What happens when an estate or trust plan has been set up to continue the operations of a business beyond the owner’s death—but the business ultimately does not provide value to the beneficiaries?
Prioritizing the Fiduciary Standards of Care and Loyalty
With the best of intentions, many owners envision their businesses continuing to be of value to family members or friends after they die, and set up their estate or trust plans accordingly. Sometimes, this turns out to be a tremendous gift to the beneficiaries. But, if the business is not performing well, it could turn out that it is in the best interest of the beneficiaries for the business to be discontinued or sold.
When making decisions, the executor or trustee appointed to administer the estate or trust is held to the fiduciary standards of care and loyalty to the beneficiaries. The National Law Review explains:
While the precise fiduciary standards may differ from state to state, in general, executors and trustees should make their decisions based upon the best interests of the estate or the trust beneficiaries to whom they owe their duties.
Executors and Trustees should consider whether, instead of continuing to operate the business, it may be more appropriate to attempt to sell the business, in order to maximize value for the beneficiaries or interested parties, or to wind down the business altogether, in order to avoid further expenses and potential waste of estate or trust assets. In the end, it may be impossible to avoid all disagreements or claims by beneficiaries concerning continued operation of a decedent’s business by a trust or estate. However, all parties should understand the applicable fiduciary standards in order to be able to evaluate whether estate or trust-owned business assets are being managed in good faith and in a manner that serves the interests of the beneficiaries.
The Purpose of Executor or Trustee Bonds
To protect the interests of beneficiaries, executors and trustees are often required to obtain executor or trustee bonds. These are a type of fiduciary bond—they guarantee the faithful performance of the executor or trustee, in accordance with applicable state laws.
It is easy to obtain an executor bond or a trustee bond from leading, national provider, Colonial Surety Company. Uniquely, Colonial offers direct, digital, fiduciary bonds. Sometimes these bonds are referred to as administrator, estate, fiduciary, personal representative or probate bonds, as well as executor and trustee bonds. Colonial provides all of these fiduciary bonds. Just get a quote online, fill out your information, and enter your payment method. Print or e-file the bond right from your home or office—even while at court. It’s that simple.
Attorneys: Head Into the New Year With a National Partner
In addition to providing bonds directly to the general public, Colonial Surety offers an innovative Partnership Account to help attorneys save time. This free business service gives attorneys user-friendly client management dashboards to coordinate, view, complete and e-file the wide variety of court and fiduciary bonds clients need.
With Colonial as your partner, you can stop shuffling back and forth to help your clients secure required bonds and respond efficiently to court deadlines. Colonial’s direct, fully digital, user-friendly system reduces the time, hassle and expense typically associated with antiquated processes.
Attorneys from across the country are invited to obtain a free Colonial Surety Partnership Account® to streamline the bonding process. Our unique Partnership Account® will increase your efficiency—and lower costs for clients. See for yourself today: Colonial’s Partnership Account for Attorneys.
Founded in 1930, Colonial Surety Company is a direct seller and writer of surety bonds and insurance products. Colonial is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA.