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One of the important tasks in creating a complete estate plan is selecting people (or financial institutions) to represent you, in case of incapacity or death. Most people think of naming an executor, but there are many more roles, advises the article “What to consider when appointing a fiduciary?” from The Ledger.
Here are the most common roles that an estate planning attorney will ask you to select:
- Executor or personal representative, who is named in your will and appointed by the court to administer your estate.
- Agent-in-fact (under a durable power of attorney) who manages your financial affairs while you are living, if you are unable to do so.
- Health care surrogate who makes health care decisions on your behalf while you are living, if you are incapacitated.
- Trustee of a trust document; administers the trust that you have created.
- Guardian: a person who makes health care and financial decisions on your behalf, if the court determines that other roles, like health care surrogate or agent-in-fact, are not sufficient.
- Guardian for minor children: person(s) who make decisions for your children, if you are not able to because of death or a loss of capacity before the children reach adulthood.
The individuals or financial institutions who take on financial roles are considered fiduciaries; that is, they have a legal duty to put your well-being first. Their responsibilities may include applying for government benefits, managing and invest your assets and income, deciding where you will live and working with your attorneys, financial advisors and accountants.
Many people name their spouse or eldest child to take on these roles. However, that’s not the only option. A few questions to consider before making this important decision include:
- Does this person have the experience, skill and maturity to manage my financial affairs?
- Does this person have the time to serve as a fiduciary?
- Would this person make the same health care decisions that I would make?
- Can this person make a difficult decision for my health care?
- Does this person live near enough to arrive quickly, if necessary?
- How old is this person, and will they be living when I may need them?
- What kind of response will my family have to this person being named?
- Are my assets substantial enough to require a financial institution or accountant to manage?
These are just a few of the questions to consider when choosing fiduciaries or health care agents in your estate plan. Speak with your estate planning attorney to help determine the best decision for you and your family.
Sometimes choosing a bank as a trustee or executor instead of a family member makes more sense.
Reference: The Ledger (Oct. 16, 2019) “What to consider when appointing a fiduciary?”