An estate plan often names several fiduciaries, each responsible for handling a different part of your affairs. These individuals may manage your finances during incapacity, make medical decisions, administer a trust, or settle your estate after death.
Choosing them deserves careful thought. A person who manages money well may not be the best choice for sensitive health care decisions. Understanding what each fiduciary does can help you assign responsibilities more effectively and avoid confusion later.
What Is a Fiduciary in Estate Planning?
A fiduciary is someone who has a legal duty to act on another person’s behalf. Depending on the role, that duty may require the fiduciary to follow your instructions, act in a beneficiary’s best interests, avoid conflicts of interest, protect property, and maintain accurate records.
Fiduciaries must use the authority they receive for its intended purpose. They cannot place their own interests ahead of the people they serve. A breach of these duties may lead to personal liability or removal from the position.
What Are the Different Fiduciary Roles in an Estate Plan?
Your estate plan may include several of the following roles:
- Personal representative: Commonly called an executor, the personal representative administers your probate estate after your death. This person gathers estate property, addresses valid debts and taxes, maintains records, and distributes assets according to your will or Massachusetts inheritance law. Naming someone in your will does not give that person immediate authority. The Probate and Family Court must appoint the personal representative.
- Trustee: A trustee manages property held in a trust and follows its distribution instructions. You may serve as trustee of your own revocable trust while you are able to manage it. A successor trustee can step in after your incapacity or death, depending on the trust’s terms. Some trusts continue for years, so this role may involve investing assets and communicating with beneficiaries over an extended period.
- Agent under a durable power of attorney: This agent handles the financial and legal matters authorized by the document. The agent may pay bills, manage accounts, deal with real estate, or communicate with financial institutions. When the authority begins depends on how the document is written. A properly drafted durable power of attorney can remain effective during incapacity.
- Health care agent: You appoint this person through a Massachusetts health care proxy. The agent makes health care decisions if your attending physician determines that you lack the capacity to make those decisions yourself. The agent must follow any limits in the proxy and make choices consistent with your wishes, if known.
- Guardian: A guardian generally makes personal or health-related decisions for a minor or an incapacitated adult. Parents can nominate a guardian for a minor child through their estate planning documents, but the court ultimately decides whom to appoint. An adult guardianship also requires court involvement.
- Conservator: A conservator is appointed by the court to manage the property or financial affairs of someone who cannot manage them independently. A durable power of attorney may reduce the need for a conservatorship, but it cannot prevent every possible court proceeding.
Can the Same Person Serve in Multiple Fiduciary Roles?
Yes. One person may serve in several capacities, such as personal representative, successor trustee, and agent under a power of attorney. Using the same individual can improve coordination and give one trusted person a clear understanding of your broader goals.
However, concentrating authority can create practical problems. The person may lack the time or skills required for every role. Family tensions or conflicts among beneficiaries can also make certain combinations less appropriate. In some cases, assigning financial and health care responsibilities to different people creates a useful division of responsibility.
How Should You Choose Your Fiduciaries?
Start with trustworthiness, but consider the demands of the specific position. Your fiduciary should understand the role, be willing to serve, and have enough time to carry out the required work.
For a financial role, look for sound judgment, organization, and comfort maintaining records. A health care agent should understand your values and be able to make difficult decisions under pressure. Geography may matter as well, particularly when someone must manage property or communicate regularly with local providers.
It is also wise to name alternates. Your first choice may die, become incapacitated, move away, or decline to serve when the time comes.
Put the Right People in the Right Roles
Thoughtful fiduciary selections can make your estate plan easier to carry out and reduce uncertainty for your family. The attorneys at Surprenant, Beneski & Nunes, P.C. can help you compare potential choices, name appropriate backups, and clearly define each person’s authority. Contact us to create or update a Massachusetts estate plan that reflects your needs.
