Why do you need a Private Trustee?

What is a Trustee?

Trustee is a legal term, which in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another. The strictest definition of the term is the holder of property on behalf of a beneficiary. There are Bank, Corporate, and Private Trustees.

Trustees are Licensed Professionals

Private trustees are regulated by the State of California Professional Fiduciaries Act. Professional Fiduciaries are required to be licensed by the State of California when they are a conservator or guardian for two or more people who are not related to them; and when they are an agent or trustee under durable power of attorney for healthcare or finances for more than three people; or more than three families at the same time who are not related to them.

What is a Private Trustee?

A Private Trustee is a position set up through a trust. It is a private agreement between the settlor of a trust and the trustee; hence ‘private trustee. This arrangement differs from a bank or corporate trustee, both of which mainly focus on financial management and accounting in the public setting.

A private trustee works for and with an individual, or a family, and beneficiaries. Working in this capacity, the Private Trustee carries the fiduciary responsibility and liability to use the trust assets according to the provisions of the trust document, regardless of their own or the beneficiaries’ wishes. The Private Trustees responsibility is to prioritize, protect, and preserve the physical and financial interests of the trust for their clients.

Why Hire a Private Trustee?

A private trustee often plays a highly skilled and positive role in the lives of many people, including the elderly, those who may be impaired or incapacitated in some way, as well as those who may be living full and productive lives but who may require help making sound decisions for themselves, either on a day-to-day basis, or when recovering from grief or illness.

A private trustee is an invaluable resource for families when a neutral third party is necessary to help in navigating controversial family issues; or if the family is no longer able to manage the health care and financial decisions for their loved ones; and/or if family is separated by geographical distance.

A private trustee can be a valued resource and advocate for an individual who may find themselves alone at a vulnerable time in their life. If the individual is separated by distance from family and friends; or if they are estranged from family and friends, a private trustee provides emotional support, assistance, and personal attention when arranging for, coordinating, and managing any type of care that may be required.

What does a Private Trustee do?

Private trustees play an important and unique role in our society today. They serve everyone from the most vulnerable among us including the elderly and those who cannot care for themselves, to those who are independent and productive but who have come to need assistance making decisions about finances or health care or other day-to-day decisions. Private trustees regularly provide customized personal service and they are advocates with, doctors, health care providers, caregivers, and attorneys. They foster and provide peace of mind while protecting physical and financial interests. The range of services they regularly provide include:

  • General Trust Administration

  • Carry out the expressed terms of the trust instrument

  • Inventory and safeguard assets

  • Collect income, verify and pay obligations

  •  Prudently manage trust assets

  • Review stock holdings/confer with brokers
  • Assist with gathering information for tax return filing

  • Consult with accountants and attorneys
  • Secure personal property

  • Account for actions and keep beneficiaries informed

  • Record keeping, organization, and reconstruction

  • Bookkeeping and Reporting

  • Daily Financial Management & Bill Pay

  • Be impartial among beneficiaries

What makes a good Private Trustee?

In the recent past, it was common for people to name a family member, a spouse or adult child as executor or trustee, but this is not always the best choice. Consider the qualities listed below. The choice of a private trustee is a decision that should not be made lightly. It requires someone with a professional orientation or professional experience, who possesses some of the following skills:

  • Honest & trustworthy
  • Conscientious
  • Able to do the work
  • Available
  • Willing to serve
  • Organized
  • Detail oriented
  • Careful about keeping records
  • Savvy about investments and taxes
  • Neutral and unbiased
  • A good listener and communicator
  • Capable of resolving conflicts

How do I find a Private Trustee?

Private trustees can be hired privately or are court appointed. They may function and be referred to as a personal estate representative, executor, fiduciary, conservator, or guardian.

Consider asking your attorney, CPA, or advisor to recommend a private trustee or professional fiduciary.

You may also find resources online at the Private Fiduciary Association of California (PFAC) www.pfac-pro.org and at the State of California website, Consumer Affairs Department – Bureau of Professional Fiduciaries www.fiduciary.ca.gov.

Choosing a Private or Corporate Trustee

When it’s time to enlist the services of a trustee, you can choose either a corporate trustee such as a bank or financial institution, or may choose to hire a private trustee.

Advantages of hiring a private trustee

  • When you hire a private trustee, you are hiring the person who will be working with you on a daily basis to manage and take care of your day-to-day bills, financial obligations, and other personal needs. Your private trustee is often able to customize and coordinate their services to fit your specific needs. And you have the comfort and reassurance of regularly working the same person one-on-one.

  • Private trustees research, evaluate, and secure investment opportunities and health care options that will best fit the client’s needs. They have access to a wide range of resources and are not bound by allegiances to particular corporations or to specific types of products.

  • Changes in health or life circumstances can occur without any warning. Private trustees have the flexibility to respond at a moment’s notice to changing circumstances. They can move quickly to marshal resources, arrange for care, and take care of other necessities as needed.

How to select a Private Trustee

Before hiring a Private Trustee or Fiduciary you should interview at least three licensed professionals. The following are examples of interview questions to ask before becoming a client.

  • What type of services do you provide?

  • Are you insured for errors and omissions?

  • What credentials do you have?

  • What are your office and telephone hours?

  • What happens to me if something happens to you? What is your succession plan?

  • Do you have a disaster recovery plan for my data?
  • What fees do you charge and when?

  • If there is an emergency after hours, how do I reach you or your staff?

  • How is my confidential information protected?

  • If you use other professionals (certified public accountant, attorney, caregiver, etc.), what are their fees?
  • Do you work alone or have a staff?

  • If you have a staff, what types of services do you delegate to them?

  • What is the fee for services provided by your staff?

  • How often will you provide me with an accounting?

  • Can you provide me with references of past or current clients or other professionals with whom you have worked who I can contact?