Selecting Your Fiduciary

When formulating estate plans, most people carefully consider to whom they should give their “stuff.” Who gets the piano? The book collection? The emerald ring and the antique pocket watch? But the process of choosing fiduciaries – the trustees, personal representatives, and agents – is handled as if bestowing an award upon them rather than interviewing them for a job. 

In many cases, selecting your fiduciary can be a daunting task. After all, it is easier to think about making gifts to intended beneficiaries, gifts we control, than it is to think about giving up control over our finances before or after death. Giving proper thought to the selection of your fiduciary, however, is essential. Otherwise, your carefully thought out intentions as to “who gets what” may not be realized. Here are some points to consider.

First, if you fail to name a competent fiduciary, a number of problems can arise. What if your fiduciary failed to harness all of your assets and protect them? What if they failed to prudently invest the assets, meet deadlines for tax returns, accountings, or probate court?

A fiduciary may not have knowledge of which creditors’ claims need to be paid, which do not, and which creditors have priority over others. This lack of understanding can result in insufficient assets to pay high priority claims. A fiduciary may also feel obligated to meet demands of a beneficiary that may not be in the beneficiary’s best interest, such as a beneficiary who is a spendthrift, or who may not yet be mature enough to handle a large sum of money responsibly.

Mistakes such as these can largely be avoided if your fiduciary hires a professional such as an estate planning attorney or accountant.The willingness to hire and work with such a professional is a quality that should be sought in your fiduciary. Your fiduciary should also be intelligent with good common sense, have the highest ethical standards and integrity, and be very organized.

Your fiduciary should have a good relationship with your beneficiaries, yet be able to stand up and “protect them from themselves” if necessary. Making a decision that takes family dynamics into account is imperative. Many choose to name a child as their fiduciary, and in many cases, that selection works well and makes the most sense. There are some instances, however, in which naming a child may be problematic.

If you have three children, for example, would naming one as trustee cause a rift between the siblings during the time they need each other most, their parent’s death? Will the two children who are not named trustee band together to pressure the trustee sibling? This is a difficult situation. Naming two children as co-trustees can cause the remaining child to feel left out, and naming all three children as co-trustees invites a world of complications and difficulties, creating a “too many cooks in the kitchen” scenario.

Yet the situation is not hopeless. You might consider naming someone other than a child as your trustee, or naming that person as co-trustee with one of your children to offer the sense of an unbiased third party to those children who are not acting as trustee.

Finally, you may wish to talk to your children in advance about your fiduciary selection. When children know what to expect, there are no surprises. If you have a chance to tell them in your words why you chose your fiduciary – perhaps one child is an attorney, financial advisor, or accountant with specific skills that would be beneficial as a fiduciary – it may be easier to accept than finding out later on paper with no explanation.

Selecting a fiduciary can be a difficult decision, but it is a decision that should be given great thought and consideration as one of the most important that you will make when planning your estate. If you need assistance with selecting your fiduciary, feel free to contact Mammel Law at 248-644-6326.

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