People who are creating an estate plan often choose a close relative as their financial fiduciary. However, there are several potential pitfalls to consider before taking this approach. The selection of a close family member might be appropriate in some cases, but there are a few specific issues and potential problems to consider. When making this decision, it is advisable to speak with an experienced Columbus estate planning attorney concerning the choice of an estate administrator.
The Disadvantages to Selecting a Family Member as Your Estate’s Financial Fiduciary
One of the disadvantages of selecting a loved one over a professional fiduciary is the impact on family dynamics. In other words, the fact that the Financial Fiduciary is a family member, there could be intense tensions and damage to relationships. Whether the Financial Fiduciary is designated to act as the executor of a will, a trustee of a revocable trust, or an attorney-in-fact under a financial power of attorney, there will be many issues to consider.
Competence Regarding Financial Matters: An adult child or a spouse is the typical choice for a Financial Fiduciary. However, these choices might not have the necessary legal and financial expertise. People often consider the administration of an estate or a trust as a low-risk “family affair.” However, the administration of an estate or a trust could involve complicated financial arrangements and decisions the family member may not be equipped to handle. Your estate fiduciary should be financially savvy, mature, and capable of communicating with the other beneficiaries and family members on a peaceable basis. It is adviseable to involve a Columbus estate planning lawyer in the decision of selecting a fiduciary and discuss the benefits, burdens, costs, and risks associated with choosing a family member over a professional third-party.
Inadequate Knowledge of the Law and Estate Planning Instruments: Family members are not usually knowledgable about the applicable common and statutory law or compliance issues concerning the provisions of estate planning instruments. Trust or estate administration fiduciaries must also have an understanding of the requirements involving estate planning instruments copies and compulsory accounting practices.
Lack of Objectivity: Designating a family member to make estate administration and trust management decisions can be an issue, especially if their objectivity becomes a significant issue. Estate and trust attorneys lack an emotional connection to the beneficiaries and do not have a stake in the distribution of the estate’s assets. A family member acting as a fiduciary could be influenced by family friction and disputes. Conflicts of interest are greater when the decedent has prior marriages, children, and stepchildren from past relationships. A spouse or an adult child might inappropriately exercise their authority in a vindictive way as recompense for perceived or real transgressions.
Time Commitment: A loved one usually accepts the responsibility of serving as a fiduciary as a “favor” to other family members. The family member acting as your fiduciary might have limited time due to personal and business responsibilities. Also, there maybe be administrative errors such as an unintended breach of administrative duties which may be costly or cause additional conflict between family members.
If you have questions about estate planning in Ohio, we welcome the opportunity to talk to you and answer your questions. We invite you to speak to a Columbus estate planning lawyer at Dawes Legal, LLC by calling 614-733-9999 to learn how we can help you.