A comprehensive and well thought out estate plan can protect you, your assets, and your loved ones throughout your lifetime and after you pass away. Creating your initial estate plan is a crucial first step; however, estate planning is something that is ever truly finished. For your estate plan to work as intended, you need to review and revise your plan from time to time. One crucial aspect of estate planning that frequently gets overlooked is the updating of fiduciaries. Fiduciaries play an essential role in managing your estate and ensuring your wishes are carried out. To ensure that your estate plan functions properly, the Indianapolis attorneys at Frank & Kraft explain the importance of updating your fiduciaries.
Who Are My Fiduciaries in My Estate Plan?
Before delving into the importance of updating fiduciaries, it is essential to understand who they are and what they do. A fiduciary is an individual who holds a legal or ethical bond of trust with one or more other parties. A fiduciary is responsible for carefully managing money or assets intended for the benefit of another party and/or for making decisions for another party. Fiduciaries bear the highest ethical duty towards the other party, obligating them to always act in the other’s best interests. Fiduciaries within the average estate plan include:
- Executor: An Executor is the person you designate in your Last Will and Testament to manage your estate upon your passing. This includes tasks such as paying debts, filing taxes, and distributing assets to beneficiaries.
- Trustee: A Trustee administers a trust you establish. This includes managing trust assets, ensuring that the trust’s terms are followed, and that the beneficiaries’ interests are protected.
- Agent: An Agent is appointed in a financial Power of Attorney or a Healthcare Power of Attorney and has the authority to act on your behalf in legal transactions and/or to make medical treatment decisions for you if you cannot make them yourself.
- Guardian: If you have minor children, you have the opportunity to nominate a Guardian for your children in your Will. This person will take over the care of your children if necessary.
Updating Fiduciaries
Throughout your life, you will experience numerous changes that may prompt a need to make changes to your estate plan, including changes to the fiduciaries named within your plan. Updating the fiduciaries in your estate plan may be necessary for a variety of reasons, including:
- Changes in Relationships: Relationships evolve. Someone who was once a close friend may drift apart, or a relative you trusted may move far away, making it impractical for them to serve as an Executor or Trustee. Regularly reviewing your estate plan ensures that the individuals in these roles are still appropriate choices given your current relationship with them.
- Changes in Capability: Health issues, aging, or significant life changes can affect a person’s ability to serve as a fiduciary. Someone who was once fully capable may no longer have the mental or physical capacity to handle the responsibilities. By updating your estate plan, you can ensure that the individuals named are still capable of fulfilling their duties effectively.
- Professional Competence: Sometimes, you might initially appoint a family member or friend out of convenience; however, as time goes on, you might realize that a professional, such as an attorney or a financial advisor, would be a better fit due to their expertise. Updating your fiduciaries allows you to make these adjustments.
- Geographical Considerations: The geographical location of your fiduciaries is also an important factor. If your chosen Executor or Trustee moves to a different state or country, their ability to manage your estate efficiently could be compromised. Regular updates to your estate plan can address such logistical concerns.
- Personal Circumstances: The personal circumstances of your fiduciaries can also change. They may face their own financial or legal issues, making it challenging for them to handle additional responsibilities. Ensuring that your chosen fiduciaries are in a stable position to manage your estate is crucial for the smooth execution of your estate plan.
Is It Time to Update Your Fiduciaries?
For more information, please join us for an upcoming FREE seminar. If you are ready to review and update your fiduciaries in your estate plan, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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