Minimize Family Drama Through Your Estate Plan
Even with considerable wealth and a multitude of resources, celebrities fall victim to money woes too. When Jimmy Buffett passed in 2023, he left management of his estate in the hands of his wife, Jane Slagsvol Buffett, and accountant, Richard Mozenter. While having co-trustees can be useful for managing a large estate, it can also lead to confusion and even conflict: In this instance, it took Jane 16 months to get key information from her co-trustee, and there was disagreement over how much annual income to which Jane was entitled. The disagreements ultimately ended up being litigated in court.
Below are a few planning considerations that could have helped Jane and might help you or your loved ones avoid similar stress down the road.
Strategy 1: Name a Corporate Co-Trustee
When a creator of a trust dies, their estate is managed by a successor trustee or co-trustee, often a surviving spouse or a trusted friend or family member. However, with multiple trustees, you run the risk of each having their own priorities and interpretations of what the grantor wanted, which can lead to disagreement or misunderstanding. That’s where a corporate trustee or co-trustee can make a real difference. Their neutrality helps guide difficult decisions with less friction, and their professional expertise ensures the estate is managed efficiently and in everyone’s best interest. For someone grieving, having a knowledgeable company handle the complexities can be a huge relief.
Strategy 2: Utilize a Team of Professionals
Engaging a team of professionals – lawyers, accountants and financial advisors – can bring peace of mind during the estate transfer process. These experts are trained to catch important details, like tax implications and legal requirements, that might be overlooked during an emotionally overwhelming time. Their guidance can prevent common mistakes that often arise when working solely with a family or friend co-trustee. Plus, they’re skilled at identifying potential issues early and addressing them efficiently before they escalate. Keep in mind that the larger and more complex the estate is, the higher the likelihood that issues arise and common mistakes get made. Your Baird Financial Advisor team can connect these advisors together for the benefit of your plan.
Strategy 3: Allow the Beneficiary To Replace a Trustee
Relationships often change after the grantor’s death, even in the best situations. The beneficiary should have the power to remove or replace a trustee if needed. This provision gives the beneficiary a way to fix problems without going to court, ultimately solving issues without expensive and time-consuming legal procedures. The trust terms could require the new trustee to be a corporate trustee with a strong reputation and a history of managing large sums of client assets. This option ensures a level of professionalism, neutrality and stability that a family member or friend acting as trustee may not have. Giving the beneficiary this option also helps protect the trust from mismanagement or neglect, as Jane Buffett’s legal claim asserts regarding her co-trustee. It’s a practical safeguard that keeps the trust flexible and focused on its purpose.
Strategy 4: Name a Trust Protector
If allowing the beneficiary to remove and replace the trustee isn’t ideal, naming a trust protector can be another great option. A trust protector is an independent professional – often a lawyer, accountant or experienced fiduciary – who can step in and remove or replace the trustee if there’s a conflict or concern. The trust protector doesn’t manage the assets directly, but they do have the authority to make sure that the trust is being handled properly. This creates a built-in safety net that helps resolve issues quickly and quietly, without the need for court involvement or added stress.
Jane Buffett’s experience shows how – even with an estate plan – situations can go awry without clear roles and proper support. It’s also a reminder that planning isn’t just for those with complex estates, but for anyone who wants to spare their loved ones confusion and stress. Your Baird Financial Advisor can help provide the right structure and safeguards to ensure your wishes are honored and your family is cared for.
