bank as executor--your thoughts?

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bank as executor--your thoughts?

Postby aquamarine » Sat Sep 05, 2009 11:13 am

My spouse and I are doing some estate planning. One thing we are considering is naming a local bank as the executor of our will. We do not have any children, and our estate is pretty straightforward, meaning we would like to leave our money to our favorite charity when we die, someone might need to sell our house and donate the proceeds, etc. But nothing too extraordinarily complex. I've talked to the person at the bank. He seems friendly enough and gave us a good "sell" as to why you should name a bank as opposed to a relative as the executor of a will (banks don't "die"; banks are "professionals with experience"; relatives don't have to be boggled down with handling an estate when they are grieving, etc).

But honestly, I've not known anyone else who has named a bank as an executor. Most people I know name their children or a relative. I don't expect any problems, but I wanted to get your feedback and collective wisdom and experience before signing on the dotted line.

Has anyone had any experiences or known of any experiences with people naming banks as executors to their will? If so, were there any good/ bad experiences anyone knows of and is there anything I should keep in mind or know before I sign off on it officially to make sure everything goes well? Whatever advice, feedback or experience you can share would be appreciated.

We're thinking of using a local bank---first national. Anyone have any particularly good/bad experiences with any banks they would either recommend us using or avoiding? My guess is that some of this depends on who is working at the particular bank at the time of my death so none of this predictable but my thought is that hearing others experiences may still be of great help especially if certain banks (without my knowlege) have either a particularly good or bad track record. Are there any questions or concerns you would ask/raise to make sure they are the "right" choice?

Thanks in advance for your advice.
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Postby soaring » Sat Sep 05, 2009 11:45 am

Have they told you what the fees will be or % of assets and are you satisfied. The clause "they may charge for their services" which usually lets a relative recoup their out of pocket expenses would be inappropriate for a company that could and likely will bleed the estate with fees.

Why not consider contacting the charity you choose and see if they will handle it. It is in their best interest to be conservative.

Of course you would be wise to look into the % of donations that get to the mission of the 503c non profit.

For example Macdonalds absorbs all administrative costs and 100% of donations go to the mission. The Hole In The Wall Gang founded by Paul Newman is well managed with an extremely high % going to the mission.

Don't necessarily believe some of the major agencies that tell you 80-90% go to the mission. For example one of them spends tens of millions in mailing to get money!

good luck
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Postby Gill » Sat Sep 05, 2009 11:49 am

I spent my entire 35-year career doing just what you describe - as an officer and later senior executive in the trust area of banks and trust companies. In the course of this work I often had the occasion to review the work done by individual fiduciaries as well as by corporate fiduciaries.

I know some will assume I'm biased, but I can assure you that most corporate fiduciaries do a much better job administering an estate than most individuals. Furthermore, it is almost always done more economically because the corporate entity has less need to draw on the lawyer's time and does most of the tax and accounting work in house instead of being farmed out to CPA's.

You need to rely on the quality of the institution and not so much the individual officers. Your family will not regret your decision to utilize a corporate personal representative.
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Postby ResearchMed » Sat Sep 05, 2009 11:56 am

Have you considered using the attorney who worked with you drawing up your estate plans? That person will have the added benefit of knowing very well what your "intentions" are, should there be decisions to be made in the future, assuming that you both had some pretty serious discussions of what you did, and did not, want to be done with your assets.

I don't know if there are any laws in your state that might preclude this choice.

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Postby Ron » Sat Sep 05, 2009 12:27 pm

MBMiner wrote:I know some will assume I'm biased, but I can assure you that most corporate fiduciaries do a much better job administering an estate than most individuals. Furthermore, it is almost always done more economically because the corporate entity has less need to draw on the lawyer's time and does most of the tax and accounting work in house instead of being farmed out to CPA's.

You need to rely on the quality of the institution and not so much the individual officers. Your family will not regret your decision to utilize a corporate personal representative.
Bruce


Actually, I'm not biased and I agree with you.

Due to the situation of having a disabled son (our only "child") and the fact that nobody in our immediate family wants nothing to do with his future welfare, we went with the "(modified) corporate entity" route.

Established with the joint working of our (Elder Law) attorney and a local financial management team, it is the best solution for our situation.

The important thing is that we are having an organization (rather than an individual) manage the situation after we have passed. And since these two folks are part of a larger organization,:

http://www.naepc.org/default-public.web

with local representatives, we feel confident for the long term, long after we can speak for our son.

