It is unfortunate that seniors are often the victims of financial abuse and scams. That’s…
Fiduciaries are individuals, professionals, or organizations that are legally obligated to act in the best interest of their appointed beneficiaries. Carrying out the terms of a will or trust or making medical or financial decisions on behalf of another are fiduciary roles that come with specific responsibilities.
The fiduciary of a will is referred to as a personal representative or executor. Within this role, the fiduciary manages asset distribution, pays off remaining debts, appoints guardianship for minor children if a guardian has not been named, and carries out any other wishes as stated in your will.
A trust’s fiduciary is known as a trustee. A trust is a type of fiduciary relationship where property or assets are held by a trustee for the beneficiary. The trust-maker still has legal ownership of the property when living. However, once deceased, the trustee distributes the assets to the beneficiaries.
Power of Attorney
The fiduciary that is associated with a power of attorney is called an agent or attorney in fact. There are different powers of attorney within an estate plan. They vary based on the individual’s specific needs. However, there are two primary powers of attorney that agents serve.
- Financial powers of attorney authorize an agent to act in place of another person to handle their financial matters if they are unable. Financial matters include paying bills, filing taxes, dealing with real estate matters, and making investment decisions.
- Health care powers of attorney designate an agent to make medical decisions on behalf of another person if they are unable. Medical decisions may pertain to medication management, diagnostic exams, procedures, surgeries, long-term care, and end-of-life matters.
While some documents in estate planning are designed to provide benefits only after death, powers of attorney may go into effect before the individual is deceased. A power of attorney serves when the individual can no longer make informed decisions by themselves.
If minor children are involved, an appointed guardian serves as a fiduciary. The guardian’s duty is to provide care for a dependent child on the parent’s behalf, with the child’s best interest in mind. Guardians are also needed for special needs adults who need help with daily finances and care.
Fiduciaries play a vital role in an estate plan. While it may seem easiest to appoint a spouse or adult child as a fiduciary, it may not be the best option. Many underestimate the amount of effort and time involved in serving as a fiduciary. Additionally, being faced with the duty of making major decisions while simultaneously coping with the death of a loved one can add substantial emotional stress. The heightened emotions and stressed state can lead to errors with management or emotional-based decision-making instead of carefully thought-out decisions.
Another option is to appoint a professional fiduciary, like an estate planning attorney or another third party. A professional has the expertise to manage complicated situations without an emotional connection. This can provide a little extra peace of mind and ensure that sound decisions are made.
A lot is involved when appointing a fiduciary. It is a decision that should not be taken lightly. Seeking professional guidance can ensure the best advice and protection. For assistance, please contact our Forty Fort office or call (570) 288-1800.