Who Are Your People? Considerations for Selecting Fiduciaries

Putting together an estate plan often involves thinking about details that seem simple at first but become complicated the further we dive in. For example, a topic that commonly causes our clients “decision paralysis” is the selection of individuals to serve in fiduciary or agent roles. All estate plans that we put together involve selecting individuals to serve as Executor, Healthcare Directive Agent, and Power of Attorney. If you have minor children, you will also select a Guardian. If a Trust is part of your estate plan, you will also select a Trustee.

What can make these selections difficult are questions of trust, lack of knowledge, and a general fear of lack of control. In this article, we hope to ease these concerns by explaining the fiduciary and agent roles and suggesting some considerations to help guide your decision making.

Executor

Role: Your Executor is responsible for probating and carrying out your Will if any of your assets pass to your probate estate. Your Executor will handle tasks such as distributing assets to your beneficiaries, selling assets such as real estate when necessary, paying debts, and generally making sure anything owned in your name is properly handled.

Common choices: Spouse, sibling(s), adult children, close friends. We recommend choosing a “first choice” person and at least one “back-up” person.

While we recommend choosing one person for this role, you may choose two people to serve as Co-Executors.

Considerations: The person, or people, you choose to serve in this role should not only be trustworthy, but organized and responsible. They will likely need to communicate with multiple people and will be responsible for maintaining at least minimal records. They will need to manage estate money and estate assets in a manner that adheres to the law and to your wishes during a process that usually takes about 6-12 months.

Guardian (only applicable if you have minor children)

Role: Your Guardian will be responsible for caring for your children in the event both parents pass away. Your Guardian will assume the role of parent until your children are grown.

Common choices: children’s grandparents, your sibling(s), your close friends. We recommend choosing a “first choice” person and at least one “back-up” person.

While we recommend choosing one person for this role, you may choose two people to serve together as Guardian.

Considerations: The person, or people, you choose to serve in this role should be reliable and prepared to care for your children full-time. It is generally best if the person you choose has an existing relationship with your children.

Trustee  (only applicable if we do trust planning as part of your estate plan)

Role: Your Trustee is responsible for managing assets in trust, including making investment decisions and distribution decisions.

Common choices: spouse, your sibling(s), adult children, close friends or trusted advisors. We recommend choosing a “first choice” person and at least one “back-up” person.

While we recommend choosing one person for this role, you may choose two people to serve together as Co-Trustees.

Considerations: The person, or people, you choose to serve in this role should be financially literate, levelheaded and comfortable making decisions that are in the best interests of the beneficiaries of the trust. It is common for people to hire a professional Trustee to serve as Co-Trustee with a sibling or friend, or to serve as sole Trustee. Depending on your instructions in the trust, the job of a Trustee may last for years or even decades.

Agent under a Power of Attorney

Role: In the event you are incapacitated, the person you choose to serve as your Agent under your Power of Attorney will assist with handling assets owned in your name and your other personal financial affairs. Common tasks could be paying your bills, filing your taxes, or managing your investment accounts.   

Common choices: Spouse, sibling(s), adult children, close friends or trusted advisors. We recommend choosing a “first choice” person and at least one “back-up” person.

Considerations: The person, or people, you choose to serve in this should be financially literate, responsible, reliable, and organized.  

Agent under a Healthcare Directive

Role: In the event you are incapacitated, the person you choose to serve as your Agent under your Healthcare Directive will make medical decisions on your behalf and express your preferences regarding healthcare to your doctor and family.

Common choices: Spouse, sibling(s), adult children, close friends. We recommend choosing a “first choice” person and at least one “back-up” person.

Considerations: The person, or people, you choose to serve in this should know you very well and feel comfortable making difficult decisions regarding your end-of-life care.

One final note: it is perfectly acceptable (and fairly common) for the same person to be named as your fiduciary in all of these documents. For example, married couples will often name their spouse as Executor, financial and healthcare Agent, and Trustee. But it is also possible to have different people appointed to different positions, depending on their strengths and your circumstances.

Ultimately, you know your family, friend, health, and financial situations better than anyone else. What is important is to choose people who make you the most comfortable handling these areas of your life.