When creating your estate plan, one of the most important decisions you'll make is selecting a fiduciary. This choice deserves careful consideration, as it will impact how your wishes are carried out and your loved ones are protected.
What Is a Fiduciary?
A fiduciary is someone who is legally obligated to act in your best interests with the highest degree of care, loyalty, and good faith. This legal standard—known as a fiduciary duty—is one of the strongest obligations recognized under the law. It means the fiduciary must put your interests above their own and act with complete honesty and transparency in managing your affairs.
What Does a Fiduciary Do?
In the context of estate planning, a fiduciary may serve in various roles. They might act as an executor of your will, trustee of your trust, or agent under a power of attorney. Depending on their role, they may be responsible for distributing your assets after death, managing investments for beneficiaries, making healthcare decisions on your behalf, or handling financial matters if you become incapacitated. This is not a ceremonial position—it requires time, attention, and often difficult decision-making during emotionally challenging times.
Key Qualities to Look For
Trustworthiness and Integrity: This may seem obvious, but it bears emphasizing. Your fiduciary will have access to sensitive financial information and control over your assets. Choose someone whose judgment and character you trust implicitly.
Financial Competence: Your fiduciary doesn't need to be a financial expert, but they should have basic financial literacy and the ability to work with professionals like attorneys and accountants. If your estate is complex, consider whether the person has the sophistication to manage investments, real estate, or business interests.
Organizational Skills: Estate administration involves significant paperwork, deadlines, and attention to detail. A disorganized person, no matter how well-intentioned, may struggle with the administrative demands of the role.
Digital Literacy: In today's world, technological competence is essential. Most financial business—whether estate administration or simply receiving statements and paying invoices—happens via email or online. Your fiduciary should be comfortable sending and receiving emails, uploading and organizing digital documents, accessing financial accounts through secure portals, and communicating with attorneys and financial institutions electronically. While they don't need to be tech experts, basic comfort with computers and online systems is increasingly essential for efficient estate management.
Availability and Willingness: Make sure the person you're considering actually wants the responsibility and has the time to fulfill it. Being a fiduciary can be time-consuming, sometimes taking months or even years depending on the complexity of the estate.
Longevity and Proximity: Consider the person's age and health relative to your own. You want someone who will likely be available when needed. Geographic proximity can also matter, though modern technology has made distance less of an obstacle than it once was.
Family Member, Friend, or Professional?
Many people default to naming a spouse, adult child, or close friend as their fiduciary. While this can work well, it's not always the best choice. Family dynamics can complicate matters, especially if the fiduciary must make decisions that affect other family members. Some beneficiaries may question decisions or feel the fiduciary is showing favoritism.
Professional fiduciaries—such as trust companies, banks, or professional trustees—offer objectivity, expertise, and continuity. They won't be influenced by family politics and have experience navigating complex estate administration. The downside is cost, as professional fiduciaries charge fees for their services, and they may lack the personal connection a family member would bring.
A hybrid approach can sometimes offer the best of both worlds: naming a family member and a professional as co-fiduciaries, allowing the personal touch while providing professional expertise.
Don't Forget to Name Successors
Life is unpredictable. Your first-choice fiduciary may be unable or unwilling to serve when the time comes. Always name at least one successor fiduciary, and consider including language in your documents that allows for the appointment of additional successors if needed.
Have the Conversation
Once you've made your decision, talk to the person you've chosen. Explain what the role entails, where important documents are located, and what your wishes are. This conversation can prevent surprises and ensure your fiduciary is prepared for the responsibility.
Choosing a fiduciary is a deeply personal decision that requires balancing practical considerations with emotional factors. Take your time, think it through carefully, and don't hesitate to consult with an estate planning attorney who can help you make the choice that's right for your unique situation.