Who Should I Name As My Fiduciary? | Common Estate Planning Mistakes
One of the most important parts of estate planning is thinking about who you can trust to manage your assets should you become incapacitated (temporarily or permanently) or pass away. This person/people or institution is known as the fiduciary.
Fiduciary duties can apply to legal guardians, financial advisors, shareholders, lawyers, investors, etc., but in terms of estate planning, they are most often related to an executor of a will or trustee of a trust.
These two roles are very similar: an executor initiates court proceedings, files the decedent’s tax returns, and manages the estate, while a trustee legally becomes the owner of the assets within a trust and is therefore responsible for distributing them according to the deceased’s wishes laid out in the trust.
As you can imagine, it’s incredibly important to name the right people or institutions to fill these positions. Not only must they be trustworthy and well-intentioned, but they must also be mentally competent, emotionally capable, and available to devote the time necessary to ensure your wishes are carried out properly.
Most people assume that their closest friends and family members should automatically become their fiduciaries, but I’ve seen time and time again that this assumption can cause problems for trustees, executors, and beneficiaries alike.
Here are some common examples of problematic fiduciaries:
While it may seem like a no-brainer to name your spouse as the person in control of your affairs, consider the fact that he or she may be overcome with grief should you pass away. It’s unlikely that your spouse will have the emotional capacity to efficiently handle legal or financial matters while in mourning. You may be better off naming a third party to ensure your wishes are carried out properly and avoid any additional obligations of your spouse at a time when they need support.
Many young people who are creating estate planning documents for the first time will name their parents as their fiduciaries because they do not yet have any dependents of their own, or know of any other financially literate people who they believe could effectively manage their assets. The problem is that as our parents’ age, they are at greater risk of becoming mentally incapacitated and therefore unable to carry out their fiduciary duties for their child’s estate/trust.
Some people who have already considered the points above may decide to name their sibling as the executor and/or trustee. However, conflicts may arise that impact your decision to have a sibling manage your wishes and assets. If you suspect any type of underlying sibling rivalry, jealousy, or bitterness from your brother or sister, you may want to reconsider naming them as your fiduciary and prevent the use of your assets as revenge collateral.
Estate Planning with Lefkoff-Duncan
Are you unsure of who to name as the fiduciaries of your important estate planning documents? Lefkoff-Duncan is here to help. Our experienced team will assist you in all of your estate planning endeavors so that you’ll never again need to wonder if you’ve done enough to take care of the ones you love. Give us a call at your convenience at 404-262-2000 to get started.