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Establishing an estate plan is crucial to ensuring that your assets and family are protected and provided for in case of a disability or death.   However, education about the estate planning process is also key to ensuring that the plan is carried out effectively.  When a loved one loses capacity or passes away it is often an overwhelming and daunting task for the chosen person to settle the estate.  For that reason, it is vital that those chosen helpers (successor trustees, agents, guardians, etc.) get the education they need in order to fulfill their duties.

First and foremost the chosen fiduciary needs to know what specific role they have been asked to fulfill, including their duties, responsibilities, rights, and potential liability.  For all of these fiduciary positions these issues are governed by state statute as well as in the documents conferring the power.  Therefore, it is important to read the documents themselves carefully.  Because trusts are essentially contracts, the provisions within the trust governing the trustee position can vary depending upon the wishes of the trustmaker/grantor.  For example, whether a trustee will be compensated for its services will depend upon the trust.  Also, whether or not the trustee is obligated to provide an accounting to beneficiaries on a regular basis will depend on the document. 

It is also important for fiduciaries to understand how and when the fiduciary is able to exercise their power.  For example, for an agent nominated under a Durable Power of Attorney the person assigning the power usually has to be deemed incapacitated before the agent can act on their behalf.  This is referred to as a “springing power.”  However, there are other types of powers of attorney which are immediate.  For a successor trustee to take control, the trustmaker/grantor must be unable to act, resigns, or passes away.  Guardians must be appointed via a formal court process even if they have been nominated within the Will or Trust. 

Finally, the fiduciary needs to know how to do their job.  A successor trustee needs to know how to follow the instructions within the trust to meet all legal requirements and administer the estate privately.  The executor of the Will needs to know how to administer the estate through the probate court system.  Each of these processes entail different procedures, legal requirements, and actions dependent upon the specific instructions in the documents and governing state law.

Most individuals nominated to serve as fiduciaries are family members and friends, not experienced professionals.  This can make it very difficult and daunting for these individuals.  I always advise that fiduciaries seek appropriate tax and legal advice in performing their duties in order to ensure they are performing their duties correctly and to and protect themselves from potential liability.

For more information about estate settlement, visit http://www.familywealthlawgroup.com/settlement.html

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