Wealth managers can make a huge difference in the lives of their clients’ families by encouraging clients to protect their legacy by appointing a qualified fiduciary to manages their assets post-death. The choice of an executor or trustee can easily transform latent family tensions into high-stakes litigation. While clients may resist selecting a professional corporate fiduciary as being too costly, fiduciary litigators advocating for corporate fiduciaries can result in long-term financial and emotional savings.
“The most common pushback from clients is cost and, of course, the client can name whomever they want to oversee their estate. If they want to name their kid, they have every right. It’s their estate. But will it really be cheaper than bringing in a professional? Probably not. A person doing it for free probably doesn’t know how to do the job well, and if they don’t do it well, it can cost far more in the long run. I’m talking generations down the line,” explained Adam R. Gaslowitz, a Founding Partner of Gaslowitz Frankel.
3 Reasons Wealth Managers Should be Advocating for Corporate Fiduciaries
Shifting a client’s perspective from emotional bias to objective risk assessment requires sold evidence. Here are 3 reasons wealth managers should be advocating for corporate fiduciaries:
- Advocating for Corporate Fiduciaries and the Cost Misconception
- Advocating for Corporate Fiduciaries Ensures Objectivity Over Emotion
- Advocating for Corporate Fiduciaries Minimizes Sibling Conflict
Related Article: When Wealth Managers Need Fiduciary Litigation Expertise
1. Advocating for Corporate Fiduciaries and the Cost Misconception
The primary objection wealthy clients raise against corporate fiduciaries is cost; they assume bank fees outweigh the “free” labor of a family member and miss the hidden costs of individual administration.
When a family member is named executor, they must hire separate accountants, lawyers, and asset managers to perform functions they are not qualified to handle. This disjointed approach is often more expensive and prone to error than a single professional fee.
Related Article: Mitigating Investment Litigation Risks for Your Clients: A Fiduciary Perspective for Wealth Managers
2. Advocating for Corporate Fiduciaries Ensures Objectivity Over Emotion
Another common objection when one advocates for professional fiduciaries involves what we refer to as the “emotional plea.” Clients often fear that a stranger is not capable of making intimate family decisions. But objectivity can be more important to preserving family wealth than insider perspective. Siblings selected as trustees for high-net-worth families often have strained relationships with other beneficiaries. When strained relationships pre-exist a sibling’s appointment as fiduciary, personal history can corrupt the fiduciary’s judgment and put them at risk of inadvertent breaches of fiduciary litigation.
“Clients worry that a fiduciary who doesn’t know the family won’t be fit to make decisions, but the opposite is frequently true. Professional fiduciaries are experts in making distribution decisions. They operate with internal committees and rigorous checks and balances that ensure the grantor’s intent is followed without the cloud of family dynamics,” explained Gaslowitz.
Related Article: Protecting Client Legacies: When Wealth Managers Face Contested Estates
3. Advocating for Corporate Fiduciaries Minimizes Sibling Conflict
A litigation perspective provides the most compelling argument for appointing a corporate fiduciary because it illustrates the worst-case scenario. A significant amount of fiduciary litigation arises from siblings fighting over the administration of an estate.
“A corporate fiduciary is a robust preventive measure against the destruction of family relationships. When one sibling is given authority over another’s inheritance, even a thoughtful decision can be perceived as a slight due to decades of family history. That perceived injustice is a common source of disputes that can consume the estate’s value,” said Craig M. Frankel, a founding partner of Gaslowitz Frankel.
Corporate fiduciaries minimize risk and ensure impartiality. They are fully staffed with specialized expertise to ensure they uphold their fiduciary duty.
“In fiduciary litigation, emotions run high, but it is essential to maintain a focus on the legal and financial issues at stake. Our role is to provide the specialized guidance necessary to navigate these challenging situations and protect the client’s financial well-being,” added Frankel.The attorneys of Gaslowitz Frankel have years of expertise in handling the complex issues surrounding will, trust, estate, business, and securities disputes. For trusted estate law and fiduciary legal guidance, consult with the attorneys of Gaslowitz Frankel.