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Postby CABob » Sat Sep 05, 2009 1:17 pm

This might be a case where you should have a will and let the probate court take care of things after you pass. This doesn't seem like good advice in most cases, but, this might be the exception.
I would like to hear from others as to why it isn't a good idea.
Bob | An investment in knowledge pays the best interest. -- Benjamin Franklin
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Postby Gill » Sat Sep 05, 2009 2:00 pm

CABob wrote:This might be a case where you should have a will and let the probate court take care of things after you pass. This doesn't seem like good advice in most cases, but, this might be the exception.
I would like to hear from others as to why it isn't a good idea.


Not sure what you mean. Do you mean to have the court administer the estate? They will appoint a PR, possibly one not to your liking.
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Postby CABob » Sat Sep 05, 2009 3:11 pm

MBMiner wrote:
CABob wrote:This might be a case where you should have a will and let the probate court take care of things after you pass. This doesn't seem like good advice in most cases, but, this might be the exception.
I would like to hear from others as to why it isn't a good idea.


Not sure what you mean. Do you mean to have the court administer the estate? They will appoint a PR, possibly one not to your liking.
John

Yes, I guess that is what I meant. If there is a will designating charities that are to receive the assets and there are not any relatives arguing about it it seems as though the court and their appointees would have a fairly straight forward job to do.
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Postby Gill » Sat Sep 05, 2009 4:38 pm

Whether it is straight forward or not, there still must be a personal representative. The court won't assume the responsibility for administering the estate, only oversee the work of the PR.
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Postby funnymoney » Sat Sep 05, 2009 5:42 pm

Our wills are set up to establish the spouse as executor. However, if that fails for any reason, our will stipulates that "a licensed, professional guardian" be appointed by our children in cooperation with an attorney) should handle whatever's left. That takes the responsiblity off the children and reduces opportunity for friction. Some $$ goes to the kids and some $$ goes to charities.

I am biased, and I think bank trust departments are notorious -- for good reason. I could be wrong, but I am sticking to that position unless it's proven otherwise.

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Postby Gill » Sat Sep 05, 2009 6:06 pm

funnymoney wrote:...and I think bank trust departments are notorious -- for good reason. I could be wrong, but I am sticking to that position unless it's proven otherwise.

Funnymoney


Notorious for what? What kind of proof would you like? Perhaps you could die naming a bank as personal representative and see how your family likes the job they do. Being retired, I no longer have a financial interest in defending the bank's role in estate administration. I can tell you in good faith that most banks and trust companies will administer an estate more economically and efficently than most individual fiduciaries. Very few people know what is involved in the administration of an estate, unlike a corporate entity who makes this its business.
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Last edited by Gill on Sat Sep 05, 2009 7:08 pm, edited 1 time in total.
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Re: bank as executor--your thoughts?

Postby stjoe56 » Sat Sep 05, 2009 7:04 pm

aquamarine wrote:But honestly, I've not known anyone else who has named a bank as an executor. Most people I know name their children or a relative. I don't expect any problems, but I wanted to get your feedback and collective wisdom and experience before signing on the dotted line.


My family (i.e., my side) has used banks/trust companies exclusively for three reasons: (1) they know what they are doing, (2) the want to get it done quickly so they can get their fee and get out, and most importantly (3) they will not steal from the estate.

Most recently my wife had to sue her sibling because (1) two (three) years later there had been no reports and no distributions. I think the sibling was waiting for various CDs to mature without penalty. What the sibling did not know that every bank waives early withdrawal penalties when the person dies.

I know of too many cases were (1) the the trusted family member who was the executor stole from the estate, (2) the lawyer, who did not specialize in trust and estate law either was incompetent or tried to bleed the estate for fees, and (3) some non-professional general f*cked up.

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Postby Grandma » Sat Sep 05, 2009 7:42 pm

Probate/estate rules will differ from state to state. In California, for example, a Will must be probated and the fees are statutory, based on a graduated percentage of the value of the estate.
Extraordinary fees can be petitioned for to the court in appropriate circumstances.
Your executor, whether individual family/friend, bank trust department or estate attorney, is entitled to these fees for serving as your executor, unless the executor waives them.
Waivers are often done in close family situations. Or nominal/reduced compensation.
Obviously neither the bank nor the attorney will waive the fees.
Just depends on what you want.
Some of the bank trust officers I have known were JDs, but most not. That's not to say they can't do it efficiently, but be aware that the bank legal department will also likely be taking fees from your estate in addition to the executor's compensation. The bank might be 'double-dipping'.
Just be certain you are aware of the ultimate costs.
It's always best to at least consult with a qualified estate attorney to educate yourself before you make any decisions.
Good luck to you.
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Postby Gill » Sat Sep 05, 2009 8:17 pm

Grandma wrote:.be aware that the bank legal department will also likely be taking fees from your estate in addition to the executor's compensation. The bank might be 'double-dipping'.
Just be certain you are aware of the ultimate costs.


