Some of the most influential decisions you will make within your estate plan are often the ones people spend very little time making. These are decisions related to fiduciary roles within your plan. Choosing people for the fiduciary roles within your estate plan should be done with great care because appointing or nominating the wrong person can have a detrimental effect on the overall success of your plan. Let’s explore the five most important roles within your estate plan.
What Does It Mean to Be a Fiduciary?
A fiduciary is a person who holds a legal or ethical relationship of trust with another person or a group of people. Put another way, a fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. Furthermore, a fiduciary duty is the highest standard of care in equity or law. A fiduciary is expected to be extremely loyal to the person to whom he/she owes the duty and must not profit from the position as a fiduciary. A fiduciary can receive a fee for services; however, he/she should not profit at the expense of the other party.
Tips for Choosing Your Fiduciaries
Although every estate plan is unique, most have at least one fiduciary role within the plan and most have several fiduciaries. When you sit are deciding who to appoint to these fiduciary roles within your estate plan, considering the following tips:
- Executor – when you create your Last Will and Testament you will appoint an Executor. Your Executor is responsible for overseeing the administration of your estate during the probate process. Appoint someone who:
- Will not be so overwhelmed with grief that they cannot focus on what needs to be done.
- 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.
- Is good at conflict resolution
- Will not hesitate to seek assistance from professionals if it is needed.
- Trustee – if you incorporate a trust agreement into your estate plan, you will need to appoint a Trustee. Your Trustee will manage and invest trust assets as well as administer the trust agreement using the terms you created. Appoint someone who:
- Has a financial and/or legal background
- Does not have any conflicts with beneficiaries
- Lives close to any real property held by the trust
- Is willing to serve in the position
- Note: Consider appointing a professional Trustee
- Agent in a Power of Attorney, also known as an Attorney in Fact – a Power of Attorney allows you to appoint an Agent/Attorney in Fact who will have the legal authority to act on your behalf in legal matters other than healthcare decisions. A POA can be general or limited. If you create a general POA, appoint an Agent who:
- You trust unconditionally
- Will actually 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
- Agent in an Advanced Directive – an 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. Appoint an Agent who:
- Knows you well enough to know what decisions you would likely make
- Will be able to understand the often complicated medical jargon and explanations
- Is able to remain calm under pressure and make difficult decisions
- Guardian for Minor Children — if you are the parent of a minor child, or you are considering becoming one in the future, your Last Will and Testament offers you the only official opportunity you will have to nominate someone to be your child’s legal Guardian should one ever be needed. Nominate someone who:
- Your child knows well if possible.
- Has the emotional, physical, and financial ability to care for your child.
- Has agreed to accept the responsibility of becoming a Guardian.
Please download our FREE estate planning checklist. If you have additional questions or concerns about how to choose the right person for fiduciary roles within your estate plan, contact us at the Northern California Center for Estate Planning & Elder Law to find out today by calling (916)-437-3500 or by filling out our online contact form.