The Merriam Webster dictionary defines the word Agent as “a person who does business for another person: a person who acts on behalf of another” Most of us are familiar with the concept of a sports agent. Wikipedia explains “a sports agent procures and negotiates employment and endorsement contracts for an athlete. Agents are responsible for communications with team owners, managers, coaches, and other individuals. Primarily, agents are used to broker and negotiate contracts for their clients.”
In my world, serving in the capacity as executor or trustee is what we do every day as a professional fiduciary. The concept of Agent is not new to us. Very often an individual who is serving as executor or trustee warms to the idea of delegating their responsibility as executor or trustee to an institution staffed with professionals willing to work on their behalf as an agency relationship.
Let me share with you a typical scenario. As I have written before, most people are not familiar with all of the nuances of settling an estate. Yet, family members insist on naming a family member as executor in their will. Along these same lines they very often choose this same family member to serve as trustee for a special needs individual, a spendthrift child or a trust designed to save estate taxes, for example.
Once appointed, this family member soon learns that a lot of time and knowledge is required in order to carry out the office of executor or trustee. You can also add personal liability! That is when they seek out the services of a professional executor or trustee to serve as their Agent.
A professional fiduciary can provide the services that give the individual executor or trustee much needed assistance with record keeping, investment management, preparation of inheritance and estate tax returns, providing statement for beneficiaries to name a few. Where a professional fiduciary can really add value is in making discretionary distributions in accordance with the trust agreement. A real burden is placed on an individual trustee when he or she has to determine if a request for a distribution from a family member who is the trust beneficiary is allowable. The professional trustee can be the intermediary that makes unbiased decisions and reduces family conflict.
Naming an individual family member as executor or trustee more often than not, is an unintended burden. The best solution – name a professional as a co-executor or co-trustee with the family member.