How to Choose the Right Fiduciaries for Your Estate Plan

Fiduciaries are individuals or entities entrusted with the responsibility of managing your estate and carrying out your instructions as laid out in your estate planning documents. Choosing the right fiduciaries for your estate plan is critical to the overall success of your estate plan and to ensuring that your wishes are carried out smoothly and effectively. Toward that end, a Murfreesboro estate planning attorney at Bennett | Michael | Hornsby discusses how to choose the right fiduciaries for your estate plan.

What Is a Fiduciary Relationship?

The legal definition of a fiduciary is “a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of

Last Will and Testament Document Ready to Sign. Last Will Document and Fountain Pen Closeup Photo.

persons).” A fiduciary role typically involves carefully managing money or assets intended for the benefit of another party and/or making decisions for another party. Fiduciaries bear the highest legal and ethical duty towards the other party, requiring them to always act in the best interest of the other party.

Fiduciaries in Your Estate Plan

Before selecting your fiduciaries, it is crucial to understand the specific duties and responsibilities associated with each role. Common fiduciary roles found in an estate plan include:

  • Executor: The Executor is responsible for administering your Last Will and Testament, typically during the legal process known as “probate.” Your Executor must ensure that your assets are identified and valued, creditor claims are reviewed and paid if approved, defend your estate during litigation, and make sure that your assets are distributed according to your wishes.
  • Trustee: A Trustee manages the assets held in a trust for the benefit of the beneficiaries. This role involves managing investments, communicating with beneficiaries, distributing assets, and calculating and paying taxes owed by the trust.
  • Agent under Power of Attorney: The type of POA will determine what authority the Agent has; however, an Agent may have the authority to act on your behalf in legal, financial, or health care matters. This role requires making significant decisions about your finances, property, and/or medical care.
  • Guardian: If you have minor children, you should nominate a Guardian for your children in your Last Will and Testament. This person will take over the financial and practical care of your children if necessary.

Characteristics to Look for When Choosing Fiduciaries

The specific characteristics you should look for in a fiduciary will depend, to some extent, on the fiduciary role involved; however, some characteristics to look for in a fiduciary include:

  • Trustworthiness and Integrity: When you appoint someone to a fiduciary role, you are entrusting them with significant responsibilities, including managing your assets and/or making critical healthcare decisions on your behalf. Regardless of the fiduciary role involved, choosing someone with a high level of integrity and a track record of making sound, ethical decisions is a wise choice.
  • Financial Acumen: For a Trustee or Executor, financial experience and skill is crucial because these roles involve handling various financial tasks, from paying debts and taxes to managing investments and distributing assets. Someone with experience in finance or a strong understanding of financial principles is better equipped to handle these responsibilities effectively.
  • Proximity: In today’s digital age, proximity can be less of an issue if your chosen fiduciaries are comfortable using technology to manage their duties. Nevertheless, having a fiduciary who lives nearby can be advantageous. This is particularly important when appointing an Executor or an Agent under a Healthcare Power of Attorney because they can more easily handle tasks that require physical presence, such as managing property or attending court hearings.
  • Availability and Willingness: Serving as a fiduciary can be time-consuming and demanding so choosing someone who has the time and is willing to take on these responsibilities is important. It is equally important to discuss the role with your potential fiduciaries in advance to ensure they understand the commitment and are prepared to serve in the role.
  • Conflict of Interest: When considering someone for a fiduciary role, always take into account any potential conflicts of interest. For example, a family member who is a beneficiary of a trust you created might have a conflict of interest if you appoint them as the Trustee of the trust. A conflict does not necessarily disqualify the person for the role; however, you should carefully consider whether the conflict should preclude the appointment.

Contact a Murfreesboro Estate Planning Attorney 

If you have additional questions about how to choose the right fiduciaries for your estate plan, consult with an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.

 

Stan Bennett