A Conversation with Kevin Duncan, Director and Head of Estate Administration, BBH Trust Company
As the director and head of estate administration for the Brown Brothers Harriman (BBH) Trust Company, Kevin Duncan is tasked with establishing and nurturing the firm’s estate administration relationships, as well as continuing to strengthen and expand our estate administration capabilities. We recently sat down with Duncan to discuss the role estate administration plays in helping families thrive for generations and why a corporate executor may be the best option in certain situations.
Tell us about your professional background. What drew you to estate administration?
My interest in estate administration began as a college intern in the South Florida office of a wealth management firm. My experience there witnessing the intersection of tax, estate planning, financial management, investments and family dynamics set me on my professional path. I pursued law school and an LL.M. in tax and estate planning to build my foundation and immediately found myself working in-house for a wealth management firm with decades of service to families. While there, I began to carve out a career in estate administration. I was drawn to the complex and varied responsibilities while recognizing the help I could provide to families that needed it. Whether explaining to families the tax savings of disclaimer planning or helping a family find the right auction house to sell the prized Gilbert Stuart, the work is impactful.
Talk about your approach to estate administration. Why is this so important in helping families thrive for generations?
Administering an estate can be a complex, time-consuming and challenging process – and many are surprised to learn that it can take up to three years or more to fully settle a large estate. During that time, myriad financial, personal and legal decisions need to be made in a relatively short period. Mistakes can lead to financial losses, family disputes, increased taxes or litigation, but having a professional in place to steward an estate through this process can help avoid those negative results. Ensuring an orderly transition maximizes the value transferred to beneficiaries and allows for continued family success for generations.
What are the most difficult challenges in estate administration?
Perhaps the most difficult challenge is the unique nature of each estate. No two estates are the same, and every estate has its own challenges. And while there are common themes to those challenges – like intrafamily conflict, one-of-a-kind assets, tax compliance and IRS audits, potential litigation and so forth – every estate is different. Thus, having a depth and breadth of experience administering estates is important, and being able to draw on that experience to address the issues unique to a particular estate is vital for a successful administration.
Why is it important that the BBH Trust Company offers executor services to its clients?
BBH has served generations of families. From the stock market crash of 1929 to the financial crisis of 2007-08 to the recent COVID-19 pandemic, BBH has helped families navigate challenges, upheaval and complexity for over 200 years. And with the complex lives of today’s high-net-worth families, we continue that tradition. Estate administration can be a difficult responsibility, and an individual executor (typically a family member or friend) often does not have the time or expertise to manage the process. Hence, BBH can help bring professional guidance to the execution of an estate plan. Families should not be left to navigate a new process, done only once or twice in a lifetime, without assistance. We can be that guide.
Importantly, the appointment of BBH as executor of an estate plan does not prohibit a friend or family member from also serving. It is common for us to serve with a friend or family member as co-executor – and we are happy to do so. There can be a great benefit in combining the professional experience of BBH with the personal touch of a friend or family member.
Tell us about why a corporate executor may be the best option in certain situations.
So often in estate planning, the focus is on the plan itself and making sure that taxes are minimized, ensuring proper succession for business assets, that beneficiaries are properly provided for and that the plan itself meets the goals of the decedent. And rightfully so! However, sometimes lost in that focus is the question of who will be responsible for executing this well-devised plan. Like anything else in life, the best plan can be quickly derailed if the implementation isn’t meticulous. Thus, the choice of executor is critical to the plan’s success. It is the executor that will ensure your wishes are carried out after you’re gone. It’s a major responsibility, and given the impact the executor can make on the plan, the choice of a corporate entity to serve as either sole or co-executor is worth exploring. A corporate executor can bring a wealth of knowledge to the process and ensure your plan is administered properly. Below are some of the benefits that a corporate executor can bring to a plan’s execution.
