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Friday, March 9, 2018

Should you use a trust company as your executor?

Having worked in a leading trust company for 7 years, I am pretty well versed on how a trust company can help when named as executor and trustee of an estate. I am definitely a fan of using a trust company in the right circumstances.

In any discussion about using a trust company, the first question most people ask is about the cost.

The reality of the situation is that a trust company does not and cannot charge more for its executor services than any other executor would charge. They never go over 5%. Don't forget that a trust company is an office full of experienced trust officers and investment professionals who have been through the estate scenario dozens, if not hundreds, of times. Your brother-in-law or aunt or kids can charge the same amount in executor fees even though they have no experience at it.

I came across a very good article at www.investmentexecutive.com that talks about naming a trust company (also known as a corporate trustee) to handle your estate. It's definitely worth a read if you're thinking about using a trust company. Click here to read it.

3 comments:

  1. Lynne
    Another excellent and timely post.
    There are family members ie adult children who believe they should be named as Executor yet many should not be chosen for various reasons. I agree with many that it is good to discuss finances with 'elderly' parents but sometimes telling them what your plans are creates problems that they don't need. Years ago, (my matter) I did speak to RBC. The size of the Estate is a consideration as to whether they will administer the Estate. Can you comment re this, Banks and Trusts?

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    Replies
    1. Thanks, webeye.

      I'm surprised that more people don't choose to use trust companies as their executors. It just takes all the fighting between siblings out of the picture.

      Yes, the size of the estate does matter. This is particularly true when they are being named as the executor ahead of time (i.e. while the person naming them is alive). If someone has already passed away and the executor approaches a trust company to take on the work to help the existing executor, the size of the estate matters less.

      The trust companies that I'm familiar with want estates that are worth a million dollars. Some say they want investable assets of a million, and some say the total assets including real estate etc need to total a million.

      Age is also a factor. Since the trust company doesn't get paid until the testator passes away, they'd prefer a 90-year-old over a 30-year-old.

      I agree that telling the adult kids your plans can create problems. The main one is that if you ever want to change your plans, everyone gets in a snit about whether someone is influencing you.

      Lynne

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  2. In my experience, it's naming a Trust company is a great option to give your family the best chance at a peaceful and professional estate settlement.
    BTW, Saskatchewan folks have the option of naming a "Mennonite Trust" as executor. They have NO size limitation on the estate. Fees are typically 3% or less for larger estates.

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