One way or another, someone has to close out our affairs when we die, and this person is a fiduciary, with legal obligations to carry out duties in the best interest of the estate and its beneficiaries. Although it is customary for relatives or friends to serve as the fiduciary, it is also possible to appoint a professional fiduciary. Read on for advice from experts.
Managing The Affairs of The Deceased
In many states, the term personal representative is used to refer to the fiduciary designated to handle the affairs of the deceased. If a will has been made, the term executor is frequently used. When an estate plan involves a trust, a trustee is designated. When no plans have been made, courts appoint an administrator. Though the nomenclature varies by state and circumstance, the individual given the responsibility of resolving debts and distributing assets has fiduciary obligations. In other words, as Investopedia explains, a fiduciary is both legally and ethically bound to put the affairs of others ahead of their own.
Among the many reasons proactive estate planning is helpful to families is that when a will is made or trust established, fiduciaries are designated, and, ideally, the individuals are prepared to take on their responsibilities. When naming a fiduciary, it is important to choose someone who understands the commitment involved and has the time and ability to carry out the related duties. Charles Hunsinger of Burns & Levinson observes that while appointing an appropriate fiduciary should be taken seriously by everyone, doing so can feel especially daunting to those who are single or without children, and offers these tips:
This person should know their fiduciary duties, be intimately familiar with the goals and written terms of your estate plan, and should know how to locate your will, trust, or other instruments….You must also ensure that your friend knows that being nominated as a fiduciary will carry with it certain obligations and may in fact be a long-term commitment….If you chose wisely… your friend can serve as personal representative or trustee with a minimum of cost and difficulty. Your friend can probate your estate or administer your trust in accordance with your wishes and their fiduciary duties, no one will contest their administration, and they will be proud and happy to serve.
Of course, despite care with decision making, any number of things can go wrong after a fiduciary is designated. For example, if a friend is appointed, you may fall out of touch, or even have a falling out. Relatives, though distant, might resent the decision and engage in probate litigation or throw up other roadblocks. For these reasons, careful and continuous communication with everyone involved is a best practice in estate planning. Though some friends and family may not agree with your decisions, understanding your intentions goes a long way to preventing conflicts and avoiding the necessity for legal remedies. Periodically revisiting and updating a “completed” estate plan is another way to ensure your current choices are clearly reflected.
When considering the appointment of a fiduciary, it is helpful to know that designating a professional for the role is also a possibility, and can be very reassuring. As Hunsinger points out:
This option will ensure that the estate or trust is administered according to a professional’s fiduciary duties and responsibilities and should help prevent waste, mismanagement, and other issues with the estate. A professional fiduciary can be an attorney, a banker, a trust company employee, or even an accountant. Such a person will charge a fee, which can be pre-arranged by the decedent such that a person’s heirs or beneficiaries need never incur additional costs. You can even nominate a professional to serve as a healthcare agent or other fiduciary, should you so choose … .A professional fiduciary will charge a fee for probating the estate or administering the trust. However, these fees are required by statute to be reasonable and the right professional fiduciary should ensure that the fees are not excessive….If you do choose to retain a professional fiduciary, interview that person carefully to ensure they are the right person for the job.
Fiduciary Bonds Explained
Given the significant responsibilities involved in serving as a fiduciary, a type of bond, often referred to as a fiduciary bond or an estate bond, is often required. Essentially, fiduciary and estate bonds serve as a guarantee that duties will be carried out in accordance with the law and in the best interests of the estate and its beneficiaries. Colonial Surety is here to help, whenever any type of fiduciary or estate bond is needed. As a leading national provider of many types of bonds, Colonial Surety makes it easy and speedy to obtain them. Simply: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere.
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Good To Know
Estate planning experts remind us that we can minimize the duties typically required of fiduciaries by using some specific estate planning tactics. For example: “If you have mainly probate assets, consider transferring to non-probate assets or designating beneficiaries, if permitted by the account or institution holding the assets. Alternatively, you can transfer title to certain assets to others during your lifetime, reserving a life estate for yourself as appropriate.”
Bonding Solutions for Professional Fiduciaries
When families put their trust in you, there’s no time to waste. With Colonial Surety on your side, you can obtain any type of fiduciary bond instantly and digitally via our online bond service. Our fiduciary bond portfolio includes: administrator, estate, executor, guardian, personal representative, probate, surrogate, trustee, conservator and more. Just select a fiduciary or court bond from the online portfolio, enter payment, and download, e-file or print the bond.
Specific obligee requirements? Trust us: Colonial’s a direct and national, bond writer, so our experts are here to ensure obligee requirements across the country are properly met.
Bonds for Professional Fiduciaries
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