When good intentions can go awry

The trust estate of music legend Jimmy Buffett, valued at an estimated $275 million, is now at the center stage of a legal dispute. At the heart of the conflict is a marital trust where Buffett's widow serves as both co-trustee and beneficiary, alongside a longtime business partner. Both parties have filed competing petitions, turning what began as trust and estate administration into a courtroom battle. While this case is high-profile, it highlights a surprisingly common challenge in estate planning: the complexities and risks of choosing a trustee.

Cara Bruner, trust market manager at Bank of Oklahoma Private Wealth, said these dynamics are far from rare. "There's an inherent conflict of interest," she explained. "A trustee is supposed to act impartially and in the best interest of all beneficiaries, not just themselves."

The trouble with naming loved ones
It's natural to want to name a spouse, sibling or close friend as trustee. After all, they know you well and seem like the most trustworthy option. However, this decision can backfire, she cautioned.

"Individual trustees often lack the time, expertise or neutrality required. They may unintentionally favor their own interests or mismanage assets and can be held accountable for failing to meet the high fiduciary standards expected of them."

- Cara Bruner, trust market manager at Bank of Oklahoma Private Wealth

When conflict escalates between individual trustees and beneficiaries, often family members, it can lead to emotionally charged disputes, costly litigation and lasting damage to relationships. However, even when things don't end up in court, the administrative burden placed on individual trustees can be overwhelming.  "Serving as trustee isn't just an honor, it's a responsibility," Bruner said. "It takes time, expertise, and the ability to manage complex family dynamics while remaining completely neutral."

Naming a corporate trustee can save money and headaches
Corporate trustees-such as banks or trust companies-offer a professional, impartial alternative to naming friends or family members. They bring deep expertise in trust administration, ensure compliance and fiduciary standards, and help navigate complex family or financial dynamics without bias.

 "We're Switzerland," Bruner said. "We don't pick sides. We follow the four corners of document and honor the grantor's intent."

Corporate fiduciaries bring specialized expertise in areas like investment management, real estate, mineral rights and tax law. They also offer continuity, unlike individual trustees: they don't retire, pass away or lose capacity. While some people may hesitate to pay fees for a trustee when a friend or family member could serve instead, Bruner explained that corporate trustees can actually be more cost-effective over time. "Individual trustees will often hire attorneys or outside experts at high hourly rates, whereas our fees are transparent, based on market value and cover everything we do."

When a hybrid approach to naming trustees makes sense
Despite the risks, there are scenarios in which naming a friend or relative as trustee may be appropriate. "In first marriages, where assets are joint and the spouse is both trustee and beneficiary, the risk is low," she noted. "It's when you get into the more complicated, taxable or blended family dynamics that things get sticky."

If you do choose a loved one, she recommended naming a corporate trustee to serve alongside them. This hybrid approach allows the individual to maintain a personal connection while benefiting from professional oversight.

Safeguards to put in place
When working out the details of your trust, proactive planning is key, she said. Here are some safeguards to consider:

• Appointing a neutral third party: This individual or organization can help resolve conflicts, interpret the grantor's intent or even replace a trustee if necessary.
• Transparency guidelines: Spell out how often the trustee must report to beneficiaries. Quarterly statements, annual performance reviews and regular meetings can prevent misunderstandings.
• Setting clearly defined roles: If you have named co-trustees, define their responsibilities clearly to avoid confusion and delays.
• Name multiple successor trustees: This list should include a corporate trustee, even if they're far down the line. This step ensures continuity and avoids court involvement if others decline to serve.
• Set spendthrift provisions: Protect beneficiaries from creditors by limiting their ability to compel distributions.
• Mediation clauses: Include language that outlines how disputes should be resolved before escalating to litigation.
• Conduct regular reviews while you are still alive: Revisit your estate plan every three to five years, after major life events, or tax law changes. "What worked 20 years ago may not work today," she said.

Estate planning is more than just distributing assets; it's about protecting your legacy and the people you care about. While naming a friend or relative as trustee may feel personal and meaningful, it can also introduce risk, conflict and unintended consequences.

"Our goal isn't to predict the future, but to prevent problems before they start," Bruner said. "Transparency, education and thoughtful planning go a long way in preventing problems down the road."