Steven Bell
Senior Vice President
Wealth Strategist
Even the best estate plan will go sideways without the right fiduciaries ready to step in and manage your affairs when you are no longer able to do so, whether by reason of death or incapacity during lifetime. It can be difficult to make these selections, considering family dynamics, time burden, availability, cost and the skills required. Thoughtful consideration in advance will be a gift to your loved ones when they may be called to enact your wishes.
Not All Have the Same Talents
When considering your choices for fiduciaries, it is important to be aware of the differences between the roles. Each fiduciary position has distinct responsibilities and time obligations. The positions may benefit from different skillsets or personalities. In many cases, the same individuals may serve in multiple roles, though it is common that not all choices will be the same. The necessary fiduciaries in your plan will vary based upon your family situation, tax planning and other factors. Some of the most common roles include:
A personal representative (also called an executor) is appointed under your will to administer your probate estate after your death. This court supervised individual gathers assets, pays debts and taxes of the estate and distributes assets according to the terms of your will. A personal representative acts only after your death and appointment by the court, for the period of the estate administration. Attention to detail and administrative competency are needed in this regimented role.
A trustee manages and administers assets held in a trust according to the terms of the trust agreement, though the scope and responsibility may vary widely. Depending on the structure of your plan, a trustee may act during your lifetime (including during incapacity) and/or after your death to administer ongoing trusts for a surviving spouse, children or other beneficiaries, often for years. Trustees must be impartial, but may have substantial latitude to exercise discretion, often with limited court oversight. Tax planning objectives may limit your choices of trustee in some cases. Multiple trustees or related roles (such as a trust protector) may be appointed to address specific goals.
An attorney-in-fact appointed under a durable power of attorney may manage financial affairs during your lifetime. This individual may act immediately or only upon incapacity, depending on how the document is drafted, but authority ends at death. Responsibilities can include managing investments, handling real estate transactions, filing tax returns and making business decisions, though many powers may overlap with those of the trustee of your revocable trust.
A healthcare representative is appointed under an advance directive or health care power of attorney to make medical decisions if you are unable to communicate or provide informed consent. This authority applies only during your lifetime and ends at death. The representative works with medical providers regarding treatment, life-sustaining care and may include end-of-life decisions.
A guardian is an individual nominated in your will to serve if a court determines that a minor child, or in some cases, an incapacitated adult, requires a legal guardian after your death. The guardian assumes responsibility for personal care, living arrangements and general welfare, but need not be the same person as a trustee of a trust for the incapacitated person. A guardian must be formally appointed by a court before acting.
Space to Collaborate
In most roles, it is possible to name co-fiduciaries, though weighing the benefits of inclusivity against risks of disagreement and cumbersome processes is necessary. Co-fiduciaries may bring valued perspectives and expertise, but may also create deadlock, higher costs or delayed decision-making. Flexibility in selecting or appointing independent or co-trustees based on family needs and assets may serve many objectives and lessen risks of disagreement.
The Need for Neutrality
Selecting family members, friends or professionals with the right mix of integrity, availability, empathy and relationships will make a world of difference. Some roles require more financial and business acumen, while others may be emotionally challenging. Conversations with your advisors and your loved ones can help prevent surprises and build trust.
Your Ferguson Wellman and West Bearing team are available to help you navigate these key estate planning decisions to best protect your legacy.
Disclosure
The views expressed represent the opinion of Ferguson Wellman. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections and other forward-looking statements are based on available information and Ferguson Wellman’s views as of the time of these statements. Past performance may not be indicative of future results. Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational purposes only and not as a substitute for qualified counsel who can determine how this information applies to you. We believe the information provided is from reliable sources but should not be assumed accurate or complete.
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