One of the most important decisions clients face when creating their estate plan documents is who to name to the multiple fiduciary positions that must be filled. These include the Personal Representative (formerly called Executor) of your Will, the attorney-in-fact who will act for you under your Power of Attorney, and the Trustee of your Trust. Black’s Law Dictionary defines a fiduciary as a person who is granted certain rights and powers to be exercised for the benefit of another person and who must use scrupulous good faith and candor in doing so.
Clients are often inclined to choose one of their children to serve in these roles based on birth order, gender, or geographical location. These are generally not good criteria for selecting a fiduciary. Here are five things to consider when deciding who to name to fiduciary positions.
1. Consider choosing different people to serve in the various fiduciary positions. A comprehensive estate plan will include a Will and a Power of Attorney, and may include one or more Trusts. Each of these documents names a fiduciary to carry out duties and instructions when the maker of the document is unable to do so because of incapacity or death. Choosing different people to serve in these roles may be appropriate depending upon your situation. For example, if your daughter lives nearby and is available to help you with bill payment, mail management, insurance claims, etc., she may be your best choice to serve as your attorney-in-fact under your Power of Attorney. However, she may not be the best choice to serve as your Personal Representative or Trustee if your children do not get along or if estate assets or distribution provisions are complicated. Naming different individuals to serve in the various fiduciary positions can also provide a good “checks and balance” system, as no one person will be in control of everything.
2. Consider appointing co-fiduciaries. You can appoint more than one person to serve as your attorney-in-fact, Personal Representative and Trustee. Doing so makes sense in situations where:
- you have multiple beneficiaries
- your chosen co-fiduciaries can work well together
- you have a complex situation
- one of your chosen fiduciaries lives far away
There are of course other considerations when deciding whether to name more than one person to serve as a fiduciary. However, the ability of your co-fiduciaries to work together is a must.
3. Consider the term of your Trust and the value and character of your assets when choosing a Trustee. If your Trust will continue during the lives of your children and then grandchildren, you need to consider your Trustee provisions carefully. If you name an individual Trustee, how old is that person and for how long will he or she be able to competently serve as Trustee? Who will serve when that person cannot? Will you give your children the right to appoint successor Trustees? If they fail to do so, how will your successor Trustee be appointed? If your estate includes a business, or multiple pieces of real estate, or a very large investment portfolio, consider carefully whether any of your family members have the skills to manage those assets when you are not around to do so.
4. Sometimes a professional Trustee is the best choice. If your family members do not get along, if your children are too busy to devote the time that will be needed to settle your estate, or if you do not have a family member who is well-suited to serve as your Personal Representative or Trustee, consider naming a professional Trustee. A professional fiduciary is typically a bank, trust company, lawyer, or accountant. Some of the advantages to using a professional fiduciary are:
- A professional is experienced in estate settlement and trust administration
- A professional carries insurance to make the estate or trust whole in the event of malfeasance
- A professional does not have a personal stake in the situation
The disadvantage to hiring a professional fiduciary is there will be a fee. However, if designating a professional means that your estate is settled promptly and efficiently, and that your Trust is properly administered, then the cost of a professional fiduciary is money well spent.
5. If selecting a non-professional as a fiduciary, look for these traits. A fiduciary owes the highest duty of good faith and fair dealing to those he serves. When considering your family members for fiduciary positions, look for someone who has the following character traits:
- Even tempered
- Financially astute
The person you choose to serve as your fiduciary can “make or break” your estate plan so choose wisely. Your estate planning attorney can help you make the best decision based on your particular family situation, assets, and distribution plan.
Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.