That's absolute nonsense. The bank is represented by the attorney chosen by the testator. Services of the bank's legal department are included in the PR's fee. The practice you describe would never be allowed by the courts or the bank examiners
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Postby Patchy Groundfog » Sat Sep 05, 2009 8:36 pm

I know that most banks can be trusted as executors, but our experience with the large bank that held my father's trust and was executor of his estate still makes me angry 13 years later. The probate judge finally made them resign because of a clear conflict of interest between the bank and the trust, otherwise they would have spent every penny my father left to protect themselves from some imagined liability. Then they refused to disburse the funds in the trust until we had paid the fees of the outside attorney they hired.

I'm just saying that if the bank perceives any possible threat, no matter how remote or implausible, to its own money, it will always act in its own interest. That's what banks are supposed to do, and that's what they do.
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Postby Grandma » Sat Sep 05, 2009 8:44 pm

Bruce, sorry to step on your toes; I'm sure you did a wonderful job as a fiduciary in your position. But it's not absolute nonsense.
There are on occasion absolutely outrageous and redundant fees by bank trust departments.

I just cautioned the poster to be certain they understand all layers of fees, and all roles. Sorry that upset you.
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Postby Gill » Sat Sep 05, 2009 8:47 pm

To each his own. I knew I'd start a heated discussion in post #3. Wish I had never replied.
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Postby pjstack » Sat Sep 05, 2009 9:30 pm

To MBMiner: Your input was valuable, please don't go away mad! But it is still prudent to inquire up front about fees.

In California the fee schedule is written into the probate law:

"In California, probate is generally triggered when an estate is worth more than $100,000. That amount doesn’t rise with inflation, so over time more and more estates are subject to probate.

The typical probate in California can take 12 to 18 months, and some go on for years. (Marilyn Monroe’s estate took 18 years to settle.) The long waits for heirs aren’t the only problem: The costs for probating even a modest estate can be astronomical.

Attorneys and executors can each take 4% of the first $100,000, then 3% of the next $100,000, then 2% of the next $800,000, then 1% of anything over that amount. So a $300,000 estate can rack up $20,000 in probate fees. (Monroe’s probate fees totaled more than $1 million, says estate planning expert Denis Clifford. Her total debts were about $400,000, leaving just $100,000 to be divided by her heirs.)

By the way, those probate fees are based on the gross estate -- the value of all the property, not counting any mortgages, loans or other debt."

Real estate prices are still preposterous in CA. Three bedroom (or even 2 bedroom) houses go for $500,000.

Of course, if the executor is also the beneficiary they probably wouldn't charge their allowable fee, but the lawyer/bank probably would.
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Postby JDCPAEsq » Sun Sep 06, 2009 10:04 am

PJStack - Although you are saying probate is not inexpensive, the fee is the same for a professional fiduciary or an individual. For the same price, why not hire the expertise, financial responsibility, continuity and group judgment of a corporate personal representative, i.e., a bank or trust company? Furthermore, a cororate executor is often cheaper because it does not have to hire others to do its work, because much of it is available in house. Managing an estate isn't a job for a novice.
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Postby pjstack » Sun Sep 06, 2009 11:29 am

JDCPAEsq wrote:PJStack - Although you are saying probate is not inexpensive, the fee is the same for a professional fiduciary or an individual. For the same price, why not hire the expertise, financial responsibility, continuity and group judgment of a corporate personal representative, i.e., a bank or trust company? Furthermore, a cororate executor is often cheaper because it does not have to hire others to do its work, because much of it is available in house. Managing an estate isn't a job for a novice.
John


Your point is well taken. It is probably wise to carefully review your accounts for beneficiary designations (and secondary beneficiaries) in order to take advantage of stuff that can pass outside of probate.

