By: Ronald A. Fatoullah, Esq. and Elizabeth Forspan, Esq.
When we create or revise our estate plans, we are faced with some very important decisions. The selection of the appropriate person to serve as one's fiduciary is a choice which can have significant implications.
A fiduciary can take various forms: in your Last Will and Testament, your fiduciary is called the executor. Your executor is responsible for administering your estate and "wrapping up" your affairs after you die. He or she will be charged with distributing your assets as directed in your will and will also be the one to pay off your final debts once he or she has been qualified to serve by the relevant Surrogate's Court. Depending on the type and size of an estate, an executor's job can be quite time-consuming and laden with responsibility. You should give a great deal of thought as to whom you think will best serve the interests of your estate (and your beneficiaries) before you make this important nomination.
Perhaps one of the most important appointments you can make during your lifetime is that of the agent under your power of attorney. Your agent may be tasked with the responsibility of entering into a myriad of financial transactions on your behalf; thus you will want to appoint someone who has a good handle on financial issues to serve in this role. If you decide to entrust your agent with gift-giving abilities, you will execute a statutory gifts rider along with the power of attorney. For obvious reasons, your choice of an agent must be someone whom you trust to make the right decisions on your behalf. Your power of attorney will generally take effect as soon as you and your agent have signed the document. If you have concerns about your agent having the ability to act on your behalf immediately, consider executing a "springing" power of attorney, which will only take effect upon a physician declaring you to be incapacitated. Please also keep in mind that your agent's authority to perform tasks on your behalf will cease upon your death.
Another very important agent appointment that you should make as soon as possible is the agent under the Health Care Proxy, who is tasked with making healthcare and medical decisions on your behalf should you become incapacitated. Contrary to what many people think, your agent will not only be asked to act at the end of your life. For instance, if you are undergoing surgery with anesthesia and are temporarily unable to make important medical decisions for yourself, your agent might be asked to do so. Needless to say, you should entrust this power to someone who you absolutely believe will have your best interests at heart. You do not necessarily need to appoint someone with medical training; however, you should consider choosing someone with good judgment whom you know will consult with the appropriate medical advisors.
A trustee is an individual you appoint to manage assets that you have transferred to a trust. There are various kinds of trusts (a robust discussion of which is beyond the scope of this article), and there are times when you may serve as your own trustee. However, when you transfer assets to a trust (perhaps for estate tax or Medicaid planning purposes) and you cannot serve as the trustee, it is important to choose someone who understands your values and will act accordingly. Your trustee will be responsible for performing tasks such as managing the assets in the trust, making investment decisions and accounting to the trust beneficiaries. The trustee has an important fiduciary duty/responsibility not only to you, the grantor/settlor, but also to your ultimate beneficiaries. This job should only be entrusted to an individual who you believe has the ability to understand these complex issues and to act accordingly.
It is also important to consider that there are very real legal requirements that apply to an executor or trustee appointment, including citizenship and/or residency requirements. You should discuss your chosen fiduciary's particular situation with your attorney prior to finalizing your estate plan.
Before selecting an individual to serve in the capacity of a fiduciary, you must consider how he or she will handle the position and responsibility. Will she act on your behalf in the same way you would act if you were making the decisions yourself? Will he manage your assets in a prudent and responsible way? Will she wrap up your affairs in a way that will keep your beneficiaries satisfied and feeling as though they have been treated fairly? These are all important qualities that we should look for in a fiduciary.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Elizabeth Forspan, Esq. is the managing attorney of the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll-free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also the co-founder of JR Wealth Advisors, LLC. The wealth management firm can be reached at 516-466-3300 or 800-353-3775.
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