A fiduciary is an individual, a business or even an association that holds property or power for another party with the legal duty and authority to make decisions regarding finances and other matters on their behalf. A fiduciary is expected to act with good faith and honesty and is normally chosen with the premise that they have either knowledge and/or expertise about the particular matters being handled.
In the estate planning process, there are several types of fiduciaries that you will encounter:
1. The Executor of an Estate
When you create a will, you will need to choose an executor to administer your estate. This individual or business will be tasked with inventorying your assets, paying debts, carrying out the instructions of your will and other administrative duties during probate.
2. The Trustee of a Trust
The trustee of a trust will hold property, invest it, manage it and distribute it according to the terms of your trust. In the case of a living trust, you may act as the trust’s trustee until incapacitation or death, when a successor trustee takes over the trustee’s duties.
3. Guardian of Minor Children
When you draft a will, you will need to name a guardian of minor children. You may choose one or more guardians to look after either the children, their property, or both upon your passing.
4. Proxy or Attorney in Fact
When making a durable power of attorney or other advance medical directives, you will need to appoint an individual to manage your property and/or affairs should you no longer be able to do so on your own.
An estate planning attorney can advise you on the duties and requirements of each of these fiduciaries, which can help you make the most informed and best decisions for your estate planning needs.