Whether you’re creating a trust, a will, or a power of attorney, your estate plan will rely upon fiduciaries to carry out your wishes. A fiduciary is someone who owes you, the principal, a legal duty to act in your best interests. Someone who has a fiduciary duty cannot use the position to take advantage of you or otherwise do anything that would harm you.
However, just because that legal duty exists doesn’t mean you can grant fiduciary authority to anyone and be sure that they will do the right thing. When it comes to selecting a fiduciary, here are several tips you might want to consider.
Tip 1. Don’t feel compelled to choose family.
A lot of people who create estate plans choose a close family member to act as their agent, executor, or to serve as the trustee of a trust. While this is often a wise choice, you shouldn’t feel obligated to choose family members for these roles. Trusted friends and professional advisors can all act as your fiduciary. In some situations, such as when you hire an attorney or an accountant, it’s often preferable to have someone who is not related to you.
Tip 2. Consider the practical limitations.
Fiduciaries should be people you trust, but they should also be people who are able to meet their duties. Don’t choose fiduciaries who are located too far away from you if the position requires them to act locally. Also, be sure to choose someone who recognizes his or her own limitations and who will seek appropriate advice when necessary.
You can learn a lot more about different fiduciaries involved in estate planning at one of our free estate planning seminars. The next seminars will be on July 23, 24th, and 25th in Grand Forks, North Dakota and Thief River Falls, Minnesota. Contact our office for details and registration information.
Raymond J. German, LTD. is a member of the American Academy of Estate Planning Attorneys.