Estate Planning for Parents of Special Needs Kids

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Estate Planning is important for all families.

However, it is especially critical for families with one or more children with special needs.  Without proper planning, valuable government resources may be jeopardized, or worse, lost forever.

How to Choose the Right Type of Professional Trustee

In a prior podcast, we discussed how discussing the subject of Successor Trusteeship is one of the most important conversations you can have with your clients.

We also discussed how the “default’ selection of a family member trustee can lead to family disharmony, and even conflict.

It is important for you to know, however, that just because a client is considering a professional trustee, it doesn’t necessarily mean they must find a local bank trust department to help them.

In this podcast, listen as San Jose Estate Planning Attorney John Erik Fraker discusses the two types of professional trustees: (1) Corporate or Bank Trustees and (2) Professional Fiduciaries.

 

 

Family Member Trustee vs. Professional Trustee

In an earlier podcast, we discussed how talking with your clients about the issue of Successor Trusteeship for their family trust is a key to establishing long-term, profitable relationships.

In that podcast, we stated that many attorneys don’t think that family members make the best Trustees, and often will recommend that a client considers using a professional or corporate trustee.

Listen as Tax and Estate Attorney John Erik Fraker discusses the pros/cons of choosing a family member trustee vs. a professional.

10 Ways to Lawsuit-Proof Your Estate #7

FORBES Magazine online blog, The Best Revenge – by Ashlea Ebeling, has an excellent article called 10 Ways to Lawsuit Proof Your Estate that covers a lot of the advice that we at Ainer & Fraker, LLP give to our clients.

Please read the entire article by clicking on the following link: 10 Ways to Lawsuit-Proof Your Estate.

Today, we examine Part 7 – Consider a corporate executor

If you have modest assets and don’t anticipate family fights, you’ll probably want to name your spouse, and alternatively an adult child, to be executor of your estate.  If you anticipate problems, don’t do this. Putting a favored child in the driver’s seat is a set up for abuse of power or the perception of abuse, which can lead to litigation. A corporate executor (say a bank) is expensive, but there’s less chance of fights among siblings.

~ Ashlea Ebeling, 10 Ways to Lawsuit Proof Your Estate

Ainer & Fraker, LLP Analysis

We regularly advise our clients to consider using a corporate or professional Trustee, to manage their Trust after they are gone.

In addition to reducing the likelihood of family friction, a professional Trustee can manage the individual shares of a beneficiary for many years (if necessary).  Rarely do family members enjoy managing a Trust for several decades, until the youngest child reaches their twenties or thirties.

Here are some of the questions our clients raise with us when considering a Professional Trustee:

1) Do we have to choose a Bank?  The short answer is No.  While a Bank Trust Department or other Corporate Trustee provides valuable services to their clients, they are not the only game in town.  In California, we have the Professional Fiduciary Association of California, whose members are known as Professional Fiduciaries.  They are independently licensed, insured and bonded, and provide many of the same services as a Bank Trustee, and sometimes more.

2) How Much will it Cost? In general, a Trustee can charge a “Reasonable” fee, based on the complexity of the matter and the skill set of the Trustee.  A Bank or Corporate Trustee generally charges a percentage of Assets Under Management (AUM), which typically can range from 1-2% annually.  A Professional Fiduciary will charge an hourly rate, so they tend to be less expensive if the administration is relatively simple.

3) Will we Lose Control of Our Money?  Again, the answer is No.  While the Trustee has legal control, the California Probate Code imposes a wide array of duties and obligations, to ensure that the Trustee is responsive to the needs of the Beneficiaries.  In addition, a Professional Trustee can be removed if they are not doing the right job, or if the beneficiaries agree it’s time for a change.

4) Is Our Money Safe with a Professional Trustee?  We hear this one all the time, and it never ceases to amaze us.  Corporate or Professional Trustees exist to serve their clients – you.  They are licensed, insured, bonded and highly regulated.  If they are found guilty of a breach of their duties, they can be sanctioned.  If they cause a loss of Trust corpus due to mismanagement, their insurance and bond protects your family from loss.  If a family member Trustee runs off with the money, it’s almost never coming back.  You can sue them, but if it’s gone, it’s gone.