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Understanding Fiduciary Roles and Considerations in Choosing Who to Appoint

Understanding Fiduciary Roles and Considerations in Choosing Who to Appoint

One of the hardest things for us to talk about is planning for end-of-life care. This includes appointing fiduciary roles to make decisions concerning health care and expressing wishes regarding life-prolonging measures and treatment. Unfortunately, most people wait too long before consulting an elder law attorney about estate planning and health care documents, which may be costly. Pre-crisis planning has many advantages, but can also be confusing. Here are some considerations you should take into account when choosing who to appoint for which fiduciary roles.

Health Proxy/Representative/Agent

This is the person you appoint to make health care decisions for you if you are unable to make them yourself. This may be because you are too ill, are incapacitated, or are unconscious. Your proxy can talk with doctors, review your medical records, and make decisions about procedures and treatment. Your agent may have to make difficult decisions quickly, so it is important to consider who has these skills.

  • Will the person be able to put their emotions and opinions aside and follow your wishes?
  • Will the person be a strong advocate, asking questions, and speaking up for you?
  • Will the person be accessible and be able to make a decision quickly?

Power of Attorney

This is the person who will be able to step in and handle your financial and legal affairs if you are unable to or just wish them to act on your behalf. Because this person may need to take over your finances, you should choose someone who you trust and will do their best to act on your behalf. In addition, it is best to choose someone who has the time to devote to the necessary tasks, is detail-oriented, and has some financial acumen If you do not have someone who fits all of those requirements, talk with your attorney about how to limit or structure the POA document to best protect you.

Trustee

If you are establishing a trust either now or in your estate plan, the trustee is the person who will manage the trust for the beneficiaries. Therefore, there several considerations in choosing a trustee. First, do they have the financial skills to invest and manage the funds? Even if they will not manage the funds themselves, they need to understand the basics of working with a financial advisor. Secondly, you should consider if the person will have the time and ability to handle the necessary tasks for as long as the trust will be in existence. In addition, the trustee must be able to work with the beneficiaries and be someone that you trust to act in the best interest of the beneficiaries. If you do not have someone who fits all of those requirements, talk with your attorney about whether you should consider a corporate trustee or a trust protector.

Executor/Personal Representative

Your Executor will administer your estate after you are gone. This includes identifying and gathering your assets, selling your property, paying your debts and taxes, and distributing everything to your heirs. Like the other roles addressed above, responsibility and attention to detail are key. While you do not need to be an attorney or an accountant to handle this role, you do need to be able to work with these professionals. As there are many things that need to be handled fairly quickly, it is important to choose someone with the time to devote to the necessary tasks. This is a short-erm job (generally, a year or two) unlike a POA or trustee who may have to act for many years, but if you choose someone who is too busy then the estate can drag on for years holding up disbursements to your heirs. Realize that the person you appoint today may not need to act for many years (hopefully), so consider a younger person, at least as a successor executor. It is okay to name someone who lives out of state but they should be a U.S. citizen. Perhaps the most important consideration, aside from trustworthiness, is that your Executor should be able to communicate openly and fairly with your beneficiaries. If there is family conflict, it is important to choose someone who is outside of the drama, or at least neutral. If you anticipate sticky issues, talk with your attorney about them. Often, estate planning documents can be drafted to address or minimize conflict.

For more information on choosing fiduciary roles, read our previous blog post, “Control What You Can – Document Your Wishes.” You can also view a presentation I put together regarding health care decision-making on our YouTube channel. If you have any questions about this post or any other related matters, please feel free to email me at ssiegel@norris-law.com.