The document discusses issues corporate trustees encounter when administering trusts and estates, and provides suggestions for estate planning attorneys. It recommends including details about dependents' needs during administration, beneficiaries' contact information, plans for concentrated assets, instructions on distributing tangible property, and tax apportionment clauses. It also suggests planning now while estate and gift tax exclusions are high given potential future tax law changes.

1. © 20XX Wells Fargo Bank, N.A. All rights reserved. Internal use.
Investment and Insurance Products: • NOT FDIC Insured • NO Bank Guarantee • MAY Lose Valu
The Trustee’s Tale: What Corporate Fiduciaries
Wish Drafting Attorneys Would Consider and
Discuss with Their Clients
June 9, 2021
Presentation for the Fiduciary Round Table
of the San Gabriel Valley
Investmentand Insurance Products: • NOT FDIC Insured • NO BankGuarantee • MAYLoseValue

2. Agenda
• Introductions and Roles
• Naming a Bank as Co-Trustee
• Needs for Dependents
• Names and Addresses of Beneficiaries
• Asset Diversification
• Powers of Appointment
• Tangible Personal Property
• Planning with your Exclusion Now
• Estate Tax Apportionment
• Social Responsibility and Substance Abuse
• Discretionary Distributions
• Amendment vs. Restatement
• Charitable Beneficiaries
• Funeral/Healthcare Power of Attorney
• Pro-Active Communication
2

3. 3

4. Introductions and Roles
The Lifecycle of Estate Planning
involves 3 phases:
•Phase I – Estate Planning
•Phase II – Estate Settlement
•Phase III – Ongoing Trust
Administration
4

5. Client Service Statement
At Wells Fargo we strive to provide a quality, accurate, tax-efficient, estate settlement experience to all clients with timely effective communications throughout the process.
Barring circumstances outside of our control, our goal is to meet the general timeframes of the key stages in the estate settlement process identified below.
0-30Days 30-90Days 3-6Months 6-8Months 9MonthstoClosing
InitialmeetingwithWellsFargo&
othersconcernedwithestate
Reviewofwilland/ortrust
Gatherdocumentsonallassets
(propertyowned),includingreal
property,tangiblepersonalproperty,
financialaccounts,specialtyassets,
insurance,etcandsummarize
Startprocesstoopennewaccount,
ifapplicable,toconsolidateassets
Engageattorneytoprobateestate*
Courthearingtoappointexecutor*
Noticetocreditors
Finalizeopeningaccount,ifapplicable
Collectallassetsintoconsolidated
accountandsafeguardthem
Paymentoffuneralexpenses,last
illnessanddebts,andotherestate
relatedexpenses(estaterelated
expensespaidthroughout
settlementperiodaswell)
Collectlifeinsurance
Appraiseandvalueallestateassets
forestatetaxreturnsandtoestablish
taxbasis
Summarizevaluationsandappraisals
ofassetsfiledwithcourt*
Payvalidatedcreditorclaims
Generatecashforpaymentofestate
taxesandspecificbequests
Distributetangiblepersonalproperty
Finalizeinventoryofestateassetsand
debts/expenses
Examinetaxelectionsandreviewprior
incomeandgifttaxreturns
Prepare/reviewdraftsoffederaland
stateestatetaxreturns
Payspecificbequests,ifapplicable
Fileestatetaxreturn(s)due9months
afterdateofdeathandpaytax,if
applicable
Filefinalincometaxreturns(dueApril
15thofyearafterdateofdeath),and
taxpaid,if applicable
Createareservefortaxesandexpenses.
Obtainestateandincometax
clearances
Finalapprovalofcourt*
Finaldistributionofremainingassets
andacknowledgementofreceiptsas
appropriate
Finalincometaxreturnforestate/trust
andtaxinformation(K-1)sentto
residualbeneficiaries
Estate Services
General Timeline to Settle an
Estate
*Required if estate probated withcourt.
