Who Are the Fiduciaries in My Estate Plan?
When creating your estate plan, understanding the roles of fiduciaries is crucial to ensuring that your wishes are carried out effectively and that your beneficiaries are well-protected. A fiduciary is an individual or entity entrusted with the responsibility to act in the best interest of you and/or your beneficiaries. The Indianapolis attorneys at Frank & Kraft help you understand who your fiduciaries are and the roles they fulfill within your estate plan.
What Is a Fiduciary?
A fiduciary is an individual who holds a legal or ethical bond of trust with one or more other parties. Typically, a fiduciary is responsible for carefully managing money or assets intended for the benefit of another party; however, a fiduciary may also be responsible for making decisions for another party as well. For instance, a bank’s trust department might assume a fiduciary role, safeguarding or investing funds entrusted to them by a customer whereas a legal guardian might be responsible for making decisions about where the ward lives. Fiduciaries bear the highest ethical duty towards the other party, obligating them to always act in the other’s best interests.
Fiduciaries in Your Estate Plan
Within your estate plan you will find several fiduciaries in crucial roles within your plan. Choosing the right person for each fiduciary role is critical to the ultimate success of your estate plan. Common fiduciaries found in an estate plan include:
- Executor: The Executor is a key fiduciary in your estate plan who is responsible for managing and distributing your estate assets according to the terms of your Will. Choosing a trustworthy and competent executor is vital, as this role demands a high level of integrity, organization, and financial acumen. Upon your death, the Executor’s duties begin and include things such as:
- Inventorying and valuing estate assets.
- Notifying creditors and beneficiaries.
- Reviewing creditor claims.
- Maintaining estate assets.
- Litigating challenges (such as a Will contest)
- Calculating and paying taxes.
- Distributing estate assets.
- Trustee: If your estate plan includes a trust, you will need to appoint a Trustee to manage the trust’s assets for the benefit of the beneficiaries. Trusts can be established for various reasons, such as minimizing estate taxes, protecting assets, or providing for minor children. The trustee’s responsibilities include things such as:
- Managing trust assets.Investing trust assets.Distributing trust assets.Communicating with beneficiaries.Settling disputes.Paying taxes.
- Keeping detailed records.
- Guardians: For parents with minor children, appointing a guardian in an estate plan is essential. The guardian is the person who will take over the care and upbringing of your children if both parents pass away. Selecting a guardian is a deeply personal decision and should be based on who will best serve the interests of your children, considering factors such as values, lifestyle, and relationship with the child. This role encompasses:
- Physical custody and care of your children.
- Making medical and educational decisions for your children.
- Agents under Powers of Attorney: Powers of attorney are legal documents that designate an agent to make decisions on your behalf if you become incapacitated. There are two main types:
- Financial Power of Attorney: This agent manages your financial affairs, including paying bills, managing investments, and handling property transactions.
- Healthcare Power of Attorney: This agent makes medical decisions for you, including choices about treatments, surgeries, and end-of-life care, based on your stated preferences or best interests.
Do You Have Additional Questions about the Fiduciaries in Your Estate Plan?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about the fiduciaries in your estate plan, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.Read More! Latest posts by Paul A. Kraft, Estate Planning Attorney (see all)
