Estate Planning Myth vs. Reality #5 - Should You Name a Bank or Trust Company as Your Executor or Trustee?

Estate planning myth: Since you can't decide between naming cousin Sue and uncle Bob as your Executor and Successor Trustee, you can simply name XYZ Bank to serve as your Executor and Successor Trustee.

Estate planning reality: To date I have not found a bank or trust company that is willing to serve as the Executor of an estate or Successor Trustee of a trust without knowing two things:

1. The net value of the estate or trust assets that will need to be administered.
2. The type of estate or trust assets that will need to be administered.

Why does the bank or trust company want to know this information? Because banks and trust companies are in the business of making money and so they need to be assured that they will get paid while serving as an Executor or Successor Trustee. So if the value of the estate or trust is under a specific dollar amount or is made up of illiquid assets, then chances are the estate or trust will not be able foot the institution's bill. Aside from this, banks and trust companies do not want to deal with assets such as primary or secondary residences, valuable personal effects, or businesses - instead they are best equipped to handle cash and liquid investments.

The recommendation: If you want to name a bank or trust company to serve as your Executor or Successor Trustee, then consult with the bank or trust company before doing so to insure that your estate or trust will be accepted by the institution. If so, then you will need to submit drafts of your will and/or trust to the bank or trust company so that their legal department can review the documents and request any changes or additional provisions. If not, then you will need to find an alternative Executor or Successor Trustee.

• What Does an Executor Do?
• How to Choose an Executor
• What Does a Successor Trustee Do?
• How to Choose a Successor Trustee
• Pros and Cons of Appointing Institutional Fiduciaries