Pub. 14 2017 Issue 3

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S 12 n No Good Deed Goes Unpunished  continued from page 11 a stepparent follows all the rules and is a good custodian for their stepchild’s future inheritance, the relationship is inherently different once a stepparent’s financial needs are pitted against a child’s financial needs and stepparent controls the purse strings. Why not consider shifting that decision making authority to a neutral party like a professional corporate fidu - ciary? Doing sowould remove an apparent conflict of interest and allow disgruntled beneficiaries to direct their displeasure over an unpopular but prudent financial decision at a corporate fiduciary instead of at a family member. This may very well save a relationship that otherwise would have deteriorated under the strain brought about by a sudden shift in power. If there are no blended family con- siderations, then naming the surviving spouse as trustee or personal representa- tive of a trust or estate is usually a pretty straightforward decision. Adult children in general tend to accept a surviving par- ent’s authority to continue to manage the couple’s own money after the death of the first parent, assuming there is capacity. But what if capacity is declining? Would one of your children have the expertise and time to devote to managing the financial affairs of a surviving spouse? Adult children who find themselves facing these circumstances are often at a place in their own lives where they have busy careers and are juggling family obliga- tions that come with raising children. Not to mention the question of which adult child to choose. Right or wrong, many children may feel slighted if they were not chosen as the one to be given the job of successor trustee of the parents’ living trust, Personal Representative under a will or agent under a Power of Attorney. The decision to appoint one child over another may have been made based on rational considerations such as proxim- ity, expertise, knowledge of a parent’s personal wishes or needs, and existing work or family obligations, but you can be sure that “mom always liked you best” is often simmering under the surface. Appointing a professional fiduciary as the second in line or backup fiduciary after the surviving spouse can relieve what would have been a burdensome responsibility for an adult child and diffuse tensions that arise between siblings when one is put in charge instead of another. Many estate planning attorneys will suggest naming a corporate fiduciary at the end of a list of family members, “just in case”. Many individuals, after realizing just howmuch work is involved in managing a parent’s financial affairs, are relieved to have an “out” and be able to resign and hand over responsibility to a corporate trustee and focus instead on their own busy lives. Some individuals elect to avoid the appearance of favoritism and decide to appoint each of their children as "co-fidu - ciaries", choosing to believe that they will work together to share the administrative burdens and make joint decisions, all the while making sure that no one child has power over the other. While checks and balances are an important consideration, frequently a co-fiduciary appointment leads to deadlock with adult children unable to work together, frustrated by conflicting schedules, unavailability, and plain old disagreement over important financial decisions. Think Congress on a smaller scale. One approach some estate planning attorneys use to give adult chil- dren a say while preserving the efficiency afforded by a single decision maker is to name a child or children as trust advisors or trust protectors and naming a corporate fiduciary as the trustee. This arrangement can allow adult children to contribute information and insight gained by a life- time with their parents while allowing an independent corporate fiduciary to make final decisions. Trust protectors can have the power to remove and replace a corpo- rate fiduciary if they are not fulfilling their fiduciary duties. Most of us, when we go on vacation, do some planning. Wemake reservations, we "Google" the locations and attractions we want to see. We "Yelp" the restaurants and food we want to experience. All of this is preplanning. It can save time, confusion, frustration and even money. Same with a carefully thought out estate plan. What you want to have happen to your property while you are incapacitated or after you are gone is an important question. Equally important is the question of whowill carry out your carefully laid plans. The corporate fiduciary is experienced - they have a serious track record of han- dling simple and very complex fiduciary matters. They know Probate and Trust Law. The State of New Mexico passed and continually revises the Uniform Probate and UniformTrust statutes. These are two of the many laws a fiduciary must under - stand to avoid a breach of their fiduciary duty. Nothing can be more harmful than when a family member contemplates or actually sues another family member if they perceive wrong doing. The corporate fiduciary carries Errors and Omissions insurance just in case someone perceives they are mishandling their job. Last but certainly not least, they must submit to regulatory oversight. Federal or state regu- lators examine the records, procedures and practices of the corporate fiduciary. This is essential oversight and good public policy. Sure, there is a cost to have your fi - nancial matters handled professionally. New Mexico law currently requires any entity that serves in a fiduciary capacity to receive "reasonable compensation". But there are also potential costs, both monetary and emotional, to relying on family members or friends to serve as your fiduciaries after your incapacity or death. Individual fiduciaries can rightly claimcompensation for the work that they perform. The emotional cost that comes when family members are pitted against each other, however, is something that can be avoided with good planning, an open mind, and a thorough examination of the benefits of bringing an independent cor - porate fiduciary in as part of the plan. n Article submitted by Elizabeth Medina, JD, Trust Officer, and John Attwood, Trust Officer and Business Development, both with Zia Trust, Inc. If you would like more information about Zia Trust serving as a corporate fiduciary, please contact John Attwood or Elizabeth Medina at 1-505-881-3338. Offices in Albuquerque, Santa Fe, Las Cruces and Phoenix, Arizona. Zia Trust is a proud member of the New Mexico Banker’s Association.