By Tim Kirk, Heyl, Royster, Voelker & Allen
When creating an estate plan, an important decision is who to name as your fiduciary. A fiduciary is a fancy legal term for the person who will take care of your property for you if you are unable to do it yourself, such as an agent under a property power of attorney, the trustee of a trust, or the executor of an estate. Your first instinct might be to name one of your children as a fiduciary. Most of our clients do just that. But, if none of your children have the required financial skills, or if you want to avoid conflict among your children, that might not be the best option.
When naming a fiduciary, it is important to be able to trust the individual, which is why people often name one or more of their children as their fiduciaries. However, problems can arise when a parent names one or more of their children as a fiduciary. Your children may not be the best fiduciary for several reasons:
- A child may not have the financial and bookkeeping skills that are required;
- It may be hard for a child to be completely objective when making decisions;
- Children may disagree over many things, including the selling of assets, the division of personal property, and the timing of distributions; and
- Children often don’t communicate with each other well.
When children are named as a fiduciary, problems often arise between family members. Also, many times your children already have very busy lives and they simply don’t have the time to serve as your fiduciary.
An alternative is to hire a professional fiduciary. A professional fiduciary can be a bank with trust powers or a trust company. The attorney who is drafting your estate planning documents can recommend a good professional fiduciary in your area. A professional fiduciary will charge a fee, but it is our experience that the fees are reasonable and well-earned. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under the professional’s guidance.
To ensure that your family has some oversight with a professional fiduciary, you can include a provision in your estate planning documents that allows one or more family members to replace the fiduciary if they feel the professional is not doing a good job. This will allow your family to be able to make sure the fiduciary is performing properly without having the burden of acting as the fiduciary.
An experienced elder law attorney can help you make sure that you name the right fiduciary for your estate plan and for your family.
For more information, you may reach Tim at Heyl, Royster, Voelker & Allen, 300 Hamilton Blvd., Peoria, IL 61601, or call (309) 676-0400.