While the term “fiduciary” is a legal term with a long history, it very generally means someone who is legally obligated to act in another person’s best interests. Trustees, executors, and agents are all examples of fiduciaries. When you pick trustees, executors, and agents in your estate plan, you’re picking one or more people to make decisions on your behalf, and in your and your beneficiaries’ best interests, and in accordance with the instructions you leave. Luckily, understanding the basics of what each of these terms means and what to consider when making your choices can make your estate plan work far better.
Fiduciary Role: Trustee
A revocable living trust is often the center of a well-designed estate plan because it is usually the best strategy for achieving most individuals’ goals. In a revocable living trust, your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or incapacity. Like each of the following individuals involved in your estate planning, it’s best to have a trusted person or financial institution carry out this vitally important role.
It’s important to make the language in your trusts as clear as possible so that your trustee knows exactly how to handle the various situations that can arise during asset distribution. Lastly, your trustee will only control the assets contained within the trust — not the rest of your estate, another reason that completely funding your living trust is incredibly important.
Fiduciary Role: Independent Executor
Your independent executor is the person named in your will, and they are the one who will see your assets through probate and carry out your wishes based on your last will and testament. Depending on your preferences, this may be the same person or institution as your trustee. You might also see this position designated as personal representative, but it means the same thing.
Being an executor can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job. The Independent Executor may need to hire a CPA to help sort out your taxes, and a lawyer to assist in the probate process or to aid in any dispute resolution. While most of us would choose a family member (such as a spouse or responsible child) to fill this role, it is important to remember your loved one will also be grieving your loss. Therefore, it is important to pick someone responsible, but someone who can also work with the professionals needed to help with the probate.
Fiduciary Role: Powers of Attorney Agent
Your power of attorney is the document in your estate plan that appoints individuals to make decisions on your behalf if you become unable to do so yourself. There are a few different types of powers of attorney, each with their own specific provisions. There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals. Here are two common types to cover in your estate plan:
Financial Power of Attorney
As further explained in this article from AARP, financial powers of attorney grant individuals the ability to take financial actions on your behalf such as purchasing life insurance or withdrawing money from your accounts to cover your costs. In most cases, powers of attorney are granted to individuals appointed as agents. However, especially regarding financial decisions, an institution like a trust company can also be named.
Health Care Powers of Attorney
Health care powers of attorney (referred to in Texas as a Medical Power of Attorney) also cover a wide range of specific actions that can be taken regarding an individual’s medical needs such as making decisions about the types of care you receive. For example, a medical power of attorney can be the doctor you most trust to gauge your mental competency. Please keep in mind, in Texas while you can appoint a doctor as your medical power of attorney agent, this doctor cannot be one who is currently treating you.
Get in touch with us today
Building a comprehensive estate plan and choosing the best people as your fiduciaries is tricky. Let us help you make the process of picking your trustee, powers of attorney, and executor as smooth and headache-free as possible. Once you have these choices in place, you’ll be able to rest easy knowing that your estate plan is in good hands no matter what life brings. Give us a call to make an appointment today. Nielsen Law PLLC provides family focused estate planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area. For more information and to learn about our firm, please contact us.