Bank as Executor of Will

[Forumfan]

I recently divorced and will be updating my will which includes naming an executor to replace my ex-husband. I don't have children and don't have any family member who I would trust to properly administer my estate so I'm planning to name a bank or trust company. Has anyone done this and have advice on choosing a corporate executor? My main bank, Chase, apparently has a $10 million minimum assets requirement so they're not an option for my current estate of $2 million. I found a local trust company that is the front runner but I'm open to other ideas.

[disneysteve]

I would suggest asking the attorney who is writing your will. He or she can probably recommend someone or may be open to doing it themselves.

[Nutria]

I would suggest asking the attorney who is writing your will. He or she can probably recommend someone or may be open to doing it themselves.

Is it wise (due to possible conflict of interest) to have the same person do both? (I have no idea, so am asking.)

[disneysteve]

Is it wise (due to possible conflict of interest) to have the same person do both? (I have no idea, so am asking.)

A good estate attorney likely offers a broad range of services. That may well include administering estates after clients die. The executor serves as fiduciary for the estate and functions in the interests of the beneficiaries. I’m not quite sure where the conflict would be. The executor is entitled to payment for their services. As I’ve learned, in Florida it’s up to 3% of the probate estate. So the attorney would be compensated for their efforts. I suppose there is concern that they could run off with assets but if you don’t trust them then you shouldn’t be hiring them to handle your estate planning in the first place.

[Forumfan]

I can't think of any potential conflict and actually one benefit would be that the estate attorney would be familiar with your wishes on how the estate should be distributed. However my attorney is 10-15 years older than me and is a solo practitioner; I want to appoint a bank or trust company because there is a higher chance that the executor will still be around when I pass.

[disneysteve]

I can't think of any potential conflict and actually one benefit would be that the estate attorney would be familiar with your wishes on how the estate should be distributed. However my attorney is 10-15 years older than me and is a solo practitioner; I want to appoint a bank or trust company because there is a higher chance that the executor will still be around when I pass.

Ah.That's a valid concern. In that case, I would ask him/her for a recommendation.

[QuarterMillionMan]

In California as I discovered they have licensed professional fiduciaries. They charge 1% of the estate to start, then about $150/hr. This is a lot cheaper than hiring an attorney. My net worth is about $700,000 so I went this route. None of the banks would even consider becoming an executor of my estate with such paltry sums.
Department of Consumer Affairs Professional Fiduciaries Bureau (ca.gov)

edit to add more context single male 55 no kids.

[QuarterMillionMan]

As I think back with my search for an executor, I first started inquiring with probate attorneys. They referred me to licensed professional fiduciaries due to my limited assets. The attorneys basically told me that I didn't have enough assets for them to work with so none of the attorneys would want to work with me. As I see now in this thread banks would require even more than what the attorneys would work with in assets.

[Forumfan]

In California as I discovered they have licensed professional fiduciaries. They charge 1% of the estate to start, then about $150/hr. This is a lot cheaper than hiring an attorney. My net worth is about $700,000 so I went this route. None of the banks would even consider becoming an executor of my estate with such paltry sums.
Department of Consumer Affairs Professional Fiduciaries Bureau (ca.gov)

edit to add more context single male 55 no kids.

Thanks for the suggestion! I no longer live in Cali but I'll look into this for my current home state of TX. I am surprised and frustrated by how most banks refuse to act as executor except for the super wealthy.

[disneysteve]

Thanks for the suggestion! I no longer live in Cali but I'll look into this for my current home state of TX. I am surprised and frustrated by how most banks refuse to act as executor except for the super wealthy.

As I'm discovering firsthand, being executor can be a very big job, even for a relatively modest estate. If you don't have someone who will do it out of love, it becomes a business transaction and you need to find someone who will do it for an acceptable price. The thing to keep in mind is that it's relatively the same amount of work for a 1M estate that it is for a 5M estate so if you're getting paid a percentage of assets to do the job, which job would you rather take?

[QuarterMillionMan]

Good point DS. The banks would rather manage someone like Donald Trump's estate than lowly ole QMM (lol).

[Forumfan]

As I'm discovering firsthand, being executor can be a very big job, even for a relatively modest estate. If you don't have someone who will do it out of love, it becomes a business transaction and you need to find someone who will do it for an acceptable price. The thing to keep in mind is that it's relatively the same amount of work for a 1M estate that it is for a 5M estate so if you're getting paid a percentage of assets to do the job, which job would you rather take?

But a big bank like Chase has streamlined processes and very experienced people who can take care of it much more easily and efficiently than someone like you who is acting as executor on a one-off basis. I believe typical fees are 1%-5% so while I understand why they wouldn't want to handle an estate of $50k, it seems to me that the fees on a $1m-$2m estate should make it worthwhile. Or they could charge an hourly rate. There are a lot more people with $1m estates than $10m. From my online research, it looks like the big banks did used to handle this stuff for more modest estates until the last decade or so; it is puzzling why they decided to raise the threshold to such a high level.

[Nutria]

From my online research, it looks like the big banks did used to handle this stuff for more modest estates until the last decade or so; it is puzzling why they decided to raise the threshold to such a high level.

The formerly big banks are now Big banks. So... find a big bank, not a Big bank.

[disneysteve]

But a big bank like Chase has streamlined processes and very experienced people who can take care of it much more easily and efficiently than someone like you who is acting as executor on a one-off basis. I believe typical fees are 1%-5% so while I understand why they wouldn't want to handle an estate of $50k, it seems to me that the fees on a $1m-$2m estate should make it worthwhile.

I guess they just decided to get out of that business except for the really large estates. $1-2M estates are pretty common these days.

Like Nutria said, try a local/regional bank rather than a big national one. If you find one, just make sure the contract says they will still do it even if they are bought out by a bigger bank. You don't want to engage Main Street Bank only to have them sell out to Chase a few years down the road and leave you stranded again.