Among the many reasons why it is critical to create an estate plan, anchored by a will and or trust, is the designation of one or more fiduciaries who understand and are committed to carrying out the plan. Far from playing a ceremonial role in our affairs, fiduciaries have formal responsibilities and a legal obligation to see them through.
Qualities, Skills and Duties
For estate plans to ultimately succeed, the designated fiduciaries must have the qualities and skills needed to fulfill them, as Adam Tarsitano explains at Empower:
Thinking through and finalizing the asset flow of your estate plan is an important step in the process, but choosing the people who will play pivotal roles within your plan is equally important. Even the best formulated estate plan can run into snags if the wrong individuals are appointed…
- Take the time to think about who in your inner circle is best suited for the particular role.
- Don’t let your emotions overwhelm your ability to get your plan in place.
- Know that your key people will likely change as life progresses and that your documents can be updated accordingly.
The specific titles given to fiduciaries depend on the specific tools used in estate planning, as well as the region. For example, when a will is written, the fiduciary is referred to as an executor or personal representative, and in addition to being organized and reliable, this individual will find that some financial literacy skills come in handy too:
An executor or personal representative is the person you appoint in your will who will be responsible for gathering assets, taking assets through the probate process, and distributing assets according to your will. Executors are also responsible for completing court filings, paying taxes, and taking care of any outstanding debts . You can appoint a friend, family member or professional to act as your executor. If you do not appoint someone, the court will appoint someone for you.
When an estate plan involves a trust, the designated fiduciary is referred to as a trustee, and like an executor, has a legal obligation to administer the trust in accordance with the details written in the trust agreement. In addition to being responsible and reliable, it’s helpful for trustees to have confidence handling financial arrangements and be strong communicators:
Their administrative tasks include filing tax returns, reporting to beneficiaries, communicating with beneficiaries and making both required and discretionary distributions. Trustees have a fiduciary duty to act in the best interest of beneficiaries and can be held liable if this duty is breached. You can appoint a friend, family member, professional or institution as your trustee.
Executor, Trustee and Fiduciary Bonds Explained
It’s typical to appoint loved ones or close friends as estate plan fiduciaries, but keep in mind that there is no law saying a fiduciary must be a relative or friend. It may turn out to be helpful to appoint a professional fiduciary, enabling loved ones to spend more time on relationships and less time puzzling over finances and bringing affairs to closure. Naming a neutral, professional fiduciary may make a particular sense if difficult conflicts or disagreements are a possibility. Those aging solo, may also find the services of a professional fiduciary particularly reassuring.
Regardless of who is ultimately appointed, every fiduciary has an inherent legal obligation to carry out duties in the best interest of the estate and beneficiaries.
Accordingly, bonds, sometimes referred to specifically as executor, personal representative, or trustee bonds, are often required as a guarantee that the estate will be administered in accordance with the law and in the best interests of beneficiaries.
Colonial Surety Company makes it easy and speedy for fiduciaries, including executors, personal representatives and trustees to obtain their bonds: simply: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere.
Obtain Fiduciary, Executor, Personal Representative or Trustee Bonds HERE
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