In a situation like the one described by the Original Poster (where there are no relatives available or up to the job), a bank may be the way to go.
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Postby Grandma » Sun Sep 06, 2009 11:34 am

Aquamarine: You indicate that your husband and you "are doing some estate planning" and contemplating naming the bank as your executor.

Does this mean you are doing the estate planning on your own, or with legal counsel?

My point is, if you are certain that one particular charity is to be the sole beneficiary of your entire estate, there may be better ways to accomplish what you ultimately wish to achieve. I think 'soaring' was hinting at that. Finally, there are instruments which might even potentially provide you income and benefit during your life with such a charitable commitment upon your death. (I'm not endorsing them; just saying they exist if you wish to explore.)

I'm really not pushing lawyers, but a consultation with a qualified professional will help you accomplish what you really want to achieve in the most efficient way.

Good luck.

Best wishes. (Edit: Sorry I said husband, you said spouse; an inappropriate assumption on my part!)
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thank you

Postby aquamarine » Sun Sep 06, 2009 6:00 pm

Thanks everyone for your replies. I have read every single post very carefully, and I wanted to say that I am grateful for your thoughtful posts. Getting your point of view is extremely helpful and valuable. I am going to see a lawyer, but I wanted to hear your thoughts so I could go in more informed and better prepared.

Thank you so much.

Best regards,
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Postby dratkinson » Mon Sep 07, 2009 4:30 pm

I would prefer a close personal friend to act as the executor, rather than an impersonal organization. I believe the friend would be much more responsible.

Several decades ago I established a living trust with my local bank prior to joining the military. The plan was that I would send the bank my military pay and the trust department paid all of my non-local bills (insurance policies and credit card bills) and file my income taxes while I traveled the world. In this way, I always had someone local watching my finances so I could never get into trouble. The only expenses I paid were my local expenses from my checking account which was filled by the trust department.

Everything seemed to work well for a number of years. Then one year I bought a new car and called the insurance company to change the vehicle on the policy. I learned that the policy had been canceled because the trust department had not paid my auto insurance for more than two years!

A quick called to the bank trust department resulted in them saying, "...you never had an accident so no harm, no foul."

After scrambling and getting new auto insurance, I terminated the living trust.

I believe a willing close family friend would have done a much better job.

/r
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Postby Ron » Mon Sep 07, 2009 4:42 pm

dratkinson wrote:I believe a willing close family friend would have done a much better job.

David


Agreed, but what if you have neither (friend or family)?

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Postby Gill » Mon Sep 07, 2009 4:45 pm

Also, the bank would have been financially responsible for such an error, whereas the "close family friend" might not be nor would you like to sue this person. Better a financially responsible corporate fiduciary. Everyone can tell you horror stories about bank trustees. I can tell you a few about individual trustees and when they mismanage a trust there's often no redress.
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Postby dratkinson » Mon Sep 07, 2009 5:00 pm

MBMiner wrote:Also, the bank would have been financially responsible for such an error, whereas the "close family friend" might not be nor would you like to sue this person. Better a financially responsible corporate fiduciary. Everyone can tell you horror stories about bank trustees. I can tell you a few about individual trustees and when they mismanage a trust there's often no redress.
Bruce


Point conceded. :)

To further our knowledge and as the OP has no children (applies to myself as well), who ensures the bank trust department faithfully discharges all of their duties?
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Postby Gill » Mon Sep 07, 2009 6:14 pm

dratkinson wrote:To further our knowledge and as the OP has no children (applies to myself as well), who ensures the bank trust department faithfully discharges all of their duties?

Multiple parties oversee the bank's trust department. First of all there are internal controls and internal auditors. Then there are external independent auditors as well as state and federal bank examiners, all of whom regularly examine the trust department to insure compliance with governing instruments and proper fiduciary procedures. Then there are the courts who oversee much of what takes place in a trust operation and are also available to beneficiaries who wish to invoke their jurisdiction. Aside from the courts, none of this oversight is available when dealing with an individual fiduciary.
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Re: bank as executor--your thoughts?

Postby celia » Tue Sep 08, 2009 12:54 am

aquamarine wrote:... gave us a good "sell" as to why you should name a bank as opposed to a relative as the executor of a will (banks don't "die"; banks are "professionals with experience"; relatives don't have to be boggled down with handling an estate when they are grieving, etc).


I disagree with all of these points that the bank rep told you.

