Like most people, when you contemplate your estate plan you likely focus on how your assets will be distributed after you are gone and how those assets will be used to care for loved ones. While the decisions you make related to your assets are certainly important, they may not be the most important decisions you make when creating your estate plan. Unfortunately, some of the most important estate planning decisions are frequently made without sufficient thought or consideration. Those decisions are the ones that choose fiduciary roles within your estate plan. To prevent you from making the wrong choice when appointing fiduciaries in your plan, the Indianapolis estate planning attorneys at Frank & Kraft explain how to pick fiduciary roles in your estate plan.
What Is a Fiduciary?
A fiduciary is a person or entity that holds a legal and/or ethical relationship of trust with another person or a group of people and who must act to benefit that person(s) at all times. Furthermore, a fiduciary duty is the highest standard of care in equity or law. A fiduciary holds a position of trust and is expected to be extremely loyal to the person to whom he/she owes the duty. Furthermore, a fiduciary must not profit from the position as a fiduciary at the expense of the beneficiaries. A fiduciary can receive a fee for services though, as is the case of a Trustee who receives a fee for administering the trust.
Picking Your Fiduciaries
Most estate plans have 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
- Note: Consider appointing a professional Trustee
- 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 an Indianapolis Estate Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions about how to pick the right fiduciaries for your estate plan, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul A. Kraft, Estate Planning Attorney
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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