By Evan on Jun 17, 2010 | Reply

I agree that a professional trustee is not needed in most situations, but if you want to kill a family as quick as possible – have one family member in charge of the other’s money…

There is a whole set of other problems (at least in NY) with trustee liability. So you have Uncle in charge of the investment choices. What happens when he puts into a business? or junk bonds or even CDs when the market is getting double digits? Kind of a rough position to put Uncle in.

Just some thoughts.

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By Nunzio Bruno on Jun 17, 2010 | Reply

That can be such a headache. You are absolutely right about the conflict of interest with the professional trustees as well. (Great pic by the way I went back for a second look and laughed pretty hard after reading the post)Appointing someone you trust is important and it’s sad to hear about all the wasted time and money on what really can be a very simple process..especially on a smaller estate where wishes and directions are explicitly laid out. Great post!

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By Little House on Jun 21, 2010 | Reply

This is great information. My parents (I have two sets) are getting older and I’ve started approaching them with questions about where they want to be buried, if their will is in order, and who the executor is. My one set of parents are currently updating everything, so I’m feeling a bit more relieved. My other set, where my step-father is two years shy of 80, is being very vague and they have a fairly large estate. I tried broaching the subject with them, but they remained pretty silent. Either they are in denial that they will eventually pass away, or they aren’t ready to share any of their estate / will information. At least I know what kind of burial plans they’d like (sort of). Hopefully they’ll share their plans in the near future. I’d hate to find out they hired an outside executor to handle everything.

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By Neal@Pilgrim on Jun 21, 2010 | Reply

Little House,

Maybe if you send them this post they’ll change their minds! Good luck and keep us posted.

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By Mrs. Modern Tightwad on Jun 28, 2010 | Reply

I hate to say it (possibly because it’s the first time ever) but I completely disagree with you. Having been the beneficiary of an educational trust with a family member trustee it was without a doubt the worst event in my life. While the family member believed they were acting in my “best interest,” they had ideas as to what the money should be used for, regardless of what was originally intended, and used money as a lever at a time when I was particularly vulnerable. I found a clause that allowed me to remove the money at age 21. I wished for the relationship I had with the family member before the trust and decided to try and remove money from the equation. Now, 10 years later, I barely have a relationship with that person who decided I was greedy, spiteful and ungrateful, and I wish the trust had never existed. I am a strong believer in having an independent trustee. Being a family member doesn’t mean there isn’t a conflict of interest and the damage can be farther reaching than financial.

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Neal@Wealth Pilgrim Reply:
June 28th, 2010 at 7:48 am

Mrs. Modern,

First, I’m really sorry you had that experience. Sounds really really terrible.

Second…I’m glad you disagree….that’s how I learn.

Third, I’m SO HAPPY you posted this reply. I believe it shows that there are horror stories on both sides of the story.

Certainly, there is no way for anyone to guarantee that a family member will be better or worse than a professional. I haven’t heard many horror stories like this but your story proves it can and does happen.

Personally, if I know someone well, I’d probably take the chance and name a family member.

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By Sam on Aug 4, 2010 | Reply

Everyone that I’ve approached about this, being a trustee to keep my kid from blowing the money, has said they’ll just hand the money over to my son’s Dad.
My son’s Dad is the most financially irresponsible person I know – he buys whatever crosses his eye no matter what bills are due to be paid (while we were together the power got shut off 3 times because of his video game habit).
So, given that most of the money is for my son to keep/maintain the house (if he wishes), for my son to go to college and get a decent start in life (regardless of his Dad’s irresponsible ways), I’m doing a professional trustee so my wishes are followed to a “T”. I did add a paragraph that if six people (from a list of 20) from both sides of my family sign a letter saying the trustee is not following the rules of the will and not acting in kiddo’s best interest then all the money will transfer to a brokerage acct within 30 days. That brokerage acct will pay a percentage out annually to my son till he’s 32 when he gets the lump sum. Don’t know if it’s a good plan but it is a plan (BTW – I’m open to advice/other ideas).

Also, I put clauses in there that if my son passes away all the money is go to charity after debts & such are paid off. And that any spouses he may have, have absolutely no entitlement or claim to the money.
I got those from my grandpa’s trust papers – the family has tried several times to bust his trust open & they can’t so I modeled mine after his.
My Grandma’s got busted open within a year of her death and it makes me sad her wishes weren’t followed.

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