- Experience and Expertise: As I touched on earlier, the financial and personal lives of our clients are growing increasingly complex. From the diversity of the assets owned by a decedent, to the voluminous estate plan designed to provide for their disposition after your death, the estate administration process can be daunting. Pair this with the fact that most individual executors may have little to no understanding of the responsibility placed upon them, and the task can be overwhelming. But engaging BBH as corporate executor will bring an effective execution to your plan. We have dedicated resources to guide families through the methodical process of estate administration, and where necessary, we will work with outside advisors like lawyers, accountants and so forth to satisfy any legal and tax reporting requirements. In addition, we may be called upon to identify and engage outside advisors like appraisers, brokers, auction houses, valuation experts, specialty asset advisors, art/collection advisors and so on, but with our years of experience, we have relationships to ensure that even the most unique assets are handled properly.
- Impartiality: A corporate executor can bring an impartial voice to the process. Throughout any estate administration, decisions will be made that can impact beneficiaries differently, and when your chosen executor may benefit financially or otherwise, his or her decisions may be seen as biased by other beneficiaries. Take, for example, the common provision in many estate planning documents that allows for the distribution of tangible property among beneficiaries as nearly equal as possible. During the selection process, it’s almost inevitable that two beneficiaries will both want the same item(s), and a process will need to be implemented to resolve those disputes. However, if the executor tasked with resolving these disputes is also entitled to make selections, the situation is ripe for conflict, and decades-old disputes and hurt feelings can be revived if there is the slightest appearance of favoritism. The involvement of a corporate executor can alleviate that concern, as the emotional aspects are reduced where a corporate entity is involved, decreasing the likelihood that these emotional disputes can bubble over into conflict – or worse, litigation.
- Continuity: An advantage of hiring a corporate executor is to ensure continuity in the execution of your estate plan. Individuals named in an estate plan will not live forever. An individual named to serve may not be up to the task of serving at the time of your death or may have already passed away. In worse scenarios, individuals may become incapacitated during the lengthy two- to three-year process of estate administration, which can lead to delays in a plan’s execution. For example, I have seen individual executors become incapacitated during their service, and the corresponding delay in appointing a suitable replacement resulted in missed tax filing deadlines with penalties and interest. BBH has a more than 200-year history of continuity, and we can be the consistency in an estate plan no matter what the future holds.
- Communication: Successful estate administration requires strong communication. Identifying the manner, timing and frequency of communication with the beneficiaries is incredibly important, but individual executors may find it difficult to maintain this level of communication and transparency. This can lead to misunderstandings and a feeling on behalf of the beneficiaries that they have been left out of the process. This is one of the most common ways for disputes to arise. BBH prides itself on early and frequent communication, laying out our approach and ensuring that the beneficiaries are aware of upcoming deadlines with frequent updates on the progress. We encourage engagement from each beneficiary. When necessary, changes can and will be made throughout the administration because effective communication is often the difference between success and a difficult administration with frequent delays and frustration.
- Preparation: BBH also works with clients during their lifetime to identify and address difficult estate administration issues. Estate planning documents are designed to provide a broad outline for how assets are disposed after your death, but often do not include the administrative details to manage your unique assets. By working with BBH, we can create detailed plans for the sale or management of unique assets owned by your estate. For example, we can assist you with preparing an art collection for sale or for the proper management and sale of real or commercial property. Once a detailed plan is created, we can facilitate communication of these plans to your beneficiaries. This will leave you with peace of mind that your assets will be handled in accordance with your wishes, but also leave beneficiaries with a clear understanding of how your estate will be handled after your death.
Lastly, when a loved one passes, it is typically a time of grieving and loss. Family members should have the opportunity to go through that process without having to deal with the lengthy, confusing and time-consuming process of estate administration alone. BBH will handle all the administrative actions required for a successful estate administration while ensuring clear communication and engagement with beneficiaries. Your family will have the opportunity to focus on their loss while knowing there is professional management in place to guide your estate.
Kevin, thank you so much for your time and insights.