Simply, a fiduciary is a trusted person, who has a responsibility to act on your behalf and in your best interest. Carefully choosing a fiduciary is one of the most important decisions when it comes to estate planning. Estate plans typically nominate several fiduciaries, such as personal representatives, trustees, powers of attorney, guardians, and conservators. Clients with adult children often name these adult children as their fiduciaries because they feel like this is the most fair...
Simply, a fiduciary is a trusted person, who has a responsibility to act on your behalf and in your best interest. Carefully choosing a fiduciary is one of the most important decisions when it comes to estate planning. Estate plans typically nominate several fiduciaries, such as personal representatives, trustees, powers of attorney, guardians, and conservators. Clients with adult children often name these adult children as their fiduciaries because they feel like this is the most fair or equitable approach… often naming the adult children in the chronological order of their birth or all together as co-fiduciaries.
The rationale behind these common strategies with adult children is admittedly noble in that they seek to avoid the appearance of favoritism. However, attempts to appear fair should be approached with caution. Subjectively naming an adult child to be a primary fiduciary simply because he or she is the oldest or naming all of the adult children as co-fiduciaries can often lead to unnecessary problems in an estate plan. The role of a fiduciary often requires business acumen, responsible accounting, money management, and responsive communication. The oldest adult child may simply not be the one that is best suited for the responsibilities and challenges of the job. Additionally, when it comes to co-fiduciaries, reasonable people (who even get along with each other) can reasonably disagree and if they all have equal decision-making power, this can lead to unnecessary delay and ultimately costly judicial intervention.
Rather than viewing fairness as first in time… first in right or as everyone having equal authority, one should consider viewing fairness as simply matching a particular person with the particular functions of the role. Creating an estate plan is in some ways like managing a business. Good business managers intentionally seek to match certain skill sets to their coordinating job descriptions… regardless of age or any other demographical attribute.
It is wise to have a responsible person, who is able to manage multiple facets of a project and who possesses experience and knowledge about finances to be the primary personal representative and financial power of attorney. It is likewise advisable to have someone who handles pressure well and is able to objectively decipher a lot of information quickly to be the primary medical power of attorney. It is not about playing favorites between children, it is about putting the best person in the best position to succeed. After all, one may actually find that the child they did not name is actually relieved to not have been given such responsibility... especially if the responsibility was placed upon them simply because he or she was the oldest.
Co-fiduciaries can often create unnecessary delays in the execution and management of an estate plan. If impassible indecision or disagreement arises, then families and estates can easily find themselves spending a lot of money and resources on legal fees… ultimately having a judge make decisions instead of a trusted family member. It is especially unadvisable to have co-medical powers of attorney because any delay could be life-threatening. If co-fiduciaries are a must, then one may at least consider giving each of them some authority to act independently of one another and putting into place an internal dispute resolution structure so that impasses and disagreements are amicably resolved within the estate plan as opposed to inside a court room.