A fiduciary is someone who has a legal obligation to serve the best interests of another individual or individuals. Some fiduciaries play a role in estate planning, and we will look at them here.
Estate Executor
The simple will is the most commonly used estate planning document. If you create a will to direct postmortem asset transfers, you would name an executor to act as the administrator after your passing. An estate executor is a prime example of a fiduciary.
They would be compelled to follow your instructions to the letter and serve the best interests of the beneficiaries that are named in the will. During probate, the court will determine the validity of the document, and the executor will pay final debts, including taxes.
All the assets will be identified, inventoried, and secured by the executor. They will get appraisals, and the executor will liquidate some property if necessary. When all of the tasks have been completed, the court will close the estate, and the assets will be distributed to the beneficiaries.
Living Trust Trustee
Another type of fiduciary is a living trust trustee. If you establish a living trust as the centerpiece of your estate plan, you will be the trustee while you are living. In the trust declaration, you would name a successor trustee to assume the role after your passing.
The successor trustee would be a fiduciary, and they would have a duty to look after the best interests of the beneficiaries. After your passing, they would distribute the assets to the beneficiaries, and there would be no need for probate.
This is a positive because the probate process is somewhat problematic for the beneficiaries. They do not receive inheritances until the estate has been probated, and it will take close to a year or more in many instances.
Probate expenses are another drawback, and there is a loss of privacy because interested parties can access the probate records. The avoidance of probate is one major benefit that a living trust will provide, and there are others that we will look at in a future post.
Health Care Representative
Many people become unable to communicate their medical decisions at some point, and you should address this eventuality when you are planning your estate. You can name an agent to make medical choices on your behalf in a durable power of attorney for health care.
This is another type of fiduciary, and in addition to the durable power of attorney, you should have a living will. In a living will, you state your life support utilization preferences, and you can add comfort care medication and organ and tissue donation choices.
Durable Power of Attorney for Property
Your incapacity plan should also address property management, and you can include a durable power of attorney for property to name a fiduciary to manage your financial affairs. If you have a living trust, you can empower a disability trustee when you are drawing up the document.
Legal Guardian
In some cases, the state will appoint a guardian or conservator to act on behalf of an incapacitated adult. This is yet another example of a fiduciary, and the legal guardian of a child would have a fiduciary duty to the child.
All Attorneys
We should point out the fact that all lawyers have a fiduciary duty to their clients. They cannot put their own interests above the interests of their clients under any circumstances.
Attend a Complimentary Seminar!
If you want to learn more about the estate planning process, you should attend one of our upcoming seminars. You can check out the schedule if you visit our Estate Planning Seminars Page, and if you decide to join us, follow the instructions to register so we can reserve your spot.
Need Help Now?
We are ready to spring into action if you have decided that it is time for you to put a plan in place. You can send us a message to request a consultation appointment at our Westport or Glastonbury, CT estate planning offices, and we can be reached by phone at 860-548-1000.
In May 2023, Diana M. O’Rourke joined Nirenstein, Horowitz & Associates, P.C. as an associate attorney in the trust administration department.Diana has five years of experience practicing in the areas of estate administration, estate planning and elder law.She is admitted to practice in the State of Connecticut and is a member of the Connecticut Bar Association, where she is part of the Estate & Probate section and the Elder Law section. She is also a member of the American Academy of Estate Planning Attorneys.