An important part of the estate planning process involves selecting an individual to carry out your wishes in accordance with your estate plan. The individual(s) you select to serve as your fiduciary are important to the success of the estate plan and your estate in the long-term.
Before you select an individual to serve in these roles, it is very important that you understand what responsibilities are required of each position. An executor, trustee, and agent are fiduciaries who work for the benefit of the person who appointed them.
An executor is the person appointed by the testator (the person creating a will) to carry out the terms of the will. The executor administers the person’s estate after their death and manages the estate’s financial assets including paying debts owed by the estate. In addition, the executor ensures that the assets of the estate are distributed to the recipients outlined in the will. An executor has a fiduciary duty to act in the best interests of the estate and estate beneficiaries.
Some duties that are commonly performed by an executor include: locating and probating the will of the deceased; making funeral arrangements; obtaining copies of the death certificate; filing the decedent’s final tax returns; locating assets and keeping them secure until they can be distributed; paying debts owed by the decedent from the assets of the estate; closing banking, investment, and other financial accounts; distributing property according to the will; and keeping detailed accounting records of the estate.
2. Trustee
The trustee ensures that the trust is administered in accordance with the grantor’s wishes. A trustee is responsible for managing the assets and property in the trust in accordance with the terms of the trust document and for the benefit of the trust beneficiaries. It is not uncommon for the person who creates the trust to serve as the trustee until he or she is no longer able to fill that role due to incapacitation or death.
Some duties that are commonly performed by a trustee are: collection and safekeeping of trust assets; maintaining necessary accounts and records of the administration of the trust property; collection of income; ascertaining income beneficiaries; formulation and review of investment policy of the trust pursuant to the provisions thereof; payment of expenses of administration; preparation and filing of fiduciary income tax returns and payment of income taxes; forwarding income tax information to the beneficiaries annually; and financial planning for the trust with respect to taxes, distributions, and investments, including review of cash needs, applicable deductions, and timing of distributions.
3. Agent
A power of attorney is a legal document that gives an individual the power to act on your behalf. The person you name to act on your behalf is called an agent. The type of power of attorney that you create as part of your estate plan dictates when an agent is permitted to act and what actions your agent can take. However, an agent may only act in the best interests of the principal.
A power of attorney gives the appointed agent legal authority to make decisions about your property, finances, or medical care. An agent acts with the same legal authority that you would have.
It is important to choose someone you trust to serve as your fiduciary. Your fiduciary may have access to bank accounts, the power to transfer your funds, or the ability to sell property, so it is imperative that you trust the person you name to honor your wishes and act in your best interests or in the best interests of your estate or trust.
Whether appointing someone to serve as an executor, trustee, or agent, these roles are complex and require the person to keep detailed records to ensure that the duties of the position are fulfilled. Choosing a detailed, organized, and responsible person to assume a fiduciary role will assist in making sure your estate plan is followed.
Make sure the person you choose is over the age of eighteen and is of sound mind.
Serving as a fiduciary is a very time-consuming process. It is important to consider the time requirements for the position and whether the person you want to name has the time to devote to the responsibility.
While naming your friend or family member as your fiduciary is an option, it may not be the right choice for you. Professionals, such as an attorney, CPA, or corporate trustee, can offer time savings, specialized experience and expertise, and objectivity to their performance of the role.
Name at least one successor fiduciary for each role. This ensures that if one person is unable to perform the duties required of the position, that another person who you trust can step in. Once you select someone to serve as your fiduciary, be sure to talk with them about his or her role. Our attorneys are here to assist in answering questions regarding your estate plan and with selecting the right fiduciary to accomplish your estate planning goals.
Parks Zeigler, PLLC – Attorneys At Law
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