While the term “fiduciary” is a legal term with a rich history, it generally means someone who is legally obligated to act in another person’s best interests. Trustees, executors, and agents are all examples of fiduciaries. When you pick trustees, executors, and agents in your estate plan, you’re picking one or more people to make decisions in your and your beneficiaries’ best interests and in accordance with the instructions you leave. Understanding the basics of what each of these terms means and what to consider when making your choices can make your estate plan work far better. This post is designed to assist you in understanding these basics.
Trustee
A revocable living trust is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals. In many revocable living trusts, you will serve as the initial trustee and will continue to manage the trust assets as you had in the past. Your successor trustee will be responsible to manage your assets during your incapacity and for making sure your wealth is passed on and managed in accordance with your wishes after your death. Like everyone appointed to serve in a roll in your estate planning, it’s best to nominate a trusted person or financial institution to carry out the vitally important role of trustee.
It’s also important to make the language in your trust is as clear as possible so that your trustee knows exactly how to handle various situations that can arise. Lastly, your trustee will only control the assets contained within the trust — not the rest of your estate, the reason why completely funding your living trust is crucial.
Agent under Powers of Attorney
Your power of attorney is the document in your estate plan that appoints individuals to make financial decisions on your behalf over assets not funded into your trust if you become unable to do so yourself. There are a few different types of powers of attorney, each with their own specific provisions. Powers of attorney grant individuals the ability to take financial and legal actions on your behalf such as withdrawing money from your accounts to cover your expenses and deal with your retirement accounts. A person who acts under the authority given in a power of attorney is generally called an agent. Regarding financial decisions, an institution like a trust company, can also be named. Keep in mind that trust companies will charge a fee for this service.
Agent under Health Care Proxies
Health care proxies cover a wide range of specific actions that can be taken regarding an incapacitated individual’s medical needs such as making decisions about the types of care you receive or who will be providing the care.
Executor
Your executor is the person who will see your assets through probate, if necessary, and carry out your wishes based on your last will and testament. Depending on your preferences, this may be the same person or institution as your trustee. You might also see this position designated as personal representative, but it means the same thing.
Some individuals chose to select a paid executor. This is usually someone who doesn’t stand to gain anything from your will and is often the best choice if your estate is large and will be divided among many beneficiaries. Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on your family or friends.
As with all of the estate planning roles, being an executor can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job. They will probably need to hire a CPA to help sort out your taxes and a lawyer to assist in the process. Of course, if there’s a dispute, attorneys, appraisers, mediators, or other professionals will undoubtedly need to be involved. Choosing a spouse or someone else intimately involved in your life can be convenient because they may already be familiar with your assets and have an easier time making sure your wishes are carried out. However, because of the time involved and the nature of some assets, they may not be up to the task at the time.
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Let us help you make the process of picking your trustee, agents, and executor as smooth and headache-free as possible. Once you have these choices in place, you’ll be able to rest easy knowing that your estate plan is in good hands no matter what life brings. Give us a call to make an appointment today.