Choosing the Right Fiduciary: Key Considerations for Protecting Your Estate Planning
Choosing the right fiduciary is one of the most personal and significant decisions in estate planning. A fiduciary is someone you rely on to manage your financial matters, make healthcare decisions, or oversee trust assets if you become unable to do so yourself. This individual or entity takes on a legal responsibility to act in your best interests, following your instructions, and protecting your assets. The role can take different forms, but in each case, the fiduciary holds serious responsibilities—making it crucial to select the right person or professional for the job.
Fiduciary roles can vary, but in estate planning, they commonly include executors, trustees, financial powers of attorney, and health care powers of attorney. An executor handles the probate process after you pass away, managing tasks such as settling debts, paying taxes, working with the Commissioner of Accounts (in Virginia), and distributing your assets according to your will. A trustee is responsible for managing the assets held in a trust, ensuring investments are handled wisely, and that beneficiaries receive what they are entitled to. A power of attorney (POA) takes charge of financial and legal decisions if you are incapacitated, while a health care power of attorney steps in to make medical decisions based on your stated preferences.
Although very important, choosing a fiduciary is not simply about trust. There are other important factors to weigh:
- Financial Skills and Knowledge
The person you select will need to handle financial matters, especially if your estate includes significant assets. You will want to choose someone with the financial know-how, or at least the willingness to seek professional guidance, to make informed decisions.
- Emotional Strength
Being a fiduciary can be emotionally challenging, particularly if the role involves managing the estate of a close relative or friend. It is worth considering whether your chosen fiduciary can handle these emotional pressures while remaining objective. This is particularly important if there might be family feuding.
- Location Matters
Having a fiduciary who lives nearby can be beneficial. They may need to oversee property, attend meetings, or handle other estate-related matters, and proximity can make these responsibilities easier to manage.
- Family Dynamics
Naming a family member or close friend as your fiduciary can sometimes create tension, especially if their decisions do not align with the expectations of other beneficiaries. In these cases, appointing a neutral third-party, such as a professional trustee or trust company, might help prevent conflicts.
- Age and Health Considerations
The age and health of your fiduciary should be taken into account. Someone facing their own health challenges or nearing retirement may not be the best choice for long-term responsibilities. It is also essential to name a backup fiduciary who can step in if needed.
- Willingness to Serve
Make sure the person you are considering is willing to take on the role. Serving as a fiduciary can be time-consuming and involve difficult decisions, so it is important they fully understand what will be required of them.
- Compensation
If you are thinking about appointing a professional fiduciary, such as an attorney or a trust company, remember that they will likely charge fees for their services. Ensure that these terms are agreed upon and fit within your overall estate plan.
- Naming a Backup
It is crucial to name a successor or backup fiduciary in case your primary choice is unable or unwilling to serve when the time comes. This ensures that your estate plan can move forward smoothly without unnecessary court involvement.
Choosing a fiduciary is not just about finding someone who is reliable and trustworthy—it is about making sure they have the skills, resilience, and willingness to take on the role. Thoughtful selection can help avoid complications and ensure your estate is thoughtfully and efficiently managed according to your wishes.
If you need help choosing a fiduciary or want to review your estate plan, reach out to our office. Wilson Law can provide valuable guidance and ensure you have made the best possible choice for your situation. Call our office at 866-603-5976 or complete our online contact form, and we will be in touch to schedule a meeting.
