Choosing a Fiduciary: What is the Fiduciary’s Role in Estate Planning?

Choosing a fiduciary is critical in estate planning. A fiduciary is a person who holds a legal relationship of trust with you, your estate, and your beneficiaries. There are different types of fiduciaries for different contexts, each with varying degrees of power and third party oversight.

Executor of a Will

An executor assumescontrol of your estate after your death. This person will manageeverything, including probating the will, filing taxes, distributing assets, and paying off debts. The powers of the executor are, however,limited andsubject to court review. The beneficiaries and/or a court must, respectively, informally or formally acknowledge that the estate has been handled appropriately once all is said and done.

Trustee of a Trust

A trustee is a person charged with holding and investing the assets of a trust. The beneficiaries of the trust are kept abreast of the trustee’s activities and performance via periodic reports on trust principal and income. Should the beneficiaries suspect that the trust is being mishandled, they can petition the court to remove the trustee.

AgentUnder Power of Attorney

An agent under a durable general power of attorney is authorized to act on behalf of the principal in all financial affairs, including receiving payments (retirement accounts, pensions, Social Security, etc.), making gifts, and selling property. This power of attorney takes effect immediately.It is not necessary to formallydetermine incapacity of the principal in order for the agent to act on his or her behalf.An agent may be removed by petitioning the court. Unlike with a trustee, however, there is no mandatory reporting to beneficiaries. Unfortunately, they may not become aware of mishandling of the estate until after irreparable damage has been done.

Choosing a Fiduciary – Factors to Consider

  • Trust – choose a fiduciary that you wholeheartedly trust.
  • Capability – choose a fiduciary with experience and expertise.
  • Availability – choose a fiduciary that communicates well.
  • Reachability – choose a fiduciary geographically close to where will is being probated.

Are you having trouble choosing a fiduciary? For information on fiduciary services offered by Cohen & Burnett P.C., please visit our homepage.

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