In your estate planning documents you will need to designate trusted people, called fiduciaries, to fulfill certain roles, as described below. A fiduciary is a person or entity with the power and obligation to act for another under circumstances which require total trust, good faith and honesty. A fiduciary is held to a higher standard of conduct and trust than you would be handling your own affairs. The people you designate as your fiduciaries must be people you trust to fulfill their responsibilities.
What does a Personal Representative (Executor) do?
The job of the Personal Representative (sometimes referred to as the Executor) is to administer the estate and to handle the probate of the estate if needed, assisted by an attorney. The Personal Representative is responsible for collecting the assets, determining and paying debts, filing tax returns, filing accounts with the Probate Court showing receipts and disbursements and distributing the estate assets to the parties named in the will, or if the deceased did not leave a will, to the heirs-at-law. The Personal Representative is a fiduciary and must act in the best interests of the estate beneficiaries. This job normally continues over a period of one to three years. You may designate an individual as sole Personal Representative or you may have two or more persons acting together. Consider also whom you would like to name as successor or alternate Personal Representatives.
What does a Trustee do?
The Trustee has the fiduciary duty to act in the best interest of the beneficiaries of the trust. The Trustee is responsible for holding assets which are transferred to the trust, keeping accounts, safekeeping assets, filing income tax returns for the trust, and making distributions to the beneficiaries as directed by the trust instrument. Prudent investment decisions are an important part of the Trustee’s responsibilities. The Trustee is charged with a duty of utmost good faith, loyalty and fair dealing. If you are establishing a revocable trust, you can be the Trustee of your trust during your lifetime and can designate who should serve as Trustee after your death. You may designate your spouse, but it may be advisable, for tax reasons, not to give a spouse or beneficiary unlimited discretion over distributions. You may designate an individual, a professional or an institution, such as a bank, as Trustee and you may have two or more parties acting together as Trustees.
What does a Guardian do?
A legal guardian is someone appointed by the court to look after the personal affairs of a minor or someone whom the court has determined lacks the capacity to manage his or her personal affairs. If you have minor children, you should designate guardians to care for them after your death. Also, if you have an adult child with special needs, you may want to designate who should serve as guardian after your death if a guardian should be needed. The interaction between the guardian and the Trustee is important. In some cases, the person you designate as guardian is also the best choice for Trustee. In other cases, it may be more appropriate to designate different people for each role. Keep in mind that caring for children is time consuming and the people chosen as guardians may be very nurturing but may not be the best choice for managing your assets.
What does an Attorney-In-Fact (Agent named in the Durable Power of Attorney) do?
The attorney-in-fact is the person designated by you in your durable power of attorney to act for you in connection with your legal and financial affairs, such as writing checks, selling property, and managing your assets. The attorney-in-fact has a fiduciary duty to act in your best interests. It is important to understand that the durable power of attorney is effective immediately, and the attorney-in-fact can transfer your assets without any advance notice to you. For this reason it is important to only designate people whom you trust. The attorney-in-fact should be someone who can be trusted, has good business judgment and keeps careful records. If you do not have a durable power of attorney and you become incapacitated, you might need a conservator to be appointed by the Probate Court to handle your affairs on your behalf.
What does a Health Care Agent do?
The health care agent is the person designated in your health care proxy to make medical decisions for you only at such time as your physician has determined that you are not able to make, or to communicate, such medical decisions for yourself. Under Massachusetts law, only one person may serve as your health care agent at a time. However, you may name an alternate. Your health care agent must make the decisions you would have made, to the extent your preferences are known. For this reason you should make sure your health care agent understands your wishes. The health care proxy may include a living will, a document in which you express your wishes concerning life support in certain medical situations, or your living will (advance directive) may be in a separate document. It is very important to discuss these issues with your family and with whomever you designate as your health care agent to insure that he or she understands your wishes.