Choosing Fiduciaries from a Litigator's Perspective

An essential part of estate planning is the selection of fiduciaries—those persons who will carry out your wishes; your agent, personal representative, or successor trustee.  What is a fiduciary? A fiduciary is a person who has a legal or ethical relationship with another.  In estate planning, we choose a fiduciary to manage our assets, either during life or at our death. The fiduciary is required to act prudently and in your best interest.  Most estate planning lawyers would advise his or her client to select someone they trust.  As a fiduciary litigator, I would suggest selecting a fiduciary that the client’s beneficiaries also trust.

Fiduciary litigation involves the resolution of disputes in the context of probate, trust, or other cases where one of the parties of the dispute is serving in a fiduciary role for another.  The origin of many of these cases is sibling rivalry.  A common scenario is where parents appoint their oldest child, or the child geographically closest to them, or worse, their “favorite” child as their personal representative or successor trustee.  The parents die, leaving their nest egg in the hands of their appointed fiduciary and before long, the other children decide that their sibling is not acting efficiently, responsibly, transparently, or in their best interest.  Soon enough a lawsuit is filed and the hard-earned nest egg is depleted by the costs of litigation.  Sadly, the parents’ wishes to benefit all of their children is not realized because they did not consider this outcome.

Another common scenario is where parents cannot decide between their two children, whom they love dearly but who hate each other.  Because the parents cannot choose one child over the other, they appoint both as co-fiduciaries, creating a recipe for disaster.  Co-fiduciaries must work together, communicate, cooperate, and agree on the administration of the estate or trust.  If the siblings did not get along while their parents were alive, it is not likely they will be able to do so after their deaths.

These situations can be avoided by careful consideration and consultation with an estate planning lawyer.  Before appointing a child to serve as your fiduciary, consider whether that child gets along with his or her siblings and is trusted and respected by them.  Is he or she able to use good judgment and treat his/her siblings fairly?  Think this over carefully before making a arbitrary decision based on age or location.

Think outside your family.  Is there a trusted friend or more distant relative that would be seen as impartial and will be steadfast in carrying out your wishes?  If not, consider a professional fiduciary.  Even though a professional fiduciary may charge more for its services than a family member or friend, those fees may be far less than the cost of litigation and you will have the satisfaction of knowing that your plans were carried out in the way you intended.