A fiduciary is someone who has been placed in a position of trust. In estate planning, this usually means managing assets.
Below is a brief overview of some of the key fiduciaries in estate planning.
The executor
The executor of the estate is a fiduciary that has several important duties. The executor must:
- Manage assets in the estate.
- Ensure that the instructions in the will are precisely followed.
- Pay debts and other financial obligations before distributing the estate to beneficiaries.
Trustees
An estate plan may include several types of trusts. The individual tasked with managing these trusts is the trustee. A trustee is a fiduciary and they must:
- Manage trust assets appropriately.
- Administer trusts according to specific terms.
- Distribute assets according to the trust. Often, assets must be distributed over time.
Guardians
While guardians do not manage assets, they still have an important fiduciary role. A guardian must:
- Care for minor children should their parents pass away.
- Make decisions in the best interests of the child as they grow up. This includes what schools they go to, what type of medical treatment they receive and other matters related to welfare.
Powers of attorney
Powers of attorney differ in the sense that they act on behalf of an individual while they are alive. A power of attorney generally:
- Handles financial affairs for someone else if they are incapacitated.
- Makes medical decisions on behalf of someone else if they are incapacitated.
All fiduciaries must be loyal, transparent and diligent. To find out more about fiduciary duties and other areas of estate planning, it may help to seek legal guidance.
