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Finding Fiduciaries
Selecting fiduciaries becomes easier when the role is understood. A fiduciary is a person empowered to control different types of assets for another person, usually the intended beneficiary of the assets. The fiduciary must put the fiduciaries own interests aside and act in the best interest of the beneficiary, even when doing so is contrary to the fiduciary’s own interests.
Who Can Be a Fiduciary?
A fiduciary can be any person who has legal capacity, including family members. If you are not comfortable with a relative controlling your assets as a fiduciary, then you may prefer to have a non-family member or even a financial institution serve in that role. For example, an
estate planning attorney is a fiduciary by the nature of the legal and ethical role to act in the best interest of his or her clients, but an attorney also may serve as a fiduciary for an estate, a person, or a trust.
The fiduciary appointed to administer a trust and manage its assets is known as a trustee. If the trust is created under your last will and testament to administer the inheritance for your beneficiaries, then such trust is known as a “testamentary” trust. On the other hand, if the trust is created under your revocable trust established during your lifetime, then the inheritance trusts come into play upon your death. Both of these inheritance trusts are irrevocable, the difference is that the “testamentary” trust requires probate and the other does not.
The fiduciary nominated by you to carry out the probate and administration of your last will and testament is known as an executor (or personal representative). The executor must first receive permission from the court to carry out the executor’s responsibilities. This happens only after the last will has been presented for probate and the court has validated the last will and approved the executor’s appointment.
How Do I Select the Best Candidate to Be My Fiduciary?
Selecting a fiduciary to take care of your financial and legal decisions in the event of incapacity or death can be more difficult than deciding who you want to inherit your estate. If your family includes multiple marriages or there are long-standing conflicts among siblings, an impartial professional or institution may be a better choice.
We spend considerable time in many consultation meetings weighing out the pros and cons of alternative choices.
Selecting a fiduciary from an online platform is not recommended, but researching candidates online does make sense. Fiduciaries do not all
have the same professional credentials. Conduct your own due diligence and comparison shop. Ask for fee schedules and an explanation of the decision-making process. With a nonfamily member fiduciary, drafting in the document a mechanism for removing without litigation, such as a trust protector, allows for checks and balances.
A recommendation from a trusted legal or financial professional, supported by research into the background of the potential fiduciary and a conversation that includes the question “Are you a fiduciary?” is how most people find their fiduciary.
What Should I Consider When Picking a Fiduciary?
Trust. Do you trust this person or institution to make decisions for you and to carry out your instructions, even if it is not the same decision that person or institution would choose?
Skilled with asset management. A fiduciary must have a wide skillset in managing investments, real property, and personal possessions.
They need to be able to handle detailed transactions from beginning to end.
Able to work with your heirs. The fiduciary needs to be able to balance a good working relationship and deal with challenges, including personality clashes. Not all heirs appreciate having an outsider manage their inheritance.
Closing Thoughts
When choosing a fiduciary, it is important not to be swayed by personality or personal relationships. This is a business decision and one that needs to be made solely based on the evidence of competency and trust.
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