Throughout the creation of your estate plan there will be opportunities to choose individuals or entities to serve in fiduciary roles. Unfortunately, people often appoint fiduciaries without giving the appointment sufficient thought and consideration. Choosing the wrong fiduciary can have a significant negative impact on your overall estate plan. To help ensure that you don’t make a mistake, the New York estate planning attorneys at the Law Offices of Kobrick & Moccia discuss how to choose your fiduciaries wisely.
What Is a Fiduciary?
The law defines a fiduciary as “a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons).” Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for example a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to the other one, who for example has entrusted funds to the fiduciary for safekeeping or investment. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice or protection is sought in some matter. The highest legal duty of one party to another, it also involves being bound ethically to act in the other’s best interests.
Choosing Your Top 4 Fiduciaries
A typical estate plan has at least one fiduciary role within the plan and most have more than one fiduciary role. When you are deciding who to appoint or nominate to a fiduciary role within your own estate plan, you may find the following tips to be useful:
- Executor – a Last Will and Testament serves as the foundation for most estate plans. 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. Suggestions for appointing the right Executor include appointing someone who:
- Is capable of managing their grief so they can focus on what needs to be done to administer your estate.
- 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.
- Will be able to resolve conflicts
- Knows to seek assistance from professionals if it is needed.
- Trustee – like many people, you may choose to incorporate a trust agreement into your estate plan. If so, 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. Suggestions for appointing the right Trustee to administer your trust include choosing someone who:
- Does not have any conflicts with beneficiaries
- Has a financial and/or legal background
- Lives close to any real property held by the trust
- Is willing to serve in the position
- Agent for a Power of Attorney – a Power of Attorney allows you to appoint an Agent who will have the legal authority to act on your behalf in legal matters other than healthcare decisions. A POA can be general, giving your Agent almost unfettered authority, or limited, only giving your Agent the specific authority outlined in the POA. If you create a general POA, suggestions for appointing the right Agent include appointing someone who:
- You trust unconditionally
- Is likely to be available if the need to use the POA arises
- 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. Suggestions for appointing the right Agent for an Advance Directive include appointing someone who:
- Knows you well enough to know what decisions you would likely make
- Lives close, or will be able to travel quickly, in case the need arises
- Will be able to understand the often complicated medical jargon and explanations
- Is able to remain calm under pressure and make difficult decisions
Contact the New York Estate Planning Attorneys
Please feel free to download our FREE estate planning worksheet. If you have additional questions or concerns regarding how to choose the right fiduciaries within your estate plan, contact the New York estate planning attorneys at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.