Finding Fiduciaries

     Few Life & Estate Planning decisions are more important than the selection of your financial fiduciaries. After all, they will be responsible for taking care of your assets when you are incapacitated and upon your death. If you find this a difficult decision, then you may tend to procrastinate and eventually become disabled or die without a proper Life & Estate Plan. In this article, we will share some thoughts to help you select appropriate financial fiduciaries and hopefully avoid the procrastination trap.

Risky Business

     Your fiduciaries will be responsible for all of the financial matters for which you are now responsible. For example, they must safeguard, manage and distribute all of your assets … after they satisfy your legitimate creditors and ensure compliance with all tax laws. Fiduciaries are held to the highest legal standards of conduct. This fiduciary duty even extends to the rights of third parties. Teaching point: Along with the honor of being named as the financial fiduciary for another comes great personal exposure to civil and even criminal liability.

Common Candidates

     Before they understand the responsibilities and attending risks, many people look first to family members as financial fiduciaries. This is natural, because family members likely know and care about you as no stranger ever would. Nevertheless, serving as a fiduciary can be an overwhelming responsibility, especially when your fiduciaries have their own busy lives to run.
     For many people, third party professionals are appropriate financial fiduciaries. Corporate fiduciaries, accountants and attorneys are commonly selected. It is their business to safeguard, manage and distribute client assets … and ensure compliance with all tax laws. Also, if these third party professional fiduciaries are unrelated to you and your family members, then valuable asset protection planning may be available.
     A popular alternative is a team approach where you select both a family member and a third party professional as co-fiduciaries. This approach combines the respective advantages of each. The family member takes care of the non-financial people concerns and the professional takes care of the financial details. Such a combination also helps preserve family relationships when someone must tell a youthful beneficiary that a red sports car is not within the letter or spirit of authorized trust fund expenditures. In other words, it is much easier for a non-family member professional to tell beneficiary Bobby "no," than it is for his favorite uncle (as trustee).

Summary

     The selection of appropriate financial fiduciaries is critical to the ultimate success of your Life & Estate Plan. Be sure to seek the advice of qualified counsel to help you carefully weigh the pros and cons before making this important decision. This definitely is an aspect of your Life & Estate Plan where an inappropriate selection could be rather expensive for you and your fiduciaries.