1. When we created our trust, the lawyer recommended that we name a series of executors in case the preceding person(s) was unwilling/unable to serve and end the list of successor trustees with a Trust Company--since they will always be there even if all the named relatives die before us. We did that. A few years ago I was looking at the trust and all the relatives were still living and at the address we had listed for them. Then for fun, I searched online to see if the Trust Co. was still at the same location. I could not find it anywhere online. It appears they merged or were bought out by another Trust Co. or bank, who also was bought out. In this day of banks being shut down, I would expect many of them to not be there when you die.

And when you and your spouse have both died, how are they to be notified (assuming they still existed, of course) that they should assume their responsiblities?

2. When I was a trustee for a relative, I had several disagreements with my bank on transactions I tried to do. I ended up closing the accounts and moved them elsewhere and easily performed the transactions I wanted. When I need to go into the bank it tends to be on a Saturday since I work other days. That is the day the temporary clerks who normally work at other branches fill in. (Maybe it's because they have less seniority so they get stuck working weekends??) It seems they need to call downtown to get directions for transactions they don't perform frequently. I have over-heard other customers (trustees) trying to do transactions and the bank prevents it as if the bank was acting as trustee in making the decisions, rather than acting like a bank.

3. You don't have to take immediate action (ie, "while grieving") except to arrange the funeral. You can have the deceased's mail forwarded to your house and pay bills and taxes when it is convenient for you (as long as it is done in a timely manner).

I suggest naming a trustworthy friend who is younger than you and who agrees to do it before you specify them. This could probably be the person who would most likely notify your other friends that you have died and would come to your funeral anyway. Surprise them by specifying 5% as their fee, before the rest is distributed. If the sale of real estate is involved, that can be very time-consuming, so they should be compensated somehow.
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Re: bank as executor--your thoughts?

Postby Gill » Tue Sep 08, 2009 7:40 am

celia wrote:Surprise them by specifying 5% as their fee, before the rest is distributed. If the sale of real estate is involved, that can be very time-consuming, so they should be compensated somehow.


Celia - Your arguments for using an individual fiduciary are weak at best, so I won't attempt to respond. However, I submit you would do your friend a favor by leaving them 5% of the estate which would be nontaxable to them, rather than specifying a fee of 5% which would be fully subject to income tax. Impressed? See how those of us who have worked for corporate fiduciaries know our stuff? :lol:
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Postby carolo » Tue Sep 08, 2009 1:37 pm

Are you also making plans in the event of incapacity? This can be even more important than designating how your estate will be handled. I've seen couples with several children and/or trusted friends who were named get into major difficulties when they are no longer able to handle their day to day financial affairs.

And a question for Bruce, if I may...would a bank still handle assets held at Vanguard or would the bank want to use their own family of mutual funds? (I'm thinking in terms of incapacity at the moment rather than the bank just acting as trustee of the estate.)
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Postby Gill » Tue Sep 08, 2009 5:14 pm

carolo wrote:And a question for Bruce, if I may...would a bank still handle assets held at Vanguard or would the bank want to use their own family of mutual funds? (I'm thinking in terms of incapacity at the moment rather than the bank just acting as trustee of the estate.)


I'm probably not current on the position of all banks on this issue, but normally though the use of a living trust you can provide for your disability, and have investment direction in the trust agreement authorizing or directing the bank as trustee to invest in a certain way.

My experience has been that banks will reduce their fee on assets held in their own funds to offset the fee of the fund. They would probably discourage you from using outside funds because of duplication of fees between the trustee and Vanguard, but you could certainly do so if you wish. An attractive alternative might be to consider using Vanguard's Trust Company as trustee which would eliminate this problem.
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Trust Company selection

Postby shawcroft » Wed Sep 09, 2009 7:27 am

Bruce's most recent comment about using the Vanguard Trust Company intrigues me. Has anyone on the Forum dine that as part of their estate planning?
That said, I do appreciate the appeal of having a (presumably) long-lived and experienced institution able to perform the estate administrative and resolution services after death. The more complex the estate, the more likely experienced individuals will be needed. As for my comment about long-lived, the turnover in the banking industry over the past two decades has been remarkable. It is truly important to keep track of what organization has become the successor company to another.
Balancing the appeal of using a banking institution as trustee are the (likely) higher costs charged to the estate. So, I wonder how folks ( if any) have fit the Vanguard Trust Company services into their estate plans. Any thoughts?
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Postby carolo » Fri Sep 11, 2009 12:17 am

I met with my accountant late this afternoon. This was a first meeting, because generally my husband prefers to do taxes himself w/ TurboTax. Although the accountant seemed very pleased w/ the Vanguard funds and also w/ the I Bonds, when I told him about a planned meeting w/ attny to finalize a new will w/ some minor changes, such as naming who would take over in the event of incapacity, the accountant said "that's the easy part. Name a local bank as trustee." I said "Vanguard has a trust department." He said "no, you will want a local bank to handle this." The accountant, whose firm also actually does estate planning as well, gave a number of examples as to why I wanted a local bank.

