While decisions relating to your assets are certainly important when creating an estate plan, they may not be the most important decisions you make. 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 Indianapolis estate planning attorneys at Frank & Kraft offer five questions to ask when choosing a fiduciary.
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 which 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
- Trustee
- Agent in a Power of Attorney
- Agent in an Advance Directive
- Guardian for your minor children
Questions to Consider
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.
- Does appointing this person create any 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 Indianapolis Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to choose the people you appoint to fiduciary roles in your estate plan, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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