When it comes to managing a person’s affairs after their passing, it is important to distinguish between two significant roles: fiduciaries and executors.
According to a recent survey by the National Association of Estate Planners & Councils, 63% of individuals do not fully comprehend the disparities between these roles.
Fiduciary vs. executor definition
A fiduciary is a person entrusted with managing the financial affairs of another. They have a legal and ethical obligation to act in the best interests of the individual or entity they are serving. This role often arises in situations like trusts or guardianships. Fiduciaries make decisions that align with the wishes and interests of the individual who appointed them.
An executor is responsible for executing the terms outlined in a person’s will after their death. This includes tasks such as distributing assets, paying outstanding debts and carrying out the deceased’s wishes in accordance with the law. The executor’s role concludes once they settle the estate’s affairs.
Scope of authority
One of the primary distinctions between these two roles lies in the scope of authority. A fiduciary’s responsibilities may extend over a longer period, depending on the arrangement. They often have ongoing duties, whereas an executor’s role typically lasts until they resolve all affairs related to the estate.
Appointment process
Fiduciaries are usually appointed by a legal document, such as a trust agreement or court order. In contrast, people normally name an executor in their will. The individual granting authority can choose both roles, but they serve different functions.
Decision-making power
Fiduciaries make financial decisions in the best interest of the person they represent. This can involve managing investments, paying bills, and ensuring financial security. Executors, however, solely focus on implementing the deceased’s wishes.
Understanding the distinctions between fiduciaries and executors is key to proper estate management. Clear communication and informed decision-making will provide peace of mind for all parties involved.