Wells Fargo & Company and its affiliates do not provide legal or tax advice. Tax Planning services are limited to the analysis of various federal and state income tax, wealth transfer tax, and tax-efficient investing strategies. Estate
Services provided are limited to administration and settlement services. Please consult your tax and legal advisors to determine how this general information may apply to your own specific situation.
Wells Fargo Wealth Management providesproducts and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
Wells Fargo affiliates may be paid a referral fee in relation to clients referred to Wells Fargo Bank, N.A.
Wells Fargo Bank, N.A. (the “Bank”) offers various advisory and fiduciary products and services. Financial Advisors of Wells Fargo Advisors may refer clients to the bank for an ongoing or one-time fee. The role of the Financial Advisor
with respect to bank products and services is limited to referral and relationship management services. The Bank is responsible for the day-to-day management of non brokerage accounts and for providing investment advice, investment
management services and wealth management services to clients. The Financial Advisor does not provide investment advice or brokerageservices to Bank accounts, but does offer, as applicable, brokerage services and investment
advice to brokerage accounts held at Wells Fargo Advisors. The views, opinionsand portfolios may differ from our broker dealer affiliates. Wells Fargo Advisors is the trade name used by Wells Fargo Clearing Services, LLC and Wells
Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.
© 2019 Wells Fargo Bank, N.A. All rights reserved. Member FDIC.
WM29712 (IHA-4229902) Valid through September 2020. Car0119-03053

6. Naming a Bank as Co-Trustee
“The best (or worst?) of both worlds?”
Naming a corporate trustee to serve as co-trustee along with an individual family
member can be an attractive option for some clients.
• Corporate trustees carry experience in administrative, legal, tax matters, and
investment decisions, not to mention are neutral as to making unpopular or difficult
decisions (i.e. discretionary distributions).
• Individual trustees bring personal and family knowledge that provides additional
legitimacy and softening of the corporate perception.
• One issue that can arise is if the trust does not specifically address individual trustee
compensation (how each trustee is to be paid).
• Consider obtaining authority for the corporate co-trustee to pay expenses under a
certain amount, i.e. $5,000 without obtaining consent from the individual co-trustee.
• Consider including tiebreaker or veto language. Unanimous consent amongst
trustees may be a source of frustration or conflict.
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7. Needs of Dependents During Administration
When drafting documents, ask the client if anyone is relying on them for support, and
consider these scenarios:
• Consider that with a corporate fiduciary stepping in as successor trustee, it will take
some time, at least a few weeks to set up trust accounts and implement the
provisions of the trust; or the administrative trust is not typically set up as a
discretionary support trust.
• Consider whether the client is supporting other family members and others – a
child, significant other, or elderly parent. These individuals who rely on the
decedent for daily living expenses are often not planned for during the initial trust
administrative period. As a result, the trustee may be limited in its ability to provide
assistance to the beneficiary during the most difficult time in the dependent’s life.
• POD/TOD Accounts: As another alternative, you may recommend that the client
reserve some assets for direct transfer on death.
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8. Needs of Dependents During Administration (continued)
Suggested Provisions:
• Commencing at the time settlor no longer serves as trustee, and until settlor’s
partner receives his residual share of the trust, the trustee shall pay to settlor’s
partner or apply for his benefit the sum of $2,500 per month.
• While settlor’s mother continues to live in her assisted living facility, the trustee shall
pay all expenses associated with such, including but not limited to rent, taxes,
assessments, costs and repairs.
• Until the funding of settlor’s sons’ residual share in trust, the trustee shall apply for
son’s benefit, such sums as the trustee, in its discretion, determines to be necessary
or appropriate for health, education, maintenance, and support. All distributions
shall be charged against the son’s share.
NOTE: The trustee may be more comfortable with a hold harmless provision with
respect to these types of distribution provisions.
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9. Names and Addresses of Beneficiaries
• Don’t forget to obtain and include current names and addresses for all beneficiaries
named in the document. Consider preparing a family tree, especially if you have
gifts going to heirs at law, or by right of representation.