Meanwhile, we'll see what the attny says. They do not know one another, btw, so I should have two separate opinions. Our long time attny retired, so here again it will be a new perspective. Stay tuned. New attny specializes in Elder Law.
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Postby seugene » Tue Sep 15, 2009 7:50 am

I would prefer a close personal friend to act as the executor

THE EXECUTOR

I had a friend who died and he
On earth so loved and trusted me
That ere he quit this earthly shore
He made me his executor.

He tasked me through my natural life
To guard the interests of his wife
To see that everything was done
Both for his daughter and his son.

I have his money to invest
And though I try my level best
To do that wisely, I'm advised
My judgement oft is criticized.

His widow once so calm and meek
Comes, hot with rage, three times a week
And rails at me, because I must
To keep my oath appear unjust.

His children hate the sight of me
Although their friend I've tried to be
And every relative declares
I interfere with his affairs.

Now when I die I'll never ask
A friend to carry such a task.
I'll spare him such anguish sore
And leave a hired executor.

-- Today and Tomorrow, Edgar A. Guest, 1942
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Postby Gill » Tue Sep 15, 2009 8:00 am

Always loved that poem! A bank I was once with used it in their advertising. The poem say it all! Thanks for posting it.
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Postby Fbone » Tue Sep 15, 2009 10:07 am

I also am trying to do some estate planning. Everyone I asked to be my financial POA and executor has politely declined.

My attorney hasnt been helpful so far. The whole thing has been stressful and I finally understand why people dont bother with wills and leave the State to deal with it.
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Postby Gill » Tue Sep 15, 2009 10:19 am

Fbone wrote:I also am trying to do some estate planning. Everyone I asked to be my financial POA and executor has politely declined.

My attorney hasnt been helpful so far. The whole thing has been stressful and I finally understand why people dont bother with wills and leave the State to deal with it.


Leaving the State to deal with it isn't the answer. You need a professional fiduciary, i.e., a bank or trust company. They are in the business of handling estates and do it well.
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Postby Fbone » Tue Sep 15, 2009 1:23 pm

MBMiner wrote:Leaving the State to deal with it isn't the answer. You need a professional fiduciary, i.e., a bank or trust company. They are in the business of handling estates and do it well.
Bruce


Neither my bank or credit union have a trust department.
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Postby seugene » Tue Sep 15, 2009 2:51 pm

Are you looking for an excuse? This is a bad one. :lol: :lol:

Talk to another bank or credit union.
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Postby Gill » Tue Sep 15, 2009 3:13 pm

I don't believe Credit Unions have trust powers, but there are banks and trust companies everywhere in the country that can serve in this capacity. Just because it is not offered by your bank is no reason to abandon the idea.
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Postby Fbone » Tue Sep 15, 2009 9:49 pm

MBMiner wrote:I don't believe Credit Unions have trust powers, but there are banks and trust companies everywhere in the country that can serve in this capacity. Just because it is not offered by your bank is no reason to abandon the idea.
Bruce


You may be correct about credit unions. I would prefer to have used someone local that knows my situation and have worked with for years that I know personally and trust. Thus, I wanted my bank and CU whom I used for 20+ years.

I did ask at a few other banks but they outsource to a 3rd party.

Anyway, I'll wait to hear what my lawyer says. Problem is my estate is very very small but complicated.
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Re: Vanguard Trust

Postby Mitchell777 » Mon Oct 08, 2012 7:10 am

MBMiner wrote:
carolo wrote:And a question for Bruce, if I may...would a bank still handle assets held at Vanguard or would the bank want to use their own family of mutual funds? (I'm thinking in terms of incapacity at the moment rather than the bank just acting as trustee of the estate.)


I'm probably not current on the position of all banks on this issue, but normally though the use of a living trust you can provide for your disability, and have investment direction in the trust agreement authorizing or directing the bank as trustee to invest in a certain way.

