Fiduciary Selection

A Fiduciary is someone who serves in a position of trust and authority with regard to you, your assets, and your minor children. Selecting your fiduciaries may be one of the most critical decisions you make in structuring your estate plan. There are several positions in an estate plan in which it is necessary to designate a fiduciary. Some fiduciary positions such as the roles of Guardian, Healthcare Agent, and Attorney-in-Fact must generally be filled by individual appointees. Individuals can also fill the roles of Executor, Trustee, and Conservator, but in same cases it may be wise to use a corporate fiduciary such as a bank or trust company. You may also want to use a corporate fiduciary along with an individual co-fiduciary in certain instances. Positions for which you’ll need to select fiduciaries can include

1. Executor
   The position of Executor is primarily administrative and short-term. The Executor submits a Will for probate and administrates the estate. If the Will provides for assets to be distributed to any trusts, the appointed Trustee will eventually take over.
2. Trustee
   The position of Trustee is administrative and involves decision-making in the areas of managing and investing the assets and filing any required returns. A Trustee also decides how trust assets will be distributed to or used for the benefit of the trust beneficiaries in accordance with the trust’s terms. This is generally a long-term position. A Trustee can serve for you during your lifetime if you have created a Revocable Living Trust, or for your beneficiaries after your death.
3. Guardian
   A guardian assumes custody of any minor child or children who survive you and their other parent. A guardian effectively acts as a replacement parent.
4. Agent or Attorney-in-Fact under your Financial Power of Attorney
   An Attorney-in-Fact is someone who can handle your financial and property matters on your behalf while you are still living and without court approval or oversight.
5. Healthcare Agent under your Advance Directive for Healthcare
   Should you become incapacitated or otherwise unable to deal with matters on your own behalf, the Healthcare Agent you’ve designated will work with your doctors, hospital personnel, other healthcare providers, and your health insurance companies. Appointing your Healthcare Agent allows you to select someone you trust to make decisions on your behalf and can also help you avoid the need to have someone appointed as your guardian.
6. Conservator
   A Conservator manages any assets that may pass to a minor child outright. You may not need a Conservator if you have a well-drafted estate plan that provides for trusts to be created for minor children (unless the children already have assets in their name prior to your death).

How do you select your fiduciaries?
We suggest you consider the following factors when making that determination:

1. Is the person honest and trustworthy?
   The role of fiduciary generally carries a lot of power with it, often coupled with little or no outside supervision.
2. Is he or she willing and able to spend the time and effort needed to manage time-sensitive tasks?
   It’s important that the fiduciary you select is willing and able to execute tasks in a timely, detail-oriented manner. The fiduciary may hire people to assist with the tasks, but the fiduciary is still responsible for ensuring the tasks are carried out accurately and on time.
3. Is the person logical and reasonable?
   In the event of a dispute, you want to ensure you’ve selected a fiduciary that can deal with the issues calmly and reasonably, avoiding potential litigation when possible.
4. Is the nominee good with financial issues?
   A core consideration when selecting a fiduciary should be his or her management of financial matters. He or she should demonstrate conservative money-management skills and not be willing to make high-risk investments or imprudent risks with assets. A fiduciary should also be willing to hire the appropriate advisors (attorneys, CPAs, investment advisors) when dealing with issues he or she is not fully equipped to address alone.
5. Does he or she have any strong conflicts of interest?
   Some fiduciaries carry powers and responsibilities over the beneficiaries that the beneficiaries may not like. This is especially true of siblings in cases where one sibling is named the fiduciary (and is also a fellow beneficiary) and the other beneficiaries are jealous, resentful, or feel the designee will take unfair advantage of the situation. Before considering whom to select as a fiduciary, (especially those in the roles of Executor or Trustee), consider whether or not your selection may cause resentments or potentially destructive litigation.

One person or corporate fiduciary can fill several roles. What is important is that you are confident in the capabilities of your selected fiduciaries.