Yes, you absolutely can, and often it’s a remarkably prudent decision, particularly when dealing with complex assets or if beneficiaries lack the expertise or desire to manage them directly.
What are the benefits of professional asset management in estate planning?
Managing assets after someone passes away can be a daunting task, and while family members often step up, their financial acumen or available time may be insufficient. Consider that approximately 60% of Americans don’t have a comprehensive financial plan, highlighting a widespread lack of expertise. Professional asset managers – whether trustees, financial advisors, or specialized firms – bring objectivity, experience, and a disciplined approach to investment and administration. They can navigate complex tax laws, ensure compliance with fiduciary duties, and potentially maximize returns on investments, all while relieving a significant burden from grieving family members. This is especially important for assets like real estate, businesses, or investment portfolios requiring active management.
How do trusts facilitate professional asset management?
Trusts are the primary vehicle for incorporating professional asset management into estate plans. A trustee, whether an individual or a professional entity like a bank trust department, is legally obligated to manage the trust assets for the benefit of the beneficiaries. You, as the grantor, can specify in the trust document the level of professional involvement you desire. For instance, you might appoint a professional co-trustee to work alongside a family member, providing guidance and oversight. Alternatively, you can designate a professional trustee to have full discretion over investment decisions, subject to the terms outlined in the trust. According to a Cerulli Associates report, assets held in trust have consistently grown, reaching over $7.9 trillion in 2023, demonstrating the increasing preference for this structured approach to wealth transfer and management.
What types of assets benefit most from professional management?
While any asset can benefit from professional management, certain types particularly warrant it. Real estate, especially rental properties, requires ongoing maintenance, tenant management, and compliance with local regulations. Businesses demand strategic oversight, financial reporting, and potentially operational involvement. Investment portfolios, particularly those with complex holdings or requiring active trading, benefit from the expertise of financial professionals. I once worked with a client, Eleanor, who owned a successful vineyard. She loved the land but was a sculptor by trade, not a vintner. Her will left the vineyard in trust, specifically directing the trustee to hire a professional vineyard manager. Without that provision, the vineyard would have likely fallen into disrepair, and her family would have faced a steep learning curve, potentially losing significant value.
What happens when professional management isn’t included in an estate plan?
I recall another situation, with a family I’ll call the Harrisons. Old Man Harrison, a self-made man, meticulously built a successful auto repair shop, but he neglected to incorporate professional management into his estate plan. He left the business to his two sons, neither of whom had any mechanical aptitude or business experience. Within a year, the shop was losing money, employee morale plummeted, and the brothers were constantly fighting. It became clear they were incapable of running the business and, ultimately, had to sell it at a substantial loss. The stress nearly fractured their family. Had Old Man Harrison included a provision for a professional business manager within his trust, the shop could have continued to thrive, and his sons could have received a consistent income stream. This highlights a critical lesson: comprehensive estate planning extends beyond simply distributing assets; it’s about ensuring their continued success and protecting family harmony.
Can I change my mind about professional asset management later?
Absolutely. Estate planning is not a static process. You can amend your trust document at any time, as long as you have the legal capacity to do so. You might decide to add or remove professional trustees, modify their powers, or adjust the level of professional involvement based on changing circumstances. It’s crucial to review your estate plan periodically – ideally every 3-5 years, or whenever there’s a significant life event, such as a birth, death, marriage, divorce, or major change in your financial situation. I had a client, Robert, who initially wanted to handle all asset management himself, but after witnessing a friend’s complicated probate process, he revised his trust to include a professional co-trustee, providing a safety net for his family and peace of mind for himself. Flexibility and proactive review are key to ensuring your estate plan continues to meet your needs and protect your legacy.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
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