Archive for trustee

Guidance on Choosing a Trustee

by Jim Ferraro, March 2017

It is easy to be passionate when speaking of our families, businesses or other life achievements. However, conversations can become uncomfortable when asked about what plans are in place to protect those things that are most important to us.

“Should I do any estate planning?” or “When should I start my planning?” are not the hardest questions. Often the harder questions are “What do I want to have happen to all that I have worked so hard to achieve?” and “Who do I trust to understand my goals and to carry-out my wishes?”

Successful people delay such planning for many reasons, among them that they would rather enjoy what they have made today and continue to achieve new goals rather than think about the unavoidable future and consider the more challenging questions.

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Fiduciary Duty: Know your Trustee

by Kevin Karpe, Senior Vice President, Trust Officer

fi·du·ci·ar·y: “ A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.

 “Fiduciary”, “fiduciary duty” or “fiduciary standard” are terms we hear from time to time. We all recognize that a Board of Directors has a duty to its shareholders.  We know an executive has an obligation to act solely in the interests of his employer.  And we know elected officials have the sworn duty to prudently administer public resources.   In each example, the board member, the executive, and the elected official are all considered fiduciaries.   Common Law says fiduciaries are bound by equity to suppress their own interest in favor of a client, shareholder, employer or even taxpayers. At Heritage Trust Company, our fiduciary obligation results from an appointment as a trustee, an agent, a guardian or a personal representative.Kevin Karpe

All too often we hear in the news about how a member of a corporate board somehow places himself in a position of conflict by trading company stock based on information exclusive to the board. We read about investigations into why a politician has appointed a colleague to a post for which they are not the most qualified, or a stock broker receiving compensation for a transaction which is obviously contrary to the needs of his client. It is apparent many of those occupying fiduciary positions do not fully understand their obligation, an obligation to act with total loyalty at all times for the sole benefit and interest of another.

It’s difficult to know if our culture has experienced a measurable change in the application of fiduciary standards over time, but I’ve heard many in the investment industry attempt to explain the various degrees of duty and suggest if a conflict exists, it is simply remedied by a disclosure buried in the fine print of an account agreement.   It’s truly a shame an organization may be inclined to take the path of least resistance in the case of disclosure rather than recognize an opportunity to build loyalty with a client. Avoiding breaches of fiduciary duty or conflicts of interest might sound simple.   Breaches or conflicts are most typical in situations where a broker or agent is compensated in manner that is an incentive for him to recommend an investment or transaction that obviously ignores the best interest of the client. A variable annuity sold to a ninety year old woman is a good example of a fiduciary breach in the investment industry.

It’s refreshing to know that consumers are hearing more about fiduciary duty and as a result, the investment industry is now focused on formalizing internal standards. I find it interesting that their best examples are the policies of the old fashioned trust companies.

At Heritage Trust, we believe our experience counts. Our approach to our duty reveals solid relationships with our clients, their kids and grand kids will always contribute to successfully transitioning a legacy.

 Originally published by Heritage Trust in 2011.