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How to Pick a Fiduciary

Posted on: February 14th, 2017
Posted by:  The Life and Legacy Planning Group

While the term fiduciary is a legal term with a long history, it very generally means someone who is legally obligated to act in another person’s best interests. Trustees, executors, and agents are all examples of fiduciaries. When you pick trustees, executors, and agents in your estate plan, you’re picking one or more people to make decisions in your and your beneficiaries’ best interests and in accordance with the instructions you leave. Luckily, understanding the basics of what each of these terms means and what to consider when making your choices can make your estate plan work far better.
 
Executor and Trustee
 
Trustee: A Revocable Living Trust is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals. In a Revocable Living Trust, your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or incapacity. Like all of your other fiduciaries, it’s best to have a trusted person or financial institution carry out this vitally important role.

It’s important to make the language in your Living Trusts as clear as possible so that your trustee knows exactly how to handle various situations that can arise during asset distribution. Lastly, your trustee will only control the assets contained within the trust — not the rest of your estate, another reason that completely funding your Living Trust is incredibly important.
 
Executor: Your executor is the person who is charged with administering all the assets not owned by your Living Trust at the time of your death. If necessary, the executor will see your assets through probate and carry out your wishes based on your Last Will and Testament. Depending on your preferences, this may be the same person or institution as the trustee of your Living Trust. In fact, an executor serves basically the same function for your Will as a trustee serves with respect to your Living Trust.
 
Many individuals choose to appoint a professional as trustee and/or executor. This is someone who doesn’t stand to gain anything from your Living Trust or your Will, and is often the best choice if your estate is large and will be divided among many beneficiaries. Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on a member of your family or one of your friends.
 
Being a trustee or executor can be hard work and may have court-ordered or other legal deadlines, so it’s crucial to pick someone you know will be up to the task. The trustee or executor may need to hire a CPA to help sort out your taxes or a lawyer to handle the probate proceeding, assist in the administration process or to aid in dispute resolution. Therefore, choosing a spouse or someone else intimately involved in your life may not always be the wisest option, as they may not be up to the task at the time.
 
Agents 
Your Powers of Attorney are the documents in your estate plan that appoint individuals to make decisions on your behalf if you become unable to do so yourself. There are a few different types of powers of attorney, each with their own specific provisions. There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals. Here are two common types of powers of attorney to cover in your estate plan: 

Financial Powers of Attorney. Financial powers of attorney, also known in Illinois as Powers of Attorney for Property, grant agents the ability to take financial actions on your behalf, such as purchasing life insurance or withdrawing money from your accounts to cover your costs. In most cases, Powers of Attorney for Property name individuals agents. However, some institutions, such as trust companies, will also allow themselves to be named. Before naming a financial institution as an agent, it is best to check with the institution to make sure that they will agree to act in that capacity.

Health Care Powers of Attorney. Health care powers of attorney (called Powers of Attorney for Health Care in Illinois) also cover a wide range of specific actions, but in this documents, it is an individual’s medical needs that are at issue, not a person’s finances. Decisions such as the type of medical care you receive, or end of life decisions are generally covered by the Power of Attorney for Health Care.

Get in touch with us today 
Let us help you make the process of picking your trustee, executor, and agents as smooth and headache-free as possible. Once you have these choices in place, you’ll be able to rest easy knowing that your estate plan is in good hands no matter what life brings. Give us a call to make an appointment today. 
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