Many estate planning clients come to us unsure about who should fill the various fiduciary roles in their estate plans. A “fiduciary” is a person or organization who acts on behalf of others. This often involves the management of another’s assets. The personal representative named in your will, your agent under your financial power of attorney, your agent under you healthcare power of attorney, and your trustee, are all fiduciaries.
For some clients, friends and family fill all of these rolls. For other clients, deciding on a fiduciary is much trickier. They may not want to burden their loved ones with their care as they age. Or, they may not have loved ones nearby that they trust to manage their affairs. Perhaps, they suspect if they choose a loved one, family tensions will heighten at an already delicate time. Or, maybe they just need a back up fiduciary in case a loved one predeceases them. Whatever the reason, a private fiduciary may be the right option for those clients.
Types of private fiduciaries
In Arizona, there are three categories of private fiduciaries- banks, law firms who do case management work, and individuals/ companies who act as fiduciary without the law firm component. In Tucson, there are a couple of organizations in each category and several reasons why a client may choose one private fiduciary over another.
When we refer clients to private fiduciaries we look at the whole picture of what a client needs. For example, we may consider what services they are looking for- financial management, healthcare management, or both. We also consider how soon a fiduciary’s services may be needed. We may also consider what sort of budget the client has, their existing relationships with professionals and the level of involvement they are seeking from a fiduciary.
Don’t pick your fiduciary blindly.
This is not a decision you want to make by drawing names out of a hat. Finding the right fiduciary for you is all about finding a good fit. Before you pick who will serve as your fiduciary, schedule meetings with the organizations you are considering. Most private fiduciaries are open to meeting with prospective clients to discuss their services and answer their questions. This is a good opportunity to ask questions and check that your values align. Remember, this organization may be making decisions about your assets and health when you are unable to. It’s important that you enjoy working with them and have a clear understanding of what they can offer.
Don’t be afraid to ask a lot of questions when you are meeting with a potential fiduciaries. Some questions to consider:
- What is your fee schedule? How do you set fees?
- How long have you been in business? What is your succession plan?
- How big is your team? Can I meet others from your team? Does your team have capacity to ______________?
- Will you serve as a healthcare agent/ financial agent/ trustee/ personal representative?
- How many clients are you serving now? What is your case load like and how do you prioritize?
- What happens if there is an emergency during times when your office is not open?
The list goes on. Also think about questions related to your specific situation. If you have a house, you may want to check if a prospective fiduciary has a property manager. If you have a trusted financial advisor, will your fiduciary continue to work with them?
The right private fiduciary for the right job.
After meeting with a few fiduciaries, you may realize that some private fiduciaries are better equipped to handle one role better than another. For example, depending on a variety of factors, it might make sense to have your bank act as a trustee. It probably does not make sense for a bank to act as your agent under a healthcare power of attorney.
The good news is, you don’t have to pick the same person for every job! You can pick a private fiduciary for one job, and a friend or family member for another. You can also pick one or multiple private fiduciaries for all of the roles.
Share!
Once you have decided on a private fiduciary, tell them you’ve chosen them! It’s best to do this before you sign your documents. That way, your fiduciary can provide any special language that they may want included in the documents. They may also want a chance to review the documents before you sign them to make sure they are up to snuff and workable for you and them.
And, once your documents are signed, the relationship doesn’t stop there. Share copies of your documents with your potential fiduciaries. Tell them about yourself, your preferences and keep them up to date with any major life events or diagnoses that may impact them as your future fiduciary. You should also share with them any future updates to your documents. Signing your documents is just the beginning of a fiduciary relationship! You don’t have to touch base very often, but keeping them informed as things change will keep the relationship strong.