My experience has been that banks will reduce their fee on assets held in their own funds to offset the fee of the fund. They would probably discourage you from using outside funds because of duplication of fees between the trustee and Vanguard, but you could certainly do so if you wish. An attractive alternative might be to consider using Vanguard's Trust Company as trustee which would eliminate this problem.
Bruce

I know I am really bumping up an old post but I was doing some research reading old posts, some very well thought out old posts such as this one. Just a note that I recently had a Trust document drawn up by my attorney using Vanguard as the Trustee. My attorney had not used Vanguard in the past. I thought I did my homework but I did not ask all the questions of Vanguard Trust. I needed a Trustee, Investment manager, and Executor to care for an elderly parent if i should die first. I found out that Vanguard Trust will not act as Executor. It is important, and works best for me personally, to have a corporate Trustee so I will probably need to change from Vanguard Trust to a Bank. Just info for anyone in the same situation although I know most people use family or friends as executor
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Re: bank as executor--your thoughts?

Postby Gill » Mon Oct 08, 2012 8:27 am

I'm still here and was surprised to see this old thread revived. :happy It's not that Vanguard will not act as executor, but that they have no authority to do so in most states. It seems unfortunate to give up on the idea of Vanguard as trustee because you can't name them as executor. The duties of an executor usually take a year or two but the trust can go on for decades. There's no reason you couldn't use a local bank as the executor to liquidiate and distribute the estate and then Vanguard as the ongoing trustee. Also, if you used a revocable living trust you would essentially eliminate the duties of the executor and thereby solve your problem. This would be the better alternative in my view.
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Re: bank as executor--your thoughts?

Postby Mitchell777 » Mon Oct 08, 2012 8:41 am

Thank you. I think I need to contact a couple of my local banks and ask about acting as executor (actually Vanguard also did not offer financial POA services either). My attorney felt that they would not want to act as executor if they did not handle the trust but that may well be that he is just most comfortable dealing with one local bank. The revocable trust is interesting. I have just a testimentary trust within my will currently. Was trying to keep it inexpensive and simply since the parent I am concerned about is not doing all that well and i'm in good health. Just want to be sure she is well cared for without receiving a large sum of money she cannot handle any longer. When she passes, everything in my estate goes to several charities in lump sums
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Re: bank as executor--your thoughts?

Postby johnep » Tue Oct 09, 2012 7:06 am

MBMiner wrote:
celia wrote:Surprise them by specifying 5% as their fee, before the rest is distributed. If the sale of real estate is involved, that can be very time-consuming, so they should be compensated somehow.


Celia - Your arguments for using an individual fiduciary are weak at best, so I won't attempt to respond. However, I submit you would do your friend a favor by leaving them 5% of the estate which would be nontaxable to them, rather than specifying a fee of 5% which would be fully subject to income tax. Impressed? See how those of us who have worked for corporate fiduciaries know our stuff? :lol:
Bruce


Having an individual be the trustee in this instance seems to be a bad plan. Finding someone who will competently administer your estate and who is totally trustworthy is harder than you might think. I am currently executor of a small estate for my mother. I spent my career in business and am usually undanted by business affairs. I have found certain aspects of estate administration challenging and time consuming. The estate has taken far more of my time than I imagined. The executor also has to be mindful of the potential legal liability they have to handle the estate. People who handle estates regularly can perform the job much better.

You are best served by appointing a bank or alternatively, an attorney as trustee.
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Re: bank as executor--your thoughts?

Postby shawcroft » Tue Oct 09, 2012 10:51 pm

MBMiner wrote:I'm still here and was surprised to see this old thread revived. :happy It's not that Vanguard will not act as executor, but that they have no authority to do so in most states. It seems unfortunate to give up on the idea of Vanguard as trustee because you can't name them as executor. The duties of an executor usually take a year or two but the trust can go on for decades. There's no reason you couldn't use a local bank as the executor to liquidiate and distribute the estate and then Vanguard as the ongoing trustee. Also, if you used a revocable living trust you would essentially eliminate the duties of the executor and thereby solve your problem. This would be the better alternative in my view.
Bruce


I, too, was a bit surprised to see this thread revived. There have been several discussions on this- and related topics- over the past three years. I've looked into this for a while and I believe Bruce's thoughts on Vanguard are quite reasonable. An experienced estate attorney is, to me , essential in crafting something which will fit your needs and those of your family.
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