at 214-365-7006 with your estate planning questions.

 

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

 

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