What role do fiduciaries play in estate planning?

Although they usually do not play a direct role in estate planning, fiduciaries serve important functions in carrying out the protection of assets and the division of assets that are essential to an effective estate plan. The executor of a will, the trustee of a trust or the agent named in a health care directive may not be part of the estate planning process, but they are important to the long-term care of an individual and to the eventual distribution of that person's assets.

Fiduciaries are individuals who hold positions of trust and allegiance to the principals who appointed them. They must carry out their duties while avoiding conflicts of interest. Their duty of care is owed to the principal who appointed them and to no one else.

An executor is an example of someone acting in a fiduciary capacity. The executor of a will is designated by the maker of a will to handle the responsibilities associated with settling an estate. Some of the typical responsibilities of an executor include:

  • Gathering the assets of the deceased
  • Paying debts, funeral expenses and taxes
  • Distributing the assets of the estate in accordance with the instructions of the deceased as reflected in the will

Trustees are also fiduciaries appointed as part of a person's estate planning. Like an executor to a will, a trustee of a living trust or a revocable trust is responsible for management of the assets that the creator placed in the trust. Trust administration tends to be for a longer period of time than probate administration.

Making of the decision about who to appoint as a fiduciary when probate planning or trust planning can be a difficult one. Understanding the roles of fiduciaries in guardianships or conservatorships can be equally difficult. This post is merely an overview of this complex area of the law. It is not offered as a substitute for the legal advice that only a probate and estate administration attorney can provider.

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