Mistakes to Avoid When Choosing a Fiduciary
In an estate plan, a fiduciary is someone who takes care of money or assets. There are different roles within an estate plan, including executors, power of attorneys, trustees and more. To choose a fiduciary is an important decision. If you want to ensure that you make the best possible decision, you need to consider other people’s mistakes. Here are three mistakes people make.
Choose a Family Member as Executor
If you choose to have a will, then you will appoint an executor. An executor’s duties include managing your estate’s assets, overseeing probate and paying off creditors. In the estate planning process, one of the biggest mistakes a person can make is basing his or her executor choice based on trust alone.
For instance, say that you choose your first child as your executor. You trust your child and know that he or she has your best interests at heart. Unfortunately, your child may not have the financial or legal experience to fulfill his or her responsibilities. If your executor makes a mistake, it could cost your family money. Sometimes, family is not the best choice.
Not Speaking to a Potential Power of Attorney
A power of attorney must understand finances, work with accountants and pay close attention to details. On top of the practical skills, your power of attorney should be trustworthy. When you make your choice, consider the people that you trust and who share your same values. This person needs to act in your best interests with legal and financial matters.
Given the magnitude of this job, you should talk with your potential POA in advance. Discuss your financial and legal affairs along with the duties and responsibilities that a power of attorney has. This discussion can help shed light on whether your choice is right for the job.
Prioritizing Family Over Financial or Legal Experts As Trustees
As with the executor of the will, it is easy to choose a family member or trustworthy loved one as your trustee. While trust is important, it is not necessarily the only factor. The trustee protects and invests your trust assets. He or she will also administer your trust. If he or she has no financial or legal understanding, then he or she may not be able to administer the trust properly.
As you prepare your estate plan, it never hurts to discuss your options with a lawyer, like an estate planning lawyer from Klenk Law. An attorney will provide you with guidance as you choose your fiduciaries.