Clients must select fiduciaries to fulfill various roles as part of estate planning. Choosing fiduciaries can prove to be a stressful challenge. In estate planning, a fiduciary is a person who is nominated to act on behalf of, and in the best interest of, another person. Specifically, clients must nominate an agent to make financial decisions pursuant to a General Durable Power of Attorney and another agent to make health care choices pursuant to a Durable Power of Attorney for Health Care Decisions. Those fiduciaries may or may not be the same person. In completing a will, clients also need to select a Personal Representative who will take charge of their estate’s administration as well as a trustee if a trust is involved. And it’s not enough to merely select one fiduciary. Backups should also be chosen because you never know what could happen.
In nominating fiduciaries, clients tend to look solely to family and close friends. However, a professional fiduciary may be a better choice. In addition to considering family and friends for fiduciary roles, here are three reasons why it might be a good idea to consider a professional fiduciary:
- Professional Fiduciaries Offer Expertise
Fiduciaries often need to fulfill a variety of exacting requirements, including recordkeeping, asset management, reporting to beneficiaries, and working with accountants, attorneys, and investment advisors on an ongoing basis. A professional fiduciary should be familiar with these requirements and possess the necessary expertise to complete them successfully. In contrast, family and friends may be completely unfamiliar with these requirements, may become frustrated with the steep learning curve sometimes involved in figuring out how to meet these requirements, or may not have the requisite skills to do the job.
- Selecting a Professional Fiduciary Avoids the Appearance of Favoritism
One reason clients may struggle to select fiduciaries is that they wish to avoid the appearance of favoritism. By choosing one child over another or one sibling over another, the family member who is not selected may feel slighted or resent the family member who was chosen for the fiduciary role. Family relationships may be strained, and conflicts can and do arise. Selecting a professional fiduciary helps preserve family relationships by avoiding these situations.
- Selecting a Professional Fiduciary Removes the Burden from Family and Friends
Serving as a fiduciary isn’t easy. It’s a lot of work. Many clients are concerned about forcing busy family members and friends to take on additional stressful and time-consuming responsibilities. Selecting a professional fiduciary can ease the burden for the people you love.
If you need assistance selecting a fiduciary, please let us know. We’d be happy to help.
This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.