When you think about what’s important in your estate plan you probably focus on how your assets will be distributed after you are gone and/or how you can use your estate plan to care for loved ones. While decisions relating to your assets are certainly important, they may not be the most important decisions you make when creating your estate plan. In fact, some of the decisions that impact the success, or failure, of an estate plan are frequently made without giving them much thought. Those decisions are the ones that relate to choosing fiduciary roles throughout your estate plan. To help you make the best decisions, the Nashua estate planning attorneys at DeBruyckere Law Offices explain how your choice of fiduciaries can impact 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 that 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.
What Are the Fiduciary Roles within an Estate Plan?
Although every estate plan is unique, the average plan will have more than one fiduciary role within the plan. The most common examples of fiduciary roles in an estate plan include:
- Executor — 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.
- 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.
- Agent in a Power of Attorney – when you create a POA you must appoint an Agent who will have the legal authority to act on your behalf in legal matters other than healthcare decisions.
- Agent in an Advance Directive – if you create a health care power of attorney you will need to appoint an Agent to make healthcare decisions for you if you are unable to make them yourself because of your incapacity.
Questions to Ask Yourself When Appointing a Fiduciary
Appointing the wrong person to a fiduciary role is among the most common estate planning mistakes. To help prevent you from making a mistake, ask yourself the following five questions when choosing a fiduciary:
- Does he/she have the necessary skills/experience? Not all fiduciary roles require special skills, but some do. A Trustee, for example, should ideally have a legal and/or financial background.
- Is this someone I trust implicitly? A fiduciary typically makes extremely important decisions as well as handles valuable assets. You must be able to trust a fiduciary unquestionably.
- Will this person be capable of fulfilling the role? Does the person live close enough? Will his/her job allow sufficient time to perform the duties required? Will the person be able to set aside emotions and think clearly when necessary?
- Is this person willing to accept the appointment? Never assume that someone is willing to be your Executor, Trustee, or Agent. Always ask them directly before appointing them.
- Will appointing this person create conflicts? There are numerous potential conflicts in an estate plan. For example, if your Trustee has an existing personal relationship with one beneficiary but not with the others, it can create a conflict.
Contact Nashua Estate Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about how to include charitable gifting in your comprehensive estate plan, contact the experienced Nashua estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.