Bank as co-executor -- pros and cons?

cathleen_ni_houlihanJanuary 5, 2012

Hello everyone,

It is time for me and my husband to do some estate planning, including getting a will and maybe a revocable trust. We don't have children, and will have to ask another family member to be an executor. My father in law has become executor for two estates this year, and it has been a terrible burden. I also spent time reading descriptions of other people's painful executor experiences on these boards.

One of our local banks does estate planning, and can be named executor. I'm wondering if it would be a good idea to name the bank as a co-executor for the purpose of relieving family of some of the work and burden. I think the bank charges 3% of the estate. I think it would be well worth it to our family not to have to deal with everything themselves.

Are there potential pitfalls? One tip I picked up from this board is to be sure there's a clause that would allow the family to dismiss the institutional executor if needed.

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If you choose your executors (plural) wisely, you do not need the bank. And the executors do not need to be family, either. Ask the most responsible, reasonable people that you know. Choose one person with a back-up in case something happens to the first person. There isn't any need for co-executors.

Do you have an extensive estate? What burdens did your FIL face? Have a long talk with your attorney. And be sure to choose an attorney who specializes in trusts and estates.

    Bookmark   January 5, 2012 at 5:23PM
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Just to clarify, I do trust our family members to be honest and competent executors, whether the bank is involved or not. I was hoping that the bank might be there to deal with the taxes, the details, hopefully liquidate the real estate (I have to find out if they do this) and generally to know what has to be done and execute much of it.

I don't know all of the reasons why one of the estates my FIL is executing has been so difficult, but I think some of the assets were not well organized, like it's been hard to track them down, and the deceased's law firm was in disarray and unresponsive for a while. It seems like a serious burden.

In any case, I have to decide whether to start by meeting with an attorney, or doing the planning with the bank who will ultimately refer me to the attorney who will draw up the documents.

    Bookmark   January 5, 2012 at 6:00PM
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Definitely find your own attorney first. A good attorney will do FAR more than draw up docs. A good attorney will listen to you, answer questions and be YOUR representative. If your estate is substantial, get someone who also knows taxes inside out.

If you don't trust your family, chose someone who is not family to be your executor.

I find that putting so much trust (pun intended) into a bank or any large institution to be very naive. Even tho the word "trust" has legal meaning, a large institution has no interest in you or doing anything for you. Yes, they get paid for pushing the paper. That's about it. The honey-tongued person who fills out paperwork for you will get promoted/demoted/fired/downsized. And the next person to pick up your file will be just as minimally involved in you.

Your attorney can help you with all your questions. Talk to everyone you know and ask around to find a good attorney who specializes in trusts, estates and taxes.

    Bookmark   January 5, 2012 at 6:22PM
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I wonder about this too. I have two people identified but as we get older so are they. They may get to be too old or die. I want an objective, responsible third party to administer disposition of my assets according to my will. I have witnessed a very unpleasant situation as DH and siblings dealt with their parents estate. It was a huge amount of work - years of unfiled taxes, practically impossible to find some of the needed paperwork, multiple pieces of real estate owned by multiple parties, etc. On top of that family members you would trust to handle things when you are alive, sometimes turn ugly when money is at stake and/or they are stressed out by dealing with it all.

I would gladly pay someone a % to just handle it objectively and efficiently. I had an old widowed aunt who died when I was a kid who also had no children or any living relatives. She had someone lined up to handle her estate and I think it might have been an attorney. It was done quite efficiently and he fended off all the money grubbing relatives.

    Bookmark   January 6, 2012 at 11:23PM
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IMHO an attorney is far better than a bank.

    Bookmark   January 6, 2012 at 11:59PM
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I totally agree with those recommending an estate attorney. Estate work is pretty specialized, but well worth not having to deal with it yourself. Shouldn't be too much problem if there is a well-prepared will/trust in place, as well as up-to-date financial records, deeds, etc. organized.

Frankly, I wouldn't go near a bank to handle anything estate related. The attorney would most likely open a trust account within his/her firm and make payments from that.

    Bookmark   January 7, 2012 at 6:12AM
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Hmmmmm....sounds like I need to find an reputable, honest estate attorney that preferably doesn't charge a small fortune. We have an attorney who did our will but he's a generalist. I have already thought at times that we need to find someone with more estate planning expertise.

    Bookmark   January 7, 2012 at 9:12AM
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Another point, get someone local for the executor. It's a major PITA to try to settle an estate that's far away. And if your executor moves away, revise your trust/will and choose someone else who is local.

    Bookmark   January 7, 2012 at 1:46PM
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The legal terms are getting mixed here and this is not a good idea.

A will has executors. A trust has trustees. Anyone, including an institution, can be named as either one. HOWEVER, an executor gets paid a set fee for settling an estate, as outlined by your state laws. Depending upon your state laws, a will may or may not be accepted as valid with only witness signatures and no notarization. State laws must be followed precisely when it comes to determining the validity of a will.

A trustee gets paid for expenses only. If you have named a bank or a professional fiduciary (e.g., an attorney), they will get paid for their time at standard hourly rates determined by your county court. A non-fiduciary (ordinary citizen, whether related to you or not) will NOT BE PAID FOR THEIR TIME, only for their expenses, by the trust.

In order for a trustee to be eligible for time reimbursement from the trust, the trustors (originators of the trust) MUST have included such permission in the trust document before notarization.

As has been pointed out, an estate under a trust can be just as time-consuming and difficult to settle as an estate probated under a will. It is your personal responsibility to make it easier to any trustee or executor to find all the necessary legal documents that are needed, after your death(s).

You should always identify secondary executors or trustees in the event the first person needs to resign for any reason (ill health, disinclination to spend time and trouble to act as the estate's fiduciary).

The vast majority of middle-class folks do not need an RLT to disburse their estate, and if they do have an RLT (which we do, for example), they need a thorough explanation from the estate attorney as to possible pitfalls and disadvantages of an RLT vs a will.

A will is made public through probate. A trust never passes through probate and is always confidential. If for any reason you think there is a risk the trustee might abuse their responsibilities - it is far from unknown, and more common than you would think, relatives or professional - then you should consider naming a co-trustee (whose signature will be needed for any legal actions by the trust), who will be able to immediately audit any suspicious activities by the other trustee.

    Bookmark   January 7, 2012 at 3:47PM
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Be sure to have alternates ... I think that old Uncle's estate was all, or pretty well all, wound up before the first of his executors, his long-time lawyer, died. A couple of years ago the second executor died.

There's a key around the house that looks like a key to a safety deposit box, but I have no idea where it might be, and had neglected to give it to the executors earlier.

The lawyer's daughter, also a lawyer, may have some capability/interest in the situation.

ole joyful

    Bookmark   January 12, 2012 at 4:59PM
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