Ask the Probate Judge—Co-Personal Representatives
Rudd, appeared November 6, 2003, Albuquerque Journal, Business Outlook
Reprinted with permission
Editor's note: This column may not be quoted or reproduced in whole or part without express written permission of the author.
Q: We have two children over 21 years of age who both live in different states other than New Mexico. I have made both of them executors of our wills. Is there a problem with two executors?
You may choose to appoint your children as the co-executors, called "personal representatives" in New Mexico, of your will. In New Mexico, you must be at least 18 years old to serve.
If you appoint co-personal representatives, your will should clearly define the duties of each. Are both signatures required for all business matters or legal paperwork? Or can one child sign checks for amounts under $500, for example? Can one child act without the other? How should disagreements between co-personal representatives be resolved? If one child chooses not to serve or predeceases you, can the other child serve alone?
Choosing a fiduciary, such as a personal representative or trustee, is a very important decision. Just because someone is related to you does not mean he or she will make a good fiduciary. You must evaluate the pros and cons of choosing an individual fiduciary versus a corporate fiduciary. Factors to consider before appointing a family member or friend as your fiduciary include the:
Age and health of the individual.
Sophistication and knowledge the individual has about taxes, investments, and other financial matters.
Stability and trustworthiness of the individual.
Willingness of the individual to serve.
Amount of spare time the individual has to serve.
Things to consider before appointing a corporation, such as a bank or trust company, as your fiduciary include:
The size of the corporation.
The experience of the corporation.
The fees involved in managing the trust.
The stability of the corporation.
Sometimes a person will decide to appoint a corporation and an individual as co-fiduciaries.
Serving as the fiduciary is a big responsibility. Often family members or friends who agree to serve do not understand how many time-consuming tasks they are agreeing to undertake. They do not realize they will have to file income taxes, pay creditors, do legal paperwork, and manage or distribute assets. They may not have the bookkeeping or accounting skills necessary to manage the property properly. They do not realize that they are bound by a fiduciary duty to act wisely and prudently.
Banks and trust companies charge a management fee to serve as your personal representative or trustee, but usually bank and trust companies are bonded and insured, unlike individuals. On the other hand, banks, trust companies, and other corporate fiduciaries are sometimes so large that they cannot give a personal touch to a family. While corporations' investment and accounting skills may be excellent, those who desire a "family approach" may decide to appoint a family member as fiduciary.
© 2003, Merri Rudd & Albuquerque Journal, All Rights Reserved