On July 21, 2023, Grammy award-winning singer Tony Bennett passed away. He was survived by his four children: Danny, Dae, Antonia and Johanna. Upon his death, the Family Trust directed that the “tangible personal property is to be distributed in equal shares” to his four children per the father’s estate plan.
Bennett’s eldest son, Danny, was designated as the trustee for the Family Trust. He stated the value of the estate at slightly less than $7 million.
Quite to the contrary, a lawsuit filed by Antonia and Johanna Bennett alleges that Tony Bennett’s estate is valued at more than $100 million. The sisters are accusing their brother of deliberately hiding the estate’s true value. Generally, in such scenarios, a third-party executor—someone who is neutral and not emotionally invested—could have helped avoid this family conflict.
In many situations, family members may not make the best executors
One of the most critical decisions you’ll make in estate planning is choosing an executor for your will. Estate planning can be incredibly messy, especially when a large sum of money is involved.While many people instinctively select a family member for this role, there are compelling reasons to consider a third-party executor. This choice can be vital for preserving family harmony and ensuring your final wishes are carried out effectively, without bias. By opting for a third-party executor or even a professional executor, your clients’ families should be able to grieve the loss of your loved one without worry that an inheritor is going to make a power play for money.
Understanding the role of the executor
The executor’s role is both crucial and potentially challenging. The responsibilities include:
- Listing all forms of assets and debts of the estate
- Ensuring all of the deceased’s debts have been paid
- Publishing an official notice to creditors
- Fulfilling legal obligations in meeting the wishes of the deceased
- Notifying the necessary agencies and administrations, such as the Internal Revenue Service and the Social Security Administration
While these duties can be deferred to an estate attorney, it’ll likely be expensive and reduce the estate’s assets.
The benefits of a professional executor
When a large or complex estate is involved, hiring a professional executor may be a preferred course of action for many reasons.
First, as is evident in the Tony Bennett case, is reducing family conflict. By removing a family member from the decision-making process, you minimize the risk of perceived favoritism or attempts to secure a larger portion of the funds.
Second, excluding a family member from a financial advisory client’s estate plan can create awkward scenarios. Whether done punitively or for other reasons, this becomes especially problematic when another relative acts as executor. A third-party executor has no emotional stake in family dynamics, allowing them to focus solely on efficiently settling the estate and carrying out their duties.
These scenarios are best dealt with by professionals who can neutrally mediate heated and intensely emotional situations. Additionally, professional third-party executors are held to rigorous standards and are usually insured, which mitigates liability and offers a level of expertise that a family member acting as an executor may lack.
Ensure clients understand an executor’s liabilities
According to Alma Banuelos, Head of Trust and Estate Services at City National Bank, “You are 100% liable for all acts and omissions, which means you could personally be sued if something goes wrong, the beneficiaries are unhappy with your decisions and/or you make a mistake that costs the estate money.”
Family members may not have the necessary legal and financial knowledge to handle complex estate matters effectively. Serving as an executor is an immense legal responsibility to put on a loved one who likely has no experience dealing with settling estates. An external executor can provide the neutrality, expertise, and professionalism needed to navigate complex family dynamics and ensure your wishes are carried out faithfully.
Choosing an executor is a highly personal decision. The OneDigitalTrust platform simplifies this process by allowing you to assign a third-party service as an executor. Additionally, you can specify in your documents that you want your executor to be compensated for their services, ensuring fair treatment for the crucial role they play in settling your estate. When family conflict is a concern, opting for a third-party executor can be a proactive step towards not just protecting your estate but also leaving a positive legacy for your loved ones.
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