As you make your estate plan and update it over the years, you’ll need to nominate several fiduciaries. What exactly is a fiduciary? It’s a person or an institution who will have the power to act on your behalf (or on behalf of your beneficiaries) in carrying out different elements of your estate plan. A fiduciary is responsible for acting in the interests of another person – and not necessarily in his or her own interests. Here are a few examples:
- Executor: An executor is the person appointed in your will to administer your estate when you pass away. He or she will have to follow the terms of your will, as well as the requirements of state law, in distributing your assets to your beneficiaries. He or she will also be responsible for making sure that all of your valid debts are paid, as well as any necessary taxes.
- Trustee: A trustee is the person or institution responsible for managing the assets in your trust. The trust property is actually titled in the trustee’s name, but the trustee is responsible for following the terms of the trust agreement, and managing the property on behalf of the beneficiaries of the trust.
- Guardian of Minor Children: You’ll nominate someone to care for your children, in the event that both you and the other parent pass away before the children reach adulthood.
- Health Care Agent: As part of your incapacity plan, you can appoint someone to make medical decisions for you in the event you’re terminally ill or severely injured, and can no longer make those decisions for yourself.
- Attorney-In-Fact: An attorney-in-fact is the fiduciary you appoint, under your Financial Power of Attorney, to manage your financial affairs and investments on your behalf, under the instructions contained in your Power of Attorney.
You can name one person to serve in many different fiduciary capacities, or you can choose different people (or institutions, like your bank’s trust department) to fulfill different roles. Your estate planning attorney can fully explain the duties of each fiduciary role, and help you choose the right person for each job.