• This information will be useful to a corporate trustee in locating persons, identifying
deceased individuals, opening new administrative accounts.
• When a beneficiary is not a US citizen or US resident, there are additional reporting
requirements (i.e. the standard non-resident alien tax withholding rate on U.S.
sourced income is 30%).
• Otherwise, without this information readily available, (under certain circumstances)
the trustee may need to consult an heir finder, which can be complex and time
consuming.
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10. Asset Diversification
“One person’s treasure is another person’s prudent investor violation””
Does your client have a concentration in a particular (favorite) stock or asset class,
such as real estate?
• Some clients have concentrations in one stock as the client may have been founder
or executive in a particular company; or a concentration in real estate.
• Many corporate trustees view anything over 10% of client’s overall net worth to be a
heavy concentration and may require divestment from the concentration absent
specific language allowing the trustee to hold the concentration and holding the
trustee harmless.
• Many corporate trustees are unable to hold investments in the corporate trustee or
its affiliates due to conflict of interest concerns, unless there is specific language in
the trust allowing the corporate trustee to hold that asset.
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11. Asset Diversification (continued)
• Trustee is bound by Prudent Investor Rule unless the trust document overrides. A
trustee shall invest and manage trust assets as a prudent investor would, by
considering the purposes, terms distribution requirements, and other circumstances
of the trust and shall exercise reasonable care and caution. (CA Prob. C. Sec
16047(a).) The Trustee’s management decisions must be evaluated in the context of
the trust portfolio as a whole and as part of an overall investment strategy having
risk and return objectives reasonably suited to the trust (Prob. C. Sec.16047(b).) The
trustee has a general duty to diversity assets, except when otherwise provided in the
trust instrument or when it would not be prudent to do so. (Prob. C. Sec. 16046(b),
16048)
• Draft to provide trustee with flexibility to adapt to changed circumstances.
• Modification of prudent investor rule under trust agreement – need more flexibility
to accommodate modern trusts and asset management.
• Higher standard of care for professional trustees: Higher standard of care applies
to professional corporate trustees, such as banks, and trust companies. Based on
their “presumed expertise,”, they are bound to apply the skill and knowledge
ordinarily possessed by such fiduciaries in similar circumstances (Estate of Beach
(1975) 15 Cal.3d 623, 631).
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12. Powers of Appointment
The hidden dispositive amendment: How do we ensure that a testamentary power of
appointment has not been exercised?
• A power of appointment is a delegation by the donor, in the disposition of his or her
property, to the donee, who does not become the owner and only holds as trustee.
(Estate of Sevegney [1975] 44 Cal.App.3d 467, 472).
• Powers of appointment commonly arise in various estate planning scenarios.
• If uncertain as to exercise, it may be necessary to open a “dry” probate proceeding
to confirm such. This involves filing a probate petition and going through the
procedural aspects of a conventional probate, including giving notice to the world of
such. However, there are no assets, inventories or distributions in the process.
• Attorney fees and expenses can also be an issue.
• Potential drafting solutions to consider:
– Adding a provision in the Trust whereby the successor trustee can presume that
the power of appointment has not been exercised if evidence of such an exercise
is not discovered within a certain time period (i.e. 60 days from the date of death).
– Limiting the type of document permitted to exercise the POA to a duly probated
will.
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13. Tangible Personal Property – Who gets the stuff?
Be very detailed with your client in addressing and disposing of personal property.
• The typical boilerplate provision provides that the trustee shall distribute all of
decedent’s tangible personal property to the surviving spouse, otherwise, in equal
shares to decedent’s children, to be allocated amongst them as they agree.
• Depending on circumstances, this provision can be unworkable as certain families
will need the Trustee to get involved and facilitate this process.
• Issues to consider:
– What does divide equally mean – by financial value, number of items, emotional or
personal significance?
– Are we to equalize with cash?
– How do we resolve conflicts with family members?
– Who pays shipping costs?
– How is the sale process to be conducted (if trustee has sale power)?
