So you live in Michigan and have finally decided to create an estate plan and it is time to choose a fiduciary – but what does that really mean?
A fiduciary is an individual that stands in a special relation of trust, confidence, or responsibility in certain obligations to the testator. Michigan law creates several different types of fiduciary positions for estate planning.
Fiduciaries, such as a personal representative and trustee, owe obligations of prudence, reasonableness, and loyalty to the person for whom he or she acts.
A personal representative settles an estate in Michigan. In general, the personal representative must observe the “standard of care applicable to a trustee” and must settle the estate “as expeditiously and efficiently as is consistent with the best interests of the estate.” MCL 700.3703(1). For these purposes, the personal representative has broad authority to engage in a wide range of transactions.
A trustee has “all powers over the trust property that an unmarried competent owner has over individually owned property” and “[a]ny other powers appropriate to achieve the proper investment, management, and distribution of the trust property.” Thus, absent a restriction in the statute or the trust instrument, a trustee possesses very broad powers to act, so long as the powers are used prudently and in line with the purposes of the trust.
A power of attorney is a person that has powers conveyed to him or her through state statute. A person is selected as an “agent” by the document signor. Often, the agent is also referred to as an “attorney-in-fact” or “power of attorney”. As noted in our prior post, a power of attorney can convey specific or general all encompassing powers to an agent. The power of attorney is designed to avoid BOTH guardianship and conservator pursuant to state law.
Although fiduciaries are granted broad authority, they are critical for the distribution of your estate. Thus, is it important to carefully consider which individuals can be trusted with this power, and who will use this power to your benefit, by administering your estate in the most favorable manner.
For more information on the selection of fiduciaries, as well as, a more in depth discussion on their powers, contact your Michigan estate planning attorneys at Serafini, Michalowski, Derkacz & Associates, P.C. at either 1 (866) 529-3537; locally in Metro Detroit at (586) 264-3756; or, in West Michigan at (616) 931-3670.