Hi, everybody. My name is Miranda Dressler and I am an attorney with the Law Office of Bridget Mackay in Petaluma, California. Today, I am going to talk to you a bit about the option of choosing either a private fiduciary or a corporate fiduciary as the trustee of your trust.
So, in most cases when we prepare an estate plan for people, you know, typically people will choose a friend. Or maybe a child or more than one of their children and name that individual person as the successor trustee of their trust.
So, there are many reasons why someone might choose an outside source as their successor trustee. Maybe they don’t have any children or any close friends that they feel comfortable naming. Or maybe just don’t have that many people in their lives that they can name, or they don’t want to play favorites with their children. Or just don’t want to put that type of a burden on a friend or family member.
So really, the two other options, aside from naming an individual person as the trustee of your trust, is either naming a bank or a trust company, which would be a corporate fiduciary or naming an individual who is a licensed professional fiduciary. If you name a bank or a trust company as the trustee of your trust, you know, these banks and trust companies have systems in place to manage a trust and have, you know, a lot of experience with financial management and with acting in that role as trustee. And because a corporate trustee has higher liability because they have that higher level of experience in acting as a trustee, they really have high standards that they are required to stick to. And they generally do stick to those high standards.
Corporate trustees are also really the most expensive option that you can name as a trustee of your trust because they generally will have their own fee schedule that they charge to act in that role. And it’ll typically be around 2 to 2.5 percent of the value of the assets in the trust.
So, the second option that I mentioned is to name a professional licensed fiduciary as the trustee of your trust. And professional fiduciaries are individuals who are licensed by the state of California, by the Professional Fiduciary Bureau, which is under the California Department of Consumer Affairs. They must pass an exam in order to become licensed and they have to maintain, you know, continuing education. So, they have to be continually receiving training in order to keep that license. And professional fiduciaries, in my opinion, are a great option because they can act not only as the trustee of your trust, but oftentimes also as a durable power of attorney agent and as well as a health care agent. In that way, a professional fiduciary really can take on many of the daily responsibilities that might be needed with your estate plan if you become incapacitated at some point during your life. So, managing your daily care as well as your daily finances.
Professional fiduciaries often have experience in other professions. So, many of them are former bank trust officers or CPA or even attorneys or social workers. So, they really have a lot of experience. They also have a lot of connections and resources to tap into when they do need to step into that role and start managing the financial and the health care decisions for a trustor or someone who has created a trust but can no longer manage it themselves.
Because professional fiduciaries are licensed, licensed and regulated by the state of California, they have to adhere to strict ethical guidelines. As all trustees do, but they are held to a kind of a higher level of care if you will.
As far as how much it will cost and what a professional fiduciary charge is, it does vary. But typically, what I’ve found is that they will charge an hourly rate. So, however much work might need to go into it, you know, it’ll be based off of their hourly rate.
So, if you are getting your estate plan done and you are thinking that you don’t want to name a child or a friend and are thinking about naming a professional fiduciary as your trustee. What I would recommend is you find a few in your area that you can contact and really just want to contact them and kind of interview them to see if you mesh. If they understand what your needs are and what you’re looking for. And then let your estate planning attorney know who you’ve chosen.
So if you have any questions about this top topic or any other topic, I would recommend that you contact an experienced estate planning attorney in your area. Thank you.