Child Upset Parents Did Not Choose Him as Fiduciary
Jan L. Warner & Jan Collins
Question: My brother and I Ė and our spouses and children -- were with our parents over Thanksgiving. They are in their late 70ís and in good health. Everything was fine until our folks told us they had just completed their estate plan and decided to appoint a bank trustee, instead of my brother and me, to handle their affairs. Can you imagine how hurt we were to learn that our parents donít trust us, their grown children, to take care of a business that we will inherit anyway? Any suggestions about how to approach our parents in order to discuss their sudden change of heart?The Executor
Answer: Regardless of their rationale, can you imagine how difficult it must have been for your parents to tell you and your brother that they wanted an independent third person to act as their fiduciary, rather than burdening you both and potentially causing irreparable discord between you two? Although it might have been easier for them to let you find out after they had died or become incapacitated, they had the gumption to let you know now. Good for them!
Besides, who would want to act as a fiduciary in todayís hostile environment? When an agent, trustee, personal representative, or conservator handles money or property for a beneficiary, he or she may well be subjected to questions about the propriety of investments, expenditures, or both, because as a fiduciary, an individual is held to high standards. If these are breached, it could result not only in personal liability for making poor investments or inappropriate expenditures, but also criminal responsibility.
Fiduciary responsibility precludes self-dealing and requires appropriate investment strategies that may be different for various beneficiaries. The "Prudent Investor Rule" mandates that in developing investment plans, fiduciaries must consider not only the needs of the ward, but also the types of resources available, the potential for market trends and inflation, and the taxation effects of various investment scenarios. In most instances, family fiduciaries spend a lot of time and assume great risks without appropriate compensation.
Taking the NextStep: Whether your folks decided to spare you and your brother from this thankless task because of genuine concern for you, or because they donít trust one or both of you, or because they donít care for your spouses, is absolutely irrelevant. The issue here is that your parents have the right to plan in a way that makes them Ė not you Ė comfortable
Perhaps the following poem, which was passed on to us by a friend, best describes why your folks might have done you and your brother a favor:
I had a friend who died and he
On earth so loved and trusted me
That ere he quit this earthly shore
He made me his executor.
He tasked me through my natural life
To guard the interests of his wife
To see that everything was done
Both for his daughter and his son.
I have his money to invest
And though I try my level best
To do what wisely, Iím advised
My judgment oft is criticized.
His widow once so calm and meek
Comes, hot with rage, three times a week
And rails at me, because I must
To keep my oath appear unjust.
His children hate the sight of me
Although their friend Iíve tried to be
And every relative declares
I interfere with his affairs.
Now when I die Iíll never ask
A friend to carry such a task.
Iíll spare him all such anguish sore
And leave a hired executor.
Today and Tomorrow, Edgar A. Guest
(Chicago: Reilly & Lee Company, 1942)
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