What is a fiduciary?
A fiduciary is an individual or institution designated to act on behalf of and for the benefit of another. In the estate planning and estate administration context, the fiduciary is most often an agent, executor or trustee, but can also be the guardian for a minor or otherwise incapacitated individual or anyone else acting on behalf of and for the benefit of another.
What is the role of an attorney-in-fact?
An agent (formerly called an attorney-in-fact) is the individual or institution designated in your Durable General Power of Attorney to assist you in the management of your financial and administrative affairs in the event of your incapacity. Depending upon the powers granted in the power of attorney document, an agent will be responsible for (i) paying bills, (ii) managing your real estate, accounts (cash, taxable investments, retirement, etc.) and other assets and (iii) taking any other steps necessary to carry out your financial and administrative affairs.
What is the role of an executor?
An executor is the individual or institution designated in a Last Will and Testament and charged with carrying out the terms of the will and complying with local and state laws and the administrative process required by the court. An executor is responsible for (i) meeting all the reporting and filing requirements to administer and settle the probate estate as required by the probate laws of the state where the decedent was living at the time of the decedent's death, (ii) paying all of the decedent's last bills, funeral expenses, and estate administration expenses, (iii) filing final income tax returns and estate tax returns (if necessary) and paying any income and estate taxes due and (iv) distributing all of the decedent's assets in accordance with the directions in the decedent's will.
What is the role of a trustee?
A trustee is the individual or institution designated in a will (establishing a testamentary trust) or trust (revocable or irrevocable) and charged with managing the trust assets for the benefit of the beneficiaries of the trust. The trustee's job description is usually defined in the document appointing the trustee (will or trust). The trustee must carefully follow the directions in the governing document as well as the state laws that govern trustees. Generally these responsibilities include (i) working with the beneficiaries to meet their needs in accordance with the governing document, (ii) supervising the investment of the assets held in the trust in accordance with the governing document and the appropriate state laws, (iii) making distributions to or for the benefit of the beneficiaries in accordance with the governing document and (iv) filing trust income tax returns.
Is a fiduciary entitled to compensation?
State law governs compensation for fiduciaries, but most will provide that fiduciaries are entitled to “reasonable compensation.” Executors' fees are subject to the approval of the Commissioner of Accounts, as are the trustees' fees in connection with trusts under wills. We recommend that you investigate and compare the potential fees of the fiduciaries you are considering naming as agents, executors and trustees.