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The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com
1
THE ROLE OF
FIDUCIARIES IN
YOUR ESTATE PLAN
It Is Imperative that You Understand What Each Fiduciary Role
Encompasses and What Should Be Considered
When Making a Decision About Whom to Appoint
JOHN R. VERMILLION
The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com
2
Creating a comprehensive estate
plan requires careful thought,
foresight, and planning. Numerous
decisions must be made during the
course of your estate plan creation.
Most people assume that decisions
regarding the distribution of estate
assets are among the most
important decisions that need to be made in an estate plan.
While those decisions are certainly necessary, the fiduciary decisions you make in
your estate plan often exert more influence over the success of your plan than any
other decisions. For this reason, it is imperative that you understand what each
fiduciary role encompasses and what should be considered when making a
decision about whom to appoint.
EXECUTOR
A well constructed last will is going to include the selection of an executor. People
often make the mistake of naming an executor without giving much thought to
the duties and responsibilities that go along with being the executor of an estate.
The complexity of an executor’s role will depend, to a large extent, on the size,
complexity, and value of the estate being probated; however, there are some
duties and responsibilities that are common to almost all executor positions,
including:
The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com
3
 Locating and Inventorying Assets
Your executor must locate all estate assets, tangible and intangible, real and
personal. All assets must be inventoried and the inventory submitted to the
appropriate court in a formal probate.
 Valuing Estate Assets
The value of estate assets must be determined. Often, this requires retaining the
services of professional appraisers. A real estate appraiser may need to be hired
to value real property while professional estate appraisers may need to provide
values for other estate assets.
 Opening Probate
The executor must prepare all of the documents needed to officially open the
probate of your estate. For moderate to large estates this is usually done with the
assistance of an estate planning attorney; however, your executor ultimately has
the responsibility to open and oversee the probate.
 Notifying Creditors
Once probate has been opened, creditors of the estate must be notified. In some
cases this is done individually; however, the public at large must also be notified
via publication in a local newspaper.
 Reviewing Claims
Creditors of the estate then have a specific amount of time within which to file a
claim against the estate. Your executor must review all claims and decide whether
to approve them or not. If approved, they are paid out of estate assets. In they are
not approved the claimant may decide to appeal to the court, in which case your
executor must oversee the litigation of the claim.
The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com
4
 Defending Challenges
If a will contest is filed, your executor has the responsibility to defend your estate
in the litigation of the will contest that follows.
 Paying Taxes
Your estate must file a tax return. Your executor is responsible for preparing and
filing the return.
 Transferring Assets
At the end of the probate process your executor must complete all necessary
documents to effectuate the legal transfer of estate assets to the proper
beneficiaries.
TRUSTEES
Trusts have become a more common
addition to even a basic estate plan in
recent years. All trusts require the
maker to appoint a trustee.
Appointing a successor trustee is also
commonly done. The trustee of a trust
has a wide variety of duties and
responsibilities, including:
1. Fiduciary Duty
A trustee has a fiduciary duty to the trust and all current and remainder
beneficiaries. A trustee must use an even higher standard when administering a
The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com
5
trust and investing trust funds than would be used with his or her own funds or
investments.
2. Trust Terms
Unless they are illegal or unconscionable, the trust terms must be followed.
3. Accounting
A trustee must keep very precise and accurate accounting records. An accounting
is usually required to be provided to beneficiaries each year as well. In addition,
because a trust is a separate legal entity, tax returns must be prepared and filed
each year.
4. Discretion
Some trusts provide the trustee with very little discretion while others provide a
trustee with wide latitude in making decisions regarding investment and
distributions. If your trustee has a considerable amount of discretion, your
trustee can significantly impact the success or failure of the trust.
AGENTS
An agent is someone to whom you give legal authority to act on your behalf.
When you execute a power of attorney, for example, the person to whom you give
authority is your agent. Another important area of your estate plan where you
may appoint an agent is in the area of incapacity planning. Texas recognizes four
different types of advanced directives. A medical power of attorney is the
advanced directive that allows you to appoint someone to make healthcare
decisions for you if you become incapacitated. The agent you appoint in a medical
power of attorney may make three very important decisions for you:
The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com
6
1. Agreeing to or refusing medical treatment
2. Deciding not to continue medical treatment
3. Making decisions to stop, or not start, life-sustaining treatment
GUARDIANS
If you have minor children, or plan to have them in the future, you will likely
want to appoint a guardian in your Last and Testament. In the event that both
parents die, or are otherwise unable to care for a minor child, a court must legally
appoint a guardian for the child. Your Will is the only opportunity you have to let
a court know whom you wish that guardian to be.
