When appointing a person to administer your trust, you may assume that a family member would be less expensive than using a professional trustee or executor. In reality, working with a professional could be more cost-effective in the long run. Many people believe that a professional trustee or executor’s services add no value, believing payments to the trustee will only serve to reduce the amount you can pass on to your beneficiaries. However, this assumption is mistaken. Hiring a professional may be the most financially sound option for several reasons.
First, professional trustees’ fees, when viewed as a percentage of the estate, are generally not high. For example, a professional trustee or executor may charge an hourly rate or a fee as a percentage of the estate. When considering the estate as whole, the extra percentage is often worth the assurance that your estate is in competent hands. Additionally, the fees usually amount to less than the amount an institutional trustee, such as a bank, would charge.
A professional trustee can also avoid or settle disputes between beneficiaries. If you appoint a family member to administer your trust, they may experience difficulties mediating between family members without damaging the familial relationship. If the family member is also a beneficiary, they may allow their personal interests to affect any disputes that arise. Conversely, a professional trustee has no personal relationship with your beneficiaries or any personal interest in your estate. Therefore, the professional can resolve conflicts with the impartiality required to handle your estate.
Finally, professional trustees can help secure lower fees for necessary service providers. For example, to administer your estate, a trustee or executor will likely need to work with an appraiser to value your assets or a realtor to sell your property. Professional trustees maintain relationships with service providers in the course of their business. To attract future business from the professional trustee, these providers often price their services at significantly lower fees. Because a professional trustee can secure lower rates, the charge to the trust for these services will be reduced. Hiring a professional can thereby result in lower fees than if you had appointed a family member as a trustee. Moreover, the money the trust saves in service provider fees can be distributed to your family member beneficiaries. For these reasons, hiring a professional trustee or executor may be the more cost-effective option. While a family member may not charge for their services, working with a professional can save you money in the long-run, which will ultimately benefit your loved ones.
Contact a Boulder, Colorado Trust and Estates Attorney
If you are seeking information about trusts or trustees, contact an experienced Colorado estate planning attorney. Braverman Law Group is here to assist clients with all their estate planning needs, including trusts, wills, probate and taxation, and other services to ensure your wishes are fulfilled. For a free, no-obligation consultation with one of our premier planning lawyers, call our office today at (303) 800-1588.