A fiduciary is an individual or entity that has a legally binding responsibility to another party or parties. Fiduciaries are a very important part of the estate planning process, and we will provide an explanation in this post.
Executor of an Estate
If you use a simple will to state your final wishes, you have to name someone that will handle the estate administration tasks after you are gone. This is the executor, and the executor of an estate is a fiduciary.
They would have a legal responsibility to serve the best interests of the beneficiaries that will be receiving inheritances, and they must make sure that your wishes are carried out.
When you are choosing an executor, you should be mindful of the tasks that must be completed. This is not a ceremonial title that you bestow on someone because you love and respect them.
The executor will be required to follow the laws of the state with regard to admitting the will to probate. Creditors must be notified about the passing of the decedent, and they are given time to come forward seeking satisfaction.
All final debts must be paid while the estate is being probated by the court, and this will include taxes. The executor will identify and inventory the assets that comprise the estate, and they will be prepared for distribution to the beneficiaries.
This is a lot of responsibility, and depending on the size and scope of the estate, it can be time-consuming. You should discuss the details with the person that you would like to designate to make sure that they are ready, willing, and able to assume the role.
Living Trust Trustee
A living trust is a great alternative to a simple will as an asset transfer vehicle for a number of reasons, and one of them is the probate avoidance.
When you have a living trust, you would act as the trustee while you are living, and you would name a successor to assume the role after your passing. This trustee would be a fiduciary, and they would have a legal responsibility to the beneficiaries.
After you pass away, the trustee would distribute the assets to the beneficiaries outside of probate. This process is time-consuming and expensive, and the records are available to the public, so there is a loss of privacy.
Health Care Representative
When you are planning your estate, you should consider the eventualities that you may face toward the end of your life. Advance directives for health care should be included in the plan, and one of them is a durable power of attorney for health care.
The “durable” designation allows the power of attorney to remain in effect upon your incapacitation. An agent would be named in the document, and they would be empowered to make medical decisions on your behalf if you become unable to communicate them yourself.
Another advance directive that should be part of the plan is a living will. With this type of will, you state your preferences with regard to the use of life-sustaining measures like feeding tubes, artificial hydration, mechanical respiration, and resuscitation.
All attorneys are considered to be fiduciaries, and this applies to all areas of the law. Lawyers must act in the best interests of their clients; they cannot prioritize their own interests.
A person that is empowered to act on behalf of someone else in a power of attorney is called an attorney-in-fact, and this is another type fiduciary. For estate planning purposes, you should have a durable power of attorney for property to name someone to manage your finances.
It should be noted that you can name a disability trustee to act as the administrator in the event of your incapacity if you have a living trust.
Powers of attorney are used for other purposes outside of the estate planning realm.
For example, you may give someone the ability to sign a real estate contract on your behalf if you are out of the country. This would be a limited power of attorney, and they would have the power to represent you for that sole purpose.
Schedule a Consultation Today!
If you would like to work with a Los Angeles estate planning attorney to put a plan in place, today is the day for action. You can schedule a consultation appointment if you call us at 310-337-7696, and you can use our contact form to send us a message.
- DIY Estate Planning Can Yield Unintended Consequences - October 22, 2021
- What Is Probate and Why Do People Try to Avoid It? - October 20, 2021
- These Long-Term Care Facts May Surprise You - October 9, 2021