Who's in Charge Here? The Who, What, When and Why of Selecting a Fiduciary, 0121 SCBJ, SC Lawyer, January 2021, #28
| Author | By William G. Newsome III, Meagan L. MacBean and Jonathan E. Spitz |
| Position | Vol. 24 Issue 4 Pg. 28 |
By William G. Newsome III, Meagan L. MacBean and Jonathan E. Spitz
Sometimes we just need a little help. In the estate planning arena, clients generally need our help in two situations— while they are alive and after they die. Clients typically ask: Why and when will I need someone to help me? What is a fiduciary? What duties will my fiduciary be called upon to perform? Does my fiduciary have to be a family