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A Trustee or Executor (sometimes called a Personal Representative) is the person responsible for gathering and distributing your assets after you pass and settling your final affairs. In some cases, this person also may be responsible for managing assets held in trust for your beneficiaries for a certain period of time. Although this may sound simple enough, depending on the nature of your assets, these tasks can be time-consuming, complex, and require a high degree of financial sophistication.
While many people select friends or family members (often adult children) to serve in this role, for some people it makes more sense to appoint a professional fiduciary. A professional fiduciary is a company, bank, or individual, such as an accountant, who specializes in serving as a trustee or executor. These professionals have years of institutional experience administering estates and have the staff and resources to manage long term trusts.
A professional fiduciary charges your estate for its services. Charges may include a set minimum fee to settle an estate plus hourly fees for administrative services. Alternatively, the fee may be calculated as a percentage of the value of the estate. If the professional fiduciary is managing the assets held in trust for a period of time, they will also charge asset management fees.
Paying a stranger to perform tasks you believe your friends or family members could do for free may feel like an extravagance. But there are many situations in which the benefits provided by a professional fiduciary significantly outweigh the costs, including:
If any of the above situations apply to you, you should strongly consider using a professional fiduciary to ease the burden on your friends and family and ensure that your estate plan is carried out according to your wishes in the most effective way.