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14. Tangible Personal Property (continued)
• Specific Gift Items: Describe with specificity. Understand the family, visit the home,
obtain appraisals, include descriptions of items and to whom, have the client
complete a tangible personal property memorandum.
• It may be difficult for the trustee to locate various items, or questions may arise if
items are not sufficiently described.
• Don’t just assume the trustee will understand everything and be able to locate and
distribute all assets without proper instructions.
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15. Planning with your Exclusion Now
Economic uncertainty, increasing budget deficits and national debt, and political
instability may bring swift change to the current gift and estate tax regime.
• The 2017 Tax Cuts and Jobs Act doubled the gift, estate and generation skipping tax
exclusions from $5 Million to $10 Million, or $11.58MM in 2020 when indexed for
inflation. If left unchanged, the Act will sunset at the end of 2025 and revert back to
the $5 Million exclusion, indexed for inflation, from 2011.
• A timely 2020 Wealth Transfer “Trifecta” of depressed asset values, low interest rates
and high exclusion amounts provides a historically opportune time to make
permanent multi-generational transfers of wealth utilizing the current gift and
estate exclusions.
• The window of opportunity to act on the Trifecta may be shorter than we think. The
result of the 2020 elections and pandemic impact may accelerate changes to the
wealth transfer tax regime. Proposals to reduce the federal gift and estate tax
exclusions to $1MM - $5MM have been introduced by Democrats.
• Estate tax and gift rates have ranged between 40% and 55% over the last 20 years.
Recent proposals have targeted rates as high as 80%.
• President Joe Biden has proposed to eliminate the step up in basis at a decedent’s
death and replace it with either a carryover tax basis regime or imputed “deemed
sale” at death. Higher income tax rates and phase outs of tax exclusions and
deductions for high income earners have also been proposed.
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16. Estate Tax Apportionment
When planning for a taxable estate, it is critical to include a well thought out estate tax
apportionment clause that will specify how the estate tax burden will be allocated among
the beneficiaries.
• Client has two sons – one who works in the family business and one who does not.
Client wishes each son to receive an equal share. He provides a pre-residuary
bequest of the family business to the son who’s active in the business; and a gift of
the residue, which is of equal value to the other son. The intent is to treat the
children equally. However, the trust provides that all taxes are to be paid from the
residuary estate, and as a result, the son with the residuary gift will bear the entire
tax burden.
• Planning opportunity: Apportion the estate taxes equitably among the two
children, essentially requiring them to pay the estate tax generated by the assets
each receives (i.e. equitable apportionment).
– Note: this approach can cause issues for the son who receives the business, as he
may lack the liquidity to pay the tax without selling the business. An ILIT may be a
solution to address the liquidity issues.
• These issues often arise in estate plans involving children from different marriages.
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17. Social Responsibility and Substance Abuse Provisions
“Beneficiary Privacy, is that even a thing?”
• Consider whether a family member or other third party would be better suited to
determine whether distributions should be reduced, suspended or eliminated due to
a beneficiary’s illegal drug use or abuse of alcohol or other legal drugs. A family
member or other third party may live close to the beneficiary or have more intimate
personal knowledge that informs his/her decision.
• If the trust agreement provides that a family member or third party can reduce,
suspend or eliminate beneficiary distributions due to a beneficiary’s illegal drug use
or abuse of alcohol or legal drugs, the family member or third party will notify the
trustee of such determination. In that situation, the trustee should be relieved from
any liability and indemnified for following and relying on such person’s directions as
to the reduction, suspension or termination of distributions to the beneficiary and
any subsequent restoration of benefits from the trust.
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18. Social Responsibility and Substance Abuse Provisions
(continued)
• If there is no family member or third party to make these decisions, the trustee may
agree to accept the trusteeship of a trust which includes social responsibility
provisions.
