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Executive roundtable

Professional fiduciaries play many roles

Professional fiduciaries can find themselves dealing with more than financial matters when it comes to administering trusts and estates both big and small.

Family feuds, personal problems and medical decisions all can factor in during the transfer of wealth from one generation to the next, according to a recent roundtable discussion hosted by The Daily Transcript and sponsored by Seltzer Caplan McMahon Vitek.

"I always think being a trustee is not an honor, it's a job," said Brian McDermott, senior vice president of Northern Trust, a wealth and asset management firm. "I do find complex assets, dysfunctional families."

Some common problems surround the medical care of the trustor — and how much expense should be given to their long-term care. Some beneficiaries don't want to see their inheritance depleted before they get it.

"There are a number of families I can think of that are wanting you to make choices based on their inheritance as opposed to the best interests of the individual for whom they're responsible [for]," said Marilyn Kriebel, a private professional fiduciary in San Diego. "I remind them the wealth that this individual has accumulated belongs to them. They're still living and breathing, and it is their money and it is available to support them in any way they choose to be supported."

It can put the fiduciary in a difficult position.

"Suddenly you're making choices between putting food in front of the trustor versus supporting the child who thinks he's entitled," she said. "So it's interesting, the dynamics of the family. I can't imagine anything we haven't seen."

A conflict can arise when a family member, who is in line to inherit money, also holds the power of making health care decisions. They may not want to put the trustor in a rest home if it is really expensive.

On the other hand, some trustors want to make sure they leave as much as possible to their beneficiaries and may not want to spend money on their own health care.

"That's the opposite challenge, to convince them that they need the help and it's going to cost money and it's OK if it costs money," said Claudia Powell, owner of Claudia Powell CA.

Making a plan while the trustor is still alive and opening up communication lines between family members are instrumental, according to the panelists.

"It's really important for neutral, third-party advisers to have those conversations and develop what distributions are going to look like while the client's still alive because those needs change over time," said Ward Wilsey, a senior fiduciary advisory specialist with Wells Fargo. "The needs of a financially successful business owner beneficiary is completely different than someone who's had to be supported by their parents their whole life."

The absence of those conversations can create problems later.

"There can be a lot of second guessing about what was done while the person was still alive, and that can create a degree of suspicion," said Daniel Abbott, a partner with the San Diego law firm Seltzer Caplan McMahon Vitek. "All of a sudden people are arguing about what was done, why was it done, did the person want that, or not want that.

"Instead of just looking at a document trying to figure out what their intentions were, people are going back and trying to create what may have been said or done under someone's supervision. Questions arise about the quality of the supervision, the motivation, the agenda. It opens up a broader period of time for people to have a dispute about."

Phillip Banks, a partner with Banks & Banks Fiduciary Services, said it's become a more litigious environment, especially with the increased amount of blended families, more complex estates and more assets involved.

Individuals have tried to execute the trust on their own, but it often doesn't work out well and a lawyer needs to be called.

It's also created more of a need for professional fiduciaries, who are often asked to "clean up" a trust set up by a non-practicing individual.

"The fact we're being brought in is because there are problems," said Susanna Starcevic, principal of Susanna P. Starcevic Fiduciary Services.

It's also important for a trustor to name a successor in case they can't fulfill their duties. It can be difficult for them to give up the reins, otherwise.

"We're trying to get to folks before the need arises," said Marguerite Lorenz of Lorenz Fiduciary Services Inc. "Making decisions in a crisis is not as effective as it would be with some planning ahead."

The complex environment in which fiduciaries work allows for professionals with different types of backgrounds. Some fiduciaries come from a health care-oriented background while others are experienced in social work and others in financial matters.

"We really are guardians of quality of life, that’s how I see our role," Lorenz said.

Related video: Marguerite Lorenz on fiduciaries and estate planning

Related article: Increase in trust, estates litigation creates demand for specialized attorneys


Roundtable participants

Daniel Abbott, Partner, Seltzer Caplan McMahon Vitek (sponsor)

Phillip Banks, Partner, Banks & Banks Fiduciary Services

Tana Cleaves, Trust Officer

Marilyn Kriebel, Private Professional Fiduciary

Marguerite Lorenz, Fiduciary, Lorenz Fiduciary Services Inc.

Brian McDermott, Senior Vice President, Northern Trust

Claudia Powell, Owner, Claudia Powell California Professional Fiduciary

Susanna Starcevic, Principal, Susanna P. Starcevic Fiduciary Services

Ward Wilsey, Senior Fiduciary Advisory Specialist, Wells Fargo

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