Your fiduciary is an integral part of your estate plan. Who should you appoint to coordinate your affairs upon incapacity or death? Consider these questions when making the selection:
• What are the responsibilities of my fiduciary? The fiduciary you select should be capable of handling the responsibilities of the appointed role. Personal Representatives and Trustees are charged with the duty of gathering your assets, satisfying your liabilities and distributing your estate among your beneficiaries.
In safeguarding your assets, fiduciaries must make prudent financial decisions. The complexity of such decisions depends upon the nature of your assets. For example, a closely held business is a more difficult asset to manage compared to a portfolio of marketable securities. Be sure to select a fiduciary knowledgeable to handle your specific assets.
• How long will my fiduciary be required to act? The role of a Personal Representative (Executor/Executrix) is relatively speaking a short-term one, while that of the Trustee is long-term. A trust can last for many years and even span several generations.
• Who are the beneficiaries of my estate? Are there any special family circumstances to consider?
Your family dynamics can impact your fiduciary selection. Your fiduciary must be able to communicate effectively with your beneficiaries. Your fiduciary should also show fairness and impartiality when beneficiaries have conflicting interests. If you foresee potential conflicts among beneficiaries, it is wise to select a fiduciary immune to such tensions. Consider the potential difficulties you may impose upon a neutral family member or friend.
• Will my fiduciary charge a fee for its services? If you appoint a professional fiduciary, review their fee schedule carefully. Family members or friends sometimes forego taking such fees, however, these fees are subject to income taxation.
• What personal considerations do I have for selecting my fiduciary?
The selection of a family member or friend as your fiduciary may be tempered by personal goals. Do you wish to give your spouse an important role in the handling of your affairs? Do you wish to show your confidence in your child’s abilities?
An estate plan must be designed to express your personal wishes, and your fiduciary selection can reflect those wishes as well. However, personal considerations should be weighed carefully against other relevant factors. Consider appointing a family member or trusted friend as a co-fiduciary to act with a well suited individual or professional fiduciary.
• Is my selected fiduciary willing to serve? It is important to determine if your selected fiduciary is willing to serve as such. The task of a fiduciary can be complex and time consuming and your fiduciary should be willing to undertake the responsibility of handling your affairs. Discuss the appointment with your chosen fiduciary. A begrudging Personal Representative or Trustee does not make the most effective fiduciary.