How to Choose the Right Fiduciaries – Part 1

One of the most important aspects of your estate plan is your fiduciaries. Fiduciaries are the people you appoint to act on your behalf. Your estate plan may include some or all of the following: Personal Representative (also known as an executor), guardian for your minor children, healthcare agent, financial power of attorney, or trustee. Each person has a specific role with different responsibilities, and choosing the right people for each role is important. However, many of our clients struggle with this. In this two part series, we’ll discuss each of these roles and the responsibilities associated with each role so you can choose the right people to fill them. As you consider each of the roles, choose at least three people to fill each one in case your primary choice is unable or unwilling to serve when the time comes.

Personal Representative/Executor

If you die with (or without) a will, any assets you own in your name alone will have to go through the probate process before they can be passed to your heirs or beneficiaries. Your personal representative is the person who is appointed by the probate court to oversee this process. The personal representative is generally the person who initiates the probate proceedings by filing a petition with the court, along with your original will. Once appointed by the Court, the personal representative’s responsibilities include:

• locating your assets
• paying your debts
• notifying creditors
• selling any property, including your house or personal belongings
• filing accountings with the Court
• winding up your business
• dealing with disgruntled heirs
• paying taxes and Filing an estate tax return

Your personal representative may also be required to post a bond with the Court at the time of appointment, even if your will waives the bond requirement. The Court has strict guidelines for when these things need to happen, and it’s the personal representative’s responsibility to make sure they meet the due dates. If the personal representative misses the deadlines, the Court is allowed to remove the personal representative and appoint an attorney chosen by the Court to act as the new personal representative. 

When choosing your personal representatives, here are some things to keep in mind.

• Choose someone who is reliable, and will be able to meet deadlines.
• Choose someone who is organized and will be able to keep track of any assets or money that comes into or goes out of the estate while it is in the probate process.
• Choose someone who lives nearby. While it may not be required to choose a personal representative who lives in the state where the will is being probated, it is much easier to have someone who can go to the Courthouse if needed. 
• Choose someone you trust. The personal representative’s primary objective should be to carry out your wishes under your will if you have one, or if you don’t have one, to distribute your assets to your heirs according to state law. 

Guardian for Minor Children

If you have minor children, one of the most important roles of your will is to name guardians to care for them if both parents die or are otherwise unable to care for them. This is probably the most difficult decision for parents to make. Deciding who will raise your kids if you can’t is a huge decision. So here are some things to consider when making the choice.

1. Make a list of all possible choices. If you have a spouse or partner, it’s best if you each come up with your own list and compare them later. You should make a list of all people you know that could possibly care for your children. This could include family, friends, neighbors, cousins, college roommates. The possibilities are endless.  This is a brainstorming exercise, so just write down anyone who comes to mind.
2. Make a list of qualities that are important to you. These are things like parenting style, religious beliefs, the current relationship with your kids, marital status. If it matters to you, write it down.
3. Pick your top three. Now that you have your lists, share them with your partner and pick your combined top three choices.The reason you should pick at least three people is because there is always the chance that your top choice may be unable or unwilling to become the guardian. 

Common Mistakes to Avoid when choosing your guardians:

1. Only naming one person. A lot of people name their parents as the guardian of their kids, and that is completely fine. But as we mentioned above, you need to consider that when the time comes your parents may not be able to take on a full time parental role for minor kids, not because they don’t want to, but because they may not be in the best health or physical condition. So you’ll want to make sure you have at least two backup guardians named. 
2. Not planning for couples. If you name a couple, be sure to consider what happens if that couple isn’t a couple when the time comes for them to be appointed as your child’s guardian. For example, you name your brother and his wife. They get divorced, and you don’t update your will. Now the Court has to decide if they are appointed as a divorced couple, which as you can imagine, would not be an ideal situation for your kids. So if you name a couple, you should be specific about what happens if they are not a couple, due to death of one or divorce. You could use language like this: I appoint John and Jane Doe, to serve jointly, or the survivor of them. If they are divorced, then I appoint John Doe to serve alone. 
3. Worrying about financial considerations. It’s easy to think about whether your potential guardians can afford to care for your kids. But as their parent, it’s your job to ensure you leave behind enough resources through life insurance or savings to care for your kids if you aren’t able. By removing the financial consideration, you may open up possibilities for guardians you wouldn’t have named otherwise, but would be the best choice for your kids. 

Next week in part two of this series, we will discuss Healthcare Agents, Powers of Attorney, and Trustees. In the meantime, if you have any questions about who to choose, please schedule a free 15 minute consultation and we’d be happy to chat.