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SELECTING YOUR FIDUCIARIES

By:  Daniel P. Simpson

Every person should select a team of fiduciaries who will step forward to assume specified responsibilities upon the occurrence of future events.  In glossary form, this article will explain each of the essential fiduciary positions.  Please note that different states have different legal qualifications for judiciary eligibility.

Executor or Personal Representative

The terms are synonymous and represent the person who will carry out the provisions of your will.  Your executor will collect all of your assets, pay your bills, file any necessary tax returns, make decisions on which assets to sell and when to sell them and which assets to distribute to which beneficiaries.

Your executor should be someone you trust who is responsible about money matters.  Most people choose a spouse, adult child, close relative or friend, understanding that whomever is appointed will be able to rely on the advice of counsel.

Trustee

A trustee is a person who is appointed, usually by will, to invest your property and make discretionary decisions about the timing and amount of distributions to your beneficiaries.

The most typical use of a trustee is for a minor’s trust.  If you leave assets in your will to a minor child and have no trustee, a legal guardian will have to be appointed by the court to hold and invest those assets.  The guardian will not be able to use the assets, absent further court order, until the child turns 18.  At that time, the child will have the full right to enjoy those assets without restriction.

This is not what most people want to happen, so if you have a minor child and even a very modest estate, you should appoint a trustee in your will to hold, invest and distribute your assets after you and your spouse have both died.   In your will, you can instruct your trustee to distribute monies for a child’s education and other needs and to distribute the remaining assets to the child at a later age than 18 or in stages over a period of years.

There are countless uses of trusts besides trusts for minors but in each case, the person should be someone who is trustworthy and a sound manager of money and whose judgment you respect.  The trustee may have to make unpopular decisions regarding distributions or withholding distributions and must have the strength to do what is right no matter what.

Guardian

There are many types of guardians but the most common is the person whom you appoint in your will to raise, feed and shelter your minor children until they reach majority.  This person need not be the same person who is the trustee because the two positions require different talents.  The guardian is often a close relative or close friend whom you feel confident will give your children the love, guidance and direction that you would have if you were still alive.

Attorney-in-Fact

The person who is authorized to act by a power of attorney is called an attorney-in-fact.  A power of attorney is a written document in which a principal gives the attorney-in-fact the legal authority specified in the document.

Absent a power of attorney, if you become mentally incompetent, your relatives will need to petition the court for appointment of a guardian to manage your affairs.  This can be an unpleasant public experience which most people would rather avoid.  A power of attorney provides a seamless transition of the management of your property in the event that you no longer can do so and whether or not your condition meets the rather stringent standard for appointment of a guardian.

A person selected as your attorney-in-fact must be completely trustworthy because he will have the legal authority to do anything he wants with your property with no supervision.  Most people appoint a spouse or a child.

Health Care Agent

Through a document known as a living will, you can direct doctors or hospitals which extraordinary measures, if any, you want taken to keep you alive in the event you are incapable of making these decisions.  In a living will, you can appoint another person to act as your health care agent and can direct that health care agent how your wishes are to be carried out.  The person chosen as your health care agent should be someone who knows you well and understands not just the words in the living will but how you truly feel about these life and death decisions.  The person should also be someone who will have the fortitude to carry out your living will if the time comes to do so.

Much care should be given to selecting each of your fiduciaries and alternates in the event any of the first choices are unable or unwilling to serve when the time comes.  The decisions can have dramatic effects on you and your family.

This publication is intended for general information purposes only and does not constitute legal advice. The reader should consult legal counsel to determine how the law may apply to specific situations.