Fiduciary services can be necessary in a wide range of situations. For estate planning purposes, you may need them when you cannot or do not wish to manage your finances. People who act as fiduciaries may be personal representatives, trustees and others.
Before you appoint someone you know to these roles, consider three situations in which it may be wise to have outside parties provide fiduciary services.
You have no suitable parties close to you
As you get older, there may be fewer and fewer people close to you who are able – and willing – to provide fiduciary services. These services can be necessary if you are ill, incapacitated or pass away and cannot handle your finances.
If you do not have an adult child, spouse or sibling who can adequately manage your estate finances, seeking outside help can be a good option.
You don’t want to burden loved ones
Even if you do have people close to you who could or would be capable of providing fiduciary services, the fact is that it is a serious responsibility. Fiduciaries have several duties, including:
- Paying debts
- Safeguarding assets
- Managing investments
- Locating and collecting property
- Appraising assets
These and other responsibilities are time-consuming and can be financially complex. In some cases, they are less of a service and more of a burden for someone you love.
Further, if they make mistakes or poor decisions, they could face harsh consequences, including legal motions and financial penalties for breaches of fiduciary duties.
Your personal relationships are too complicated or contentious
Someone in the role of a personal representative, guardian or trustee may have to navigate difficult personal relationships. If you have estranged family members, contentious relationships or infighting among relatives, having one of them in a position to make financial decisions can be a recipe for disaster.
Under these circumstances, having a neutral outside party manage these complex matters can make things easier for everyone.
Those providing fiduciary services should be honest, trustworthy and capable of handling their many responsibilities. If you do not have or want someone close to you taking on these duties, seeking the help of professionals can be in your best interests.