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Step 3: Choosing your Fiduciaries Wisely:

Image result for financial planningIn our financial services practice, one of the first questions we ask a new client is, “do you have a will?” The answer, it seems, is almost inevitably “no.” Most of our clients don’t neglect their wills because they don’t have the time, or because they don’t want to pay the legal fees, or even because they don’t consider it important. We have found that they often don’t have wills because they are afraid to make the wrong decision about who should be their fiduciaries. The fiduciaries are the executor, the guardian and the trustees. Clients are often afraid that someone they pick won’t be able to do the job, or they are afraid of offending someone by not selecting them. Often they just can’t think of anyone who they trust. This is particularly true when a special needs child is involved.

Here are a few pieces of information to help make the decision process easier. To start, you should understand the different types of fiduciaries. The Executor executes your Will. They clean up after you, distribute your assets to the heirs and trusts and pay your outstanding bills and taxes. The Trustee manages and distributes assets left to a trust for the benefit of an heir, such as a minor or disabled child. The Guardian raises your child if you cannot. Choosing a Guardian is perhaps the most difficult planning decision you will make. The Guardian will be responsible for your child until they reach the age of majority (usually 18). For families with special needs children, the Guardian is taking on a commitment that may last your child’s entire life.

It is important to know that your selection of fiduciaries is not irrevocable. They can be changed and sometimes should be. Grandparents can become too old or pass away; siblings grow up and can take on fiduciary responsibilities; trusted friends move in and out of one’s life. In addition, the fiduciary can have multiple roles or just one. It may be most convenient and appropriate to have the Guardian of your child also be the Trustee of their assets. However, if the Guardian isn’t comfortable managing money or, if you feel it creates a conflict of interest, select someone else to be the Trustee. Further, fiduciaries can hire help. If a fiduciary is not familiar with the financial, legal or accounting issues of the role they have been tasked with, they can hire professionals to guide them. This includes assistance navigating the educational or governmental services available for the special needs child, or even emotional support in dealing with the new responsibilities. The cost of that advice is usually paid for by the estate.

If you are worried about offending a friend or family member by not selecting them to be a fiduciary, it is important to know that you only need to discuss your selection of fiduciary with the candidate of your choosing. You are not required to tell anyone else. If you cannot think of an appropriate person for any of the fiduciary roles, there are professional fiduciaries available including banks, trust companies, legal firms, charities, and more.

Finally, think about your choice of fiduciaries before you sit down with the lawyer. The lawyer’s office is not the best place to have the argument with your spouse about whether your sister would be a better choice than your spouse’s brother.

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California Insurance License #: 0J12618, 0I43753

Zev Grossman Bruce Maier Aron Mestel Ainka Munroe has earned the Retirement Planning Specialist (RPS) title. The Retirement Planning Specialist title is awarded by Equitable Advisors, based upon the Financial Professional's (FP) receipt of a Certificate in Retirement Planning from the Wharton School, University of Pennsylvania. In a collaboration between the Wharton School and Equitable Advisors' affiliated life insurance carrier, coursework for the certificate was developed exclusively for Equitable Advisors FPs, and the title may be used only by FPs who have completed the required coursework and maintain the title through ongoing continuing education requirements. To verify that an FP has earned and holds the title in good standing, contact us at atretirement@equitable.com. Complaints about an Equitable Advisors FP should be directed to customer.relations@equitable.com.

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