Creating an estate plan involves many difficult decisions. One important decision is who will take care of you and your estate in the event of incapacitation or death. This individual is known as a fiduciary. You may have heard the terms executor, agent or trustee. These are just a few of the roles that a fiduciary fulfills.
What factors should you consider before deciding on a fiduciary?
If you are a parent, you will most likely choose an adult child to take on the role of fiduciary. But what if you have multiple children? Or what if your children are unfit for the role? Alternately, if you do not have children, how do you decide who among your friends and family is the right person?
- First and foremost, you must be able to trust the person implicitly. As they will be performing their duties when you are either incapacitated or deceased, you need to know this individual will act with integrity and respect. What will they do when no one is watching?
- Second, this person should have an established track record of sound judgment and common sense. Even though part of a fiduciary’s duty involves money management, it is not essential for the person you choose to handle money or property professionally. The right person can always hire an excellent team to assist and advise them. This team could include a lawyer, a CPA, a broker and anyone else good judgment deems necessary.
- Third, consider geographic proximity. If the fiduciary you choose lives far from your current or final residence, it will be more difficult to execute their duties. Being a fiduciary usually involves meetings and paperwork. Handling real estate and other affairs is just less complicated if the person is nearby.
- Fourth, they should be dependable. Who is always there for you when you need them?
A fiduciary is a vital part of an estate plan. Choose wisely, for your own sake as well as your beneficiaries.
