How to Choose Fiduciaries in Your Estate Plan
A fiduciary is a person or entity that holds a legal and/or ethical relationship of trust with another person or a group of people and who must act to benefit that person(s) at all times.
What Is a Fiduciary?A fiduciary is a person or entity that holds a legal and/or ethical relationship of trust with another person or a group of people and who must act to benefit that person(s) at all times. Furthermore, a fiduciary duty is the highest standard of care in equity or law and must not profit from the position at the expense of the beneficiaries. A fiduciary can, however, receive a fee for services.
Choosing Your ExecutorA Last Will and Testament serves as the foundation for most estate plans. When you create your Will, you will be required to appoint an Executor who is responsible for overseeing the administration of your estate during the probate process. Suggestions for appointing the right Executor include appointing someone who:
• Can manage their grief so they can focus on what needs to be done to administer your estate.
• Lives close enough to be able to secure and manage property while probating is going on and can handle the distribution of your assets at the end of the process.
• Will be able to resolve conflicts.
• Knows to seek assistance from professionals if it is needed.
Choosing a TrusteeYour Trustee will manage and invest trust assets as well as administer the trust agreement using the terms you created. Suggestions for appointing the right Trustee to administer your trust include choosing someone who:
• Does not have any conflicts with beneficiaries.
• Has a financial and/or legal background.
• Lives close to any real property held by the trust.
• Is willing to serve in the position.
• You may wish to consider appointing a professional Trustee.
Choosing an Agent for a Power of AttorneyA Power of Attorney allows you to appoint an Agent who will have the legal authority to act on your behalf in legal matters. A POA can be general, giving your Agent almost unfettered authority, or limited, only giving your Agent the specific authority outlined in the POA. If you create a general POA, suggestions for appointing the right Agent include appointing someone who:
• You trust unconditionally.
• Is likely to be available if the need to use the POA arises.
• Will need to have your POA.
• Has the ability to handle challenges to his/her authority because some third parties will likely question your Agent’s authority.
Choosing an Agent for an Advanced DirectiveAn Advance Directive allows you to appoint an Agent to make healthcare decisions for you if you are unable to make them yourself because of your incapacity. Suggestions for appointing the right Agent for an Advance Directive include appointing someone who:
• Knows you well enough to know what decisions you would likely make.
• Lives close, or will be able to travel quickly, in case the need arises.
• Will be able to understand the complicated medical jargon and explanations.
• Can remain calm under pressure and make difficult decisions.