Dear Liz: I enjoyed your recent column about spendthrift trusts. You’re right that when parents assign the job of trustee to one sibling for the benefit of another sibling, it creates a hazardous situation that often results in a court battle. The appointed professional trustee should be a neutral party. You recommended a bank or trust company to fill the bill.
However, there is a third and often better option: a licensed professional fiduciary. There are about 600 in California. We are independent fiduciaries licensed by the state to manage clients’ assets in trusts and estates.
Professional fiduciaries will take the smaller trusts and estates, since banks and trust companies usually require a minimum of $1 million to $2 million under management before accepting a trust or remainder estate. Banks and trust companies also typically charge fees based on the amount of money under management, whereas California Licensed Professional Fiduciaries normally charge on a time-incurred basis.
Fiduciaries also give the beneficiary an annual accounting. A case I have now came to me when the sibling trustee failed to account for money spent for nine years.
Answer: Thanks for highlighting this option. Licensed professional fiduciaries aren’t available everywhere, but certified public accountants also can serve this function. The attorney who drafts the trust may have recommendations.