When you plan your estate, you record your wishes with regard to the way you want your assets to be transferred after you pass away. Everyone is aware of this element, but it is also important to consider the estate administration process that will be initiated.
An executor is the administrator of an estate when a will is used. This individual or entity is called a fiduciary informal sense, and they have a fiduciary duty to the estate and the beneficiaries.
The executor must serve the best interests of the beneficiaries and the estate without regard to their own interests. This is a simple definition of a fiduciary relationship.
A living trust is a good alternative to a simple will because for a few different reasons. The estate administration process is streamlined because probate is not a factor, and the trust will hold all or most of the assets that comprise the estate.
There are asset protection advantages after you are gone, and you can set up any type of distribution schedule that you choose.
You would be the trustee while you are living, and you would name a successor to step into the role after your death. Once again, the successor trustee would have a fiduciary duty to adhere to the terms of the trust and serve the best interests of the beneficiary or beneficiaries.
The revocable living trust is just one of many different types of trusts. There are irrevocable trusts that are used for a number of different purposes, including estate tax efficiency and nursing home asset protection. The trustee of this type of trust would have the same fiduciary duty.
A significant percentage of elders become unable to handle their own affairs. Alzheimer’s disease strikes over 30 percent of the oldest old, and there are other causes of cognitive impairment and physical incapacitation.
If you do not take any steps in advance to address this possibility and you become incapacitated, the state could be petitioned to appoint a guardian to act on your behalf. You would become a ward of the estate under these circumstances.
When a guardianship is in place, the guardian has a fiduciary duty to the ward. In addition to adult guardianship, there are also guardians for minors that have fiduciary responsibilities to the children.
You can prevent a guardianship and name your own decision-maker in advance if you execute a durable power of attorney. The “durable” designation allows the power of attorney to remain in effect upon the incapacitation of the grantor, so it is quite relevant.
An incapacity plan will typically include a power of attorney for property and a power of attorney for health care decision-making. The agent or agents that you name to represent you would have a fiduciary duty to act in your best interests.
Other Fiduciary Relationships
Every attorney has a fiduciary duty to their clients, regardless of the area of specialization. Retirement plan administrators have a fiduciary relationship with retirees, and a corporate board of directors will have a fiduciary duty to protect the interests of the shareholders.
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