• Proving Social Responsibility – Social responsibility provisions which require the
beneficiary to be employed or to otherwise be engaged in productive behavior
should have objective standards (i.e. distribution of $100,000 upon completion of
college) or should explain how any subjective standards can be met in good faith. If
provisions require employment, the trust should require the beneficiary to provide
the trustee with W2/tax information.
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19. Discretionary Distributions
“Is absolute discretion really absolute?”
What is the intent of your client? Do they want to provide a lavish lifestyle for the
beneficiary, or something more modest? Will the beneficiary be required to provide
certain documentation to the trustee? Many corporate trustees will require a budget
and/or tax returns from the beneficiary prior to approving a discretionary distribution.
HEMS will only get you so far.
• Letters of Wishes/Precatory Language – What carries legal weight and what just
provides additional insight into settlor’s intent? The more information a trustee has
at its disposal the better. Consider suggesting that your client execute a statement
or precatory letter outlining their wishes.
• Changes in circumstances – How should the trustee handle changes in
circumstances? While you can’t draft for each and every contingency, is there a
guiding principle that can inject some flexibility into the trustee’s discretion?
• Legacy Trusts – How to interpret a legacy trust that is multiple generations from
creation? It’s hard enough to draft comprehensive instructions for distributions to
one’s children, how to handle the unknown beneficiary?
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20. Discretionary Distributions (continued)
Options:
Letters of Wishes/Precatory Language – What carries legal weight and what just
provides additional insight into settlor’s intent? The more information a trustee has at
its disposal the better. Consider suggesting that your client execute a statement or
precatory letter outlining their wishes.
• Trust committee – manages all discretionary requests
• How responsive must you make the committee – monthly meetings at least. More
often?
• Is this sufficient protection against claim of abuse of discretion?
• Family communication – share estate plan with beneficiaries prior to death to
communicate intent and wishes.
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21. Amendment vs. Restatement
“To amend, or (not) to amend and restate, that is the question”
• Consider how cumbersome it can be to administer a trust with multiple
amendments.
• If the change is minor (i.e. correcting a name or clarifying an ambiguity), an
amendment may work.
• Consider a restatement when you’re removing a beneficiary or altering the
dispositive scheme in some respect.
• California Probate Code Section 16061.7(g)(5): The Trustee must provide to a
beneficiary, upon request, “a true and complete copy of the “terms of the trust”.
• California Probate Code Section 16060.5: If a trust has been completely restated,
“terms of trust” does not include trust instruments or amendments which are
superseded by the last restatement before the settlor’s death, but does include
amendments executed after the restatement.
• Weigh benefits and burdens of an amendment vs. restatement. Does it really cost
that much more to amend and restate?
• Providing trust documents to family members who have been removed from the
trust or share decreased or altered can result in undue conflict and unnecessary
dispute, that may have been avoided with a restatement.
21

22. Charitable Beneficiaries
• Common issues arise where the charity is not properly named in the trust
document, is no longer in existence, has morphed into a new organization, or its tax
exempt status may be in question.
• Many trusts contain lapse language, i.e. “if any recipient is not then a charitable
organization or if the distribution to the recipient cannot otherwise be made, then
the distribution to that recipient shall be reallocated proportionately among the
other recipients.”
• Consider looking up the charity on the IRS website, and drafting language to allow
the trustee discretion in this regard.
• If the funds are going to national or local chapter, so state.
• If the funds are to be restricted in some manner, or are to be designated for a
particular purpose, so state.
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23. Funeral/Healthcare Power of Attorney
• It is fairly common, especially with elderly clients who do not have children or family,
to have HPOAs with deceased agents, or agents who are unable or unwilling to act.
• This puts the corporate fiduciary in the precarious position of having to be involved
in burial matters, and facilitate as best it can. However, this may not be the
decedent’s wishes.
• Continue to review and update these documents. Or, add instructions in the file,
particularly if the client wishes to be cremated and no family members are available.
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24. Contact the Corporate Trustee Upon Nomination
• If the client is going to name a Wells Fargo Bank, N.A. in their estate planning
documents, consider contacting us to discuss. For executed estate planning
documents whereby Wells Fargo Bank is nominated in a primary or secondary
fiduciary capacity, Wells Fargo Bank may be able to provide document storage
through our Central Will File Administration Team.
• The trustee can point out issues of concern and work with you to resolve them.
• We have a pre-acceptance process, so reviewing assets in that respect makes sense
as well.
• Engage in a discussion with your client’s full team of advisors, including their CPA
and Wealth Advisor.
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25. Acknowledgements
We would like to acknowledge and sincerely thank our team
members who authored this original presentation:
• Karen E. Sugihara, Senior Vice President, Senior Regional Fiduciary Manager
• Alexander V. Quest, Senior Vice President, Regional Wealth Planning Manager
• Elena V. Toulios, Senior Vice President, Senior Estate Advisory Specialist
• Brett D. Mulberg, Vice President, Senior Estate Advisory Specialist
25

26. Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and
its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo &
Company.
© 20XX Wells Fargo Bank, N.A. All rights reserved. Member FDIC. NMLSR ID 399801
Investment and Insurance Products:
NOT FDIC-
Insured
NO Bank
Guarantee
MAY Lose
Value
Presenters
Clare R. Ceplecha
Senior Vice President,
Senior Fiduciary Advisory Specialist
Wells Fargo Wealth Management | 350 W. Colorado Blvd. | Pasadena,
CA 91105 |
Tel 949-253-4235 |Fax 866 227-3910 |Cell 949-537-0328
Clare.Ceplecha@wellsfargo.com
Robin Boren-Coleman Sexton
Vice President
Senior Estate Advisory Specialist
Estate Services
Wells Fargo Wealth Management | 5 Park Plaza | Irvine, CA 92614 |
Tel 949-253-4235 |Fax 866 227-3910 |Cell 949-537-0328
Robin.Boren-colemansexton@wellsfargo.com

27. Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and
its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo &
Company.
© 20XX Wells Fargo Bank, N.A. All rights reserved. Member FDIC. NMLSR ID 399801
Investment and Insurance Products:
NOT FDIC-
Insured
NO Bank
Guarantee
MAY Lose
Value
Presenters
Crystal Lopez, CTFA
Vice President
Senior Estate Advisory Specialist
Estate Services
Wells Fargo Wealth Management | 707 Wilshire Blvd. Floor 52, 5200 |
Los Angeles, CA 90017-3501|
Tel 213-688-3608 |Fax 855.292.3426
Crystal.Lopez@wellsfargo.com

28. Disclosures
Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and its various affiliates and
subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
Wells Fargo affiliates may be paid a referral fee in relation to clients referred to Wells Fargo Bank, N.A.
Wells Fargo Bank, N.A. (the “Bank”) offers various advisory and fiduciary products and services including
discretionary portfolio management. Financial Advisors of Wells Fargo Advisors may refer clients to the bank for an
ongoing or one-time fee. The role of the Financial Advisor with respect to bank products and services is limited to
referral and relationship management services. The Bank is responsible for the day-to-day management of non-
brokerage accounts and for providing investment advice, investment management services, and wealth
management services to clients. The Financial Advisor does not provide investment advice or brokerage services to
Bank accounts but does offer, as applicable, brokerage services and investment advice to brokerage accounts held at
Wells Fargo Advisors. The views, opinions and portfolios may differ from our broker-dealer affiliates.
Brokerage services are offered through Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by
Wells Fargo Clearing Services, LLC, and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate
registered broker-dealers and non-bank affiliates of Wells Fargo & Company. Wells Fargo & Company and its
affiliates do not provide legal or tax advice. Please consult your legal and/or tax advisors to determine how
this information may apply to your own situation. Whether any planned tax result is realized by you depends
on the specific facts of your own situation at the time your tax return is filed.
Trust services are available through banking and trust affiliates in addition to non-affiliated companies of Wells
Fargo Advisors. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed
to practice law in your state.
©2020 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. WCR-0820-
00290
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