Choosing a trustee is a very personal matter and should never be left to chance. Doris Duke, heiress of Duke’s energy and tobacco fortunes, didn’t seem to know her trustee very well at all. After Duke passed in 1992, her trustee bilked the estate for over $1 million. It begs the question: How well do you know your trustee?
In our experience, choosing the people to nominate as fiduciaries through your estate plan is one of the hardest tasks that our clients’ face. That is why we work with each client to help them decide the best people to name in the all important roles that fiduciaries must take on when named in an estate plan.
The Butler Did It:
That old saying certainly fits in this situation because Doris Duke had her butler appointed as her estate’s trustee. The estate was reportedly worth $1.3 billion at the time of her death. Perhaps all that money was too much temptation for Bernard Lafferty, an Irish immigrant with only a grade school education.
After Duke’s death in 1992, Lafferty went on a bit of a spending spree. It was reported that he spent over $1 million on himself, including:
- Charging hundreds of thousands of dollars on luxury store items onto estate charge cards
- Traveling all over the world, whenever he felt the urge
- Redecorating Doris Duke’s old bedroom for himself
Lafferty apparently had very expensive taste as he spent over $60 thousand on the bedroom redecoration alone.
The final straw was when he borrowed more than $825,000 from the U.S. Trust Company, the estate's co-executor, apparently without having to pay interest. He was removed as the trustee three years later.
5 Characteristics of a Good Trustee:
Your trustee will ultimately manage your financial future as well as the disposition of your estate. While it’s tempting to choose a family, friend, or say – your butler – it might be wiser to treat your choice as a strict business decision.
Trustees have a “fiduciary” responsibility toward the trust. That means they owe the highest duty of care, good faith, honesty and diligence when it comes to managing it. Five characteristics of a good trustee include someone who is:
- Experienced in business matters
- Confident in their understanding of your intentions
Whomever you choose, keep in mind that anyone who is dissatisfied with the terms of your trust might try to influence your trustee. In many cases, family relationships are wrought with various types of emotion. Those close bonds could put your trustee in the middle of a situation they can’t handle – especially when it involves someone where saying no simply isn’t an option. Therefore, let’s talk about whether a professional trustee would be appropriate.
Protect Your Assets, Heirs & Wishes:
Whether it’s choosing a trustee, creating a will, or coming up with a comprehensive estate plan, we can help you make the right choices. Protect your assets, your heirs, and your wishes. We can show you how to select the best trustee for your individual situation.
If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.