Common Mistakes When Choosing an Executor or Trustee | Kevin C. Martin

Common Mistakes When Choosing an Executor or Trustee

Mistake 1: Choosing Based Only on Emotion

Many people name the oldest child, closest sibling, or best friend because it feels natural. That person may be loving and trustworthy, but the role also requires time, organization, financial discipline, and emotional steadiness.

An executor or trustee may need to deal with banks, courts, creditors, tax professionals, real estate agents, investment advisors, and beneficiaries. They may also need to make unpopular decisions.

A better approach is to ask practical questions:

• Can this person meet deadlines?
• Do they handle money responsibly?
• Can they stay calm during family conflict?
• Are they willing to serve?
• Do they understand your values?
• Can they work with attorneys, accountants, and financial advisors?

Mistake 2: Ignoring Family Conflict

Family conflict can make estate administration difficult. If siblings already disagree, naming one sibling over the others may increase resentment. If a blended family is involved, one side of the family may worry that the fiduciary will favor the other.

This does not mean a family member can never serve. It means you should think honestly about how the choice will be received.

Potential conflict is especially important when:

• Beneficiaries do not trust each other
• One child received more financial help during life
• There is a second spouse or blended family
• One beneficiary lives in the home
• A family business is involved
• The estate plan leaves unequal shares
• A beneficiary has creditor, divorce, or substance abuse concerns

If conflict is likely, a neutral fiduciary or professional trustee may reduce pressure on the family. Clear document language can also help by giving the fiduciary specific instructions instead of leaving too much room for interpretation.

Mistake 3: Naming Someone Who Is Too Busy or Unavailable

Serving as a personal representative or trustee takes time. The person may need to gather records, contact institutions, review legal documents, respond to beneficiaries, attend meetings, sign forms, and make decisions.

A person may be honest and capable but still be the wrong choice if they are too busy, live far away, travel constantly, have health issues, or are overwhelmed by their own responsibilities.

Distance is not always a dealbreaker, but it can make practical tasks harder. A D.C. estate may involve local court filings, real estate access, property maintenance, or coordination with professionals in the area.

Before naming someone, ask whether they have the time and willingness to serve. Do not assume they will accept the role.

Mistake 4: Overlooking Financial and Recordkeeping Skills

A fiduciary does not need to be a lawyer, accountant, or investment professional. But they should be organized enough to keep records, manage money, and seek professional help when needed.

Poor recordkeeping can create disputes. Beneficiaries may question missing statements, unclear payments, or delays. A court may require information that the fiduciary is not prepared to provide.

Trustees have ongoing duties that may include investment decisions, distributions, tax reporting, and beneficiary communication. D.C. law also requires trustees to keep qualified beneficiaries reasonably informed about trust administration and material facts necessary to protect their interests.

If the person you trust does not have strong financial skills, you may still be able to name them with support. Options may include appointing a professional co-trustee, allowing the fiduciary to hire advisors, or naming a professional fiduciary for complex assets.

Mistake 5: Failing to Name Alternates

A common estate planning mistake is naming only one executor or trustee. That person may die, become incapacitated, move away, decline to serve, or become unsuitable by the time the role is needed.

Without a backup, the court or trust process may become more complicated. Family members may disagree over who should step in.

Your documents should name at least one alternate personal representative and successor trustee. In some cases, it makes sense to name more than one backup or to name a professional fiduciary as a final option.

Successor planning is especially important for long-term trusts. A trustee may serve for many years, so your trust should explain what happens when a trustee resigns, dies, becomes disabled, or needs to be removed.

Mistake 6: Creating Co-Fiduciary Problems

Naming co-executors or co-trustees can sound fair, but it can also create delays. If two people must agree on every decision, simple tasks may become harder.

Co-fiduciaries may work well when they trust each other and bring different strengths. For example, one person may understand the family while another understands finances.

But co-fiduciaries can create problems when:

• They do not communicate well
• They live in different places
• They have different views about money
• One does all the work, and the other blocks decisions
• They are beneficiaries with competing interests
• They cannot agree on distributions, sales, or expenses

D.C. trust law addresses co-trustees. Under D.C. Code § 19-1307.03, co-trustees who cannot reach a unanimous decision may act by majority decision. That rule can help in some trust situations, but the trust document should still be clear about how co-trustees make decisions, divide responsibilities, and resolve disputes.

If you want more than one person involved, consider whether one fiduciary with advisors or a professional co-trustee would work better than two family members with equal authority.

Mistake 7: Ignoring Conflicts of Interest

A conflict of interest can arise when the fiduciary’s personal interests do not align with the estate, trust, or beneficiaries.

For example, a person living in estate property may delay selling it. A trustee who is also a beneficiary may favor distributions that benefit themselves. A business partner serving as a fiduciary may have divided loyalties.

Some conflicts can be managed with clear terms. Others make the person a poor choice.

Before naming someone, consider whether they might:

• Benefit personally from delaying administration
• Have financial disputes with another beneficiary
• Owe money to the estate
• Own property jointly with you or another beneficiary
• Have control over a family business
• Need to make decisions that affect their own inheritance

A fiduciary must act in the interests of the estate or trust, not for personal advantage. If that will be difficult, choose someone else or build stronger safeguards into the plan.

Mistake 8: Not Considering a Professional Fiduciary

Some estates are too complex or too sensitive for a family member to manage alone. A professional fiduciary may be useful when the estate has large assets, business interests, rental property, difficult tax issues, family conflict, or long-term trust administration.

Professional options may include a bank trust department, a trust company, an attorney, an accountant, or another qualified fiduciary. Each option has benefits and costs.

A professional fiduciary may offer:

• Neutrality
• Continuity
• Administrative systems
• Investment oversight
• Experience with trust and estate duties
• Reduced family pressure

The downside is cost and, in some cases, less personal knowledge of the family. That is why some families use a hybrid approach, such as naming a trusted family member as a co-trustee with a professional.

The right choice depends on the estate’s complexity and the beneficiaries’ needs.

Mistake 9: Forgetting to Review the Choice Later

The right executor or trustee today may not be the right person five years from now. Relationships change. People move. Health changes. Financial habits change. Family conflict may increase or decrease.

You should review your fiduciary choices after major life events, including:

• Marriage or divorce
• Birth or adoption of a child
• Death of a named fiduciary
• A move to or from Washington, D.C.
• A major change in assets
• Sale or purchase of a business
• Estrangement or family conflict
• A beneficiary develops special needs
• A named fiduciary becomes unavailable

Estate planning is not a one-time task. A periodic review helps keep your documents aligned with your current life.