How To Name a Fiduciary
It feels impossible to decide who is best suited to handle your financial or healthcare decisions on your behalf should the time come that you are no longer able to decide these things for yourself. Equally daunting is who to task with carrying out your wishes when you pass away. Considering not only who to choose, but how to choose feels weighty. In an effort to help my clients navigate this naming process, I’ve made a list of considerations - in order - of what I feel should be the priorities in naming a fiduciary.
With regard to the priority of appointment, several factors come into play. My top five are as follows:
- Trust. First and foremost, you should only appoint people that you absolutely trust for any fiduciary position (power of attorney, successor trustee, personal representative, etc.). If there is any hesitation, I encourage you move on to an alternate.
- Ability and Availability. Choose people who will have the ability to perform well and who are not overwhelmed with other things, such as obligations to care for others, running high-level businesses, extensive travel, etc. These same people may be willing and able to squeeze in their newfound responsibilities, but their existing busy schedules should be considered.
- Consistency amongst Appointments. I try to keep consistency between fiduciary appointments throughout a client’s estate plan. In most cases, your first successor trustee named in your trust should be named as your first personal representative and power of attorney. This will allow your fiduciary to handle all needs comprehensively and efficiently. I highly recommend that your fiduciaries be in the same order of priority throughout your documents. (There is an exception for your health care representative who will not be handling finances but would be handling personal and medical care. This is an entirely different type of position and should be considered separately based on your needs and the abilities of your appointees.)
- Family Dynamics. Keeping the peace is important. Family in fighting creates stress and ultimately costs money. Seemingly trivial things can pose problems where fragile family relationships exist. An example would be appointing a younger child with a higher priority than an older child. In some families this would create unrest, whereas in others, it would be acceptable. It depends on your family dynamics. Maintaining family harmony should be thoughtfully contemplated.
- Proximity. This used to be very important, but it is not so much now as we have a much more electronic and mobile society. Your fiduciary should be able to handle most, if not all, financial matters from a distance. Proximity becomes much more important for your health care representative because, if needed, they will need to be physically available to deal with you and your personal/medical needs in person.