Now that you understand the complexity of the various fiduciary roles in your
estate plan, as well as the influence they can have on the success of your plan, you
should be prepared to spend the time and attention necessary to choose the right
person for each role.
Texas Estates Code, Executors and Administrators
Elder Law Answers, A Brief Overview of a Trustee’s Duties
Lorman Education Services, The Importance of a Fiduciary in Estate Planning
Journal of Financial Planning, Selecting and Maintaining Appropriate Fiduciaries
in an Estate Plan
Texas Health Resources, Living Will
The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com
7
About the Author
John R. Vermillion
John R. Vermillion works as an estate planning and probate attorney
and is licensed to practice in Texas, Louisiana, Oklahoma, and
Tennessee. A native Texan, he graduated from Texas Christian
University in 1974 receiving a Bachelor of Arts Degree in Political
Science. In 1977, he received his Juris Doctor degree from the
Louisiana State University Law School.
Upon graduation from law school, Mr. Vermillion worked
extensively as a corporate attorney in the fields of oil and gas
exploration and production, real estate development, finance and
estate planning. He served for many years as corporate counsel and
Vice President of a private independent oil and gas company.
Mr. Vermillion is a member of the State Bar of Texas, the Dallas Bar Association, the Louisiana
State Bar Association, the Oklahoma Bar Association, and the Tennessee Bar Association. He is
a member of the American Academy of Estate Planning Attorneys and the National Academy of
Elder Law Attorneys.
Also active in his community, he currently serves as a director for the Charles Coody Classic
Golf Tournament which benefits Catholic Charities of Fort Worth, Texas. A member of the
French-American Chamber of Commerce, Louisiana Chapter, Mr. Vermillion pursues their
goal of promoting and developing commercial and financial relations between France and the
United States. In addition, he serves on the TCU Dallas Alumni Board and sponsors the Dallas
area NAMI Walkathon (National Alliance for Mental Illness).
Coming from a family of entrepreneurs, Mr. Vermillion has owned and operated his own
businesses, including an historic inn. His experience has given him a hands-on understanding
of the legal and practical issues facing his clients and their estate planning needs.
The Vermillion Law Firm, LLC
www.vermillionlawfirm.com
7616 LBJ Freeway #120
Dallas, TX 75251
Phone: (972) 386-4560
Toll Free: (888) 567-574

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The Role of Fiduciaries in Your Estate Plan

  • 1. The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com 1 THE ROLE OF FIDUCIARIES IN YOUR ESTATE PLAN It Is Imperative that You Understand What Each Fiduciary Role Encompasses and What Should Be Considered When Making a Decision About Whom to Appoint JOHN R. VERMILLION
  • 2. The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com 2 Creating a comprehensive estate plan requires careful thought, foresight, and planning. Numerous decisions must be made during the course of your estate plan creation. Most people assume that decisions regarding the distribution of estate assets are among the most important decisions that need to be made in an estate plan. While those decisions are certainly necessary, the fiduciary decisions you make in your estate plan often exert more influence over the success of your plan than any other decisions. For this reason, it is imperative that you understand what each fiduciary role encompasses and what should be considered when making a decision about whom to appoint. EXECUTOR A well constructed last will is going to include the selection of an executor. People often make the mistake of naming an executor without giving much thought to the duties and responsibilities that go along with being the executor of an estate. The complexity of an executor’s role will depend, to a large extent, on the size, complexity, and value of the estate being probated; however, there are some duties and responsibilities that are common to almost all executor positions, including:
  • 3. The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com 3  Locating and Inventorying Assets Your executor must locate all estate assets, tangible and intangible, real and personal. All assets must be inventoried and the inventory submitted to the appropriate court in a formal probate.  Valuing Estate Assets The value of estate assets must be determined. Often, this requires retaining the services of professional appraisers. A real estate appraiser may need to be hired to value real property while professional estate appraisers may need to provide values for other estate assets.  Opening Probate The executor must prepare all of the documents needed to officially open the probate of your estate. For moderate to large estates this is usually done with the assistance of an estate planning attorney; however, your executor ultimately has the responsibility to open and oversee the probate.  Notifying Creditors Once probate has been opened, creditors of the estate must be notified. In some cases this is done individually; however, the public at large must also be notified via publication in a local newspaper.  Reviewing Claims Creditors of the estate then have a specific amount of time within which to file a claim against the estate. Your executor must review all claims and decide whether to approve them or not. If approved, they are paid out of estate assets. In they are not approved the claimant may decide to appeal to the court, in which case your executor must oversee the litigation of the claim.
