The word “fiduciary” may be unfamiliar to you, especially if you are relatively new to estate planning. A fiduciary is a position of trust. To put it another way, a fiduciary is an individual whom you trust to act in good faith on your behalf when granted certain powers and rights to be used for your benefit.
Fiduciary Roles in Estate Planning
As it relates to estate planning, a fiduciary is someone whom you name to act on your behalf in the event of your death or incapacitation. Your estate plan will likely include more than one fiduciary position to fill: an attorney-in-fact for your power of attorney, an executor or personal representative for your will, a trustee for any trusts that you create, etc.
Questions To Ask When Choosing a Fiduciary
The requirements someone must meet to act as a fiduciary vary by state. However, even among those who meet the requirements, certain individuals may be more qualified to assume a role such as this than others.
- Is It Appropriate To Choose More Than One Fiduciary?
Often, the answer is yes. In many cases it is desirable to choose more than one individual to serve different fiduciary duties. This prevents one person from holding all the power and creates a series of checks and balances.
In complex situations, such as when your desired fiduciary lives out of state, it is sometimes appropriate to choose co-fiduciaries to share the same role. However, it is essential to first ensure that the two get along well and can work effectively together.
- Does This Individual Have the Necessary Qualities?
The single most important quality you should consider when choosing a fiduciary is trustworthiness. The fiduciary will be your voice when you cannot speak for yourself, so you must be sure that he or she is not motivated by self-interest.
Once you’ve identified someone you can trust, you should look for the following essential qualities:
- Competence in financial matters
- If You Choose a Family Member, Will It Cause a Rift?
Members of the same family don’t always get along as well as they should. In the heightened emotional state that follows a death or other tragic event, tempers can flare and old wounds can reopen. If you think choosing a family member as a fiduciary may cause problems, you may wish to turn to someone outside the family, such as a friend or a professional.
- What Are the Advantages of Choosing a Professional Fiduciary?
There is a fee involved in hiring a professional fiduciary, but depending on your family situation, it may be money well spent. Besides not having a personal stake, a professional fiduciary has experience in matters such as trust administration and estate management.
A Folsom estate planning lawyer can answer your questions about choosing a fiduciary and other estate planning matters. Contact a law office for more information.
Thanks to Yee Law Group for their insight into estate planning and how to choose a fiduciary.