One of the most important decisions you will make in developing a legacy plan is selecting the right individuals to serve out the roles in your core legacy planning documents.
The people appointed to these roles are often called fiduciaries or sometimes, stewards. A fiduciary is a person or institution who can act on your behalf. Personal representatives, trustees, guardians, and agents are all fiduciaries.
When selecting who should serve what role, you should carefully consider each role’s responsibilities and what qualifications your prospective appointee’s bring to the table.
Regardless of who is selected as the initial fiduciary, a successor fiduciary can always be named in case the initial fiduciary is unable to serve.
A personal representative is responsible for wrapping up your affairs and ensuring that the terms of your Will are carried out.
Some duties include:
- Controlling the estate’s assets;
- Paying outstanding bills;
- Paying expenses incurred in administering the estate;
- Filing paperwork with the Register of Wills (e.g., filing an inventory of estate assets and an accounting of distributions and expenses);
- Paying any creditor claims; and
- Preparing any necessary tax returns.
Your personal representative is named in your Last Will and Testament. Generally, married individuals name their spouse as their initial personal representative. Both professionals and individuals may serve in this role, and typically individual personal representatives such as family and friends will choose to hire an attorney for assistance.
When your legacy plan involves a trust, a trustee will manage the assets held in trust. A trustee is responsible and legally liable for the financial welfare of your named trust beneficiaries and can be a professional institution (e.g., a bank or law firm) or an individual.
Your choice of trustee and successor trustee are named in the trust agreement.
Some duties include:
- Reviewing assets for quality and performance;
- Making adjustments to the portfolio;
- Filing annual trust tax returns;
- Distributing income and principal to the beneficiaries; and
- Arranging for the maintenance of a personal residence or other real estate owned by the trust.
A guardian is an individual appointed to take custody of your minor children under your Will.
An agent is appointed to manage your affairs upon your incapacity under a durable power of attorney.
Under an advance medical directive, an agent will make your health care decisions in the event that you are unable to do so.
You may choose to appoint different agents under the durable power of attorney and the advance medical directive depending on who you trust to make your financial decisions and your health care decisions.