  • 4. The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com 4  Defending Challenges If a will contest is filed, your executor has the responsibility to defend your estate in the litigation of the will contest that follows.  Paying Taxes Your estate must file a tax return. Your executor is responsible for preparing and filing the return.  Transferring Assets At the end of the probate process your executor must complete all necessary documents to effectuate the legal transfer of estate assets to the proper beneficiaries. TRUSTEES Trusts have become a more common addition to even a basic estate plan in recent years. All trusts require the maker to appoint a trustee. Appointing a successor trustee is also commonly done. The trustee of a trust has a wide variety of duties and responsibilities, including: 1. Fiduciary Duty A trustee has a fiduciary duty to the trust and all current and remainder beneficiaries. A trustee must use an even higher standard when administering a
  • 5. The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com 5 trust and investing trust funds than would be used with his or her own funds or investments. 2. Trust Terms Unless they are illegal or unconscionable, the trust terms must be followed. 3. Accounting A trustee must keep very precise and accurate accounting records. An accounting is usually required to be provided to beneficiaries each year as well. In addition, because a trust is a separate legal entity, tax returns must be prepared and filed each year. 4. Discretion Some trusts provide the trustee with very little discretion while others provide a trustee with wide latitude in making decisions regarding investment and distributions. If your trustee has a considerable amount of discretion, your trustee can significantly impact the success or failure of the trust. AGENTS An agent is someone to whom you give legal authority to act on your behalf. When you execute a power of attorney, for example, the person to whom you give authority is your agent. Another important area of your estate plan where you may appoint an agent is in the area of incapacity planning. Texas recognizes four different types of advanced directives. A medical power of attorney is the advanced directive that allows you to appoint someone to make healthcare decisions for you if you become incapacitated. The agent you appoint in a medical power of attorney may make three very important decisions for you:
  • 6. The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com 6 1. Agreeing to or refusing medical treatment 2. Deciding not to continue medical treatment 3. Making decisions to stop, or not start, life-sustaining treatment GUARDIANS If you have minor children, or plan to have them in the future, you will likely want to appoint a guardian in your Last and Testament. In the event that both parents die, or are otherwise unable to care for a minor child, a court must legally appoint a guardian for the child. Your Will is the only opportunity you have to let a court know whom you wish that guardian to be. Now that you understand the complexity of the various fiduciary roles in your estate plan, as well as the influence they can have on the success of your plan, you should be prepared to spend the time and attention necessary to choose the right person for each role. Texas Estates Code, Executors and Administrators Elder Law Answers, A Brief Overview of a Trustee’s Duties Lorman Education Services, The Importance of a Fiduciary in Estate Planning Journal of Financial Planning, Selecting and Maintaining Appropriate Fiduciaries in an Estate Plan Texas Health Resources, Living Will
  • 7. The Role of Fiduciaries in Your Estate Plan www.vermillionlawfirm.com 7 About the Author John R. Vermillion John R. Vermillion works as an estate planning and probate attorney and is licensed to practice in Texas, Louisiana, Oklahoma, and Tennessee. A native Texan, he graduated from Texas Christian University in 1974 receiving a Bachelor of Arts Degree in Political Science. In 1977, he received his Juris Doctor degree from the Louisiana State University Law School. Upon graduation from law school, Mr. Vermillion worked extensively as a corporate attorney in the fields of oil and gas exploration and production, real estate development, finance and estate planning. He served for many years as corporate counsel and Vice President of a private independent oil and gas company. Mr. Vermillion is a member of the State Bar of Texas, the Dallas Bar Association, the Louisiana State Bar Association, the Oklahoma Bar Association, and the Tennessee Bar Association. He is a member of the American Academy of Estate Planning Attorneys and the National Academy of Elder Law Attorneys. Also active in his community, he currently serves as a director for the Charles Coody Classic Golf Tournament which benefits Catholic Charities of Fort Worth, Texas. A member of the French-American Chamber of Commerce, Louisiana Chapter, Mr. Vermillion pursues their goal of promoting and developing commercial and financial relations between France and the United States. In addition, he serves on the TCU Dallas Alumni Board and sponsors the Dallas area NAMI Walkathon (National Alliance for Mental Illness). Coming from a family of entrepreneurs, Mr. Vermillion has owned and operated his own businesses, including an historic inn. His experience has given him a hands-on understanding of the legal and practical issues facing his clients and their estate planning needs. The Vermillion Law Firm, LLC www.vermillionlawfirm.com 7616 LBJ Freeway #120 Dallas, TX 75251 Phone: (972) 386-4560 Toll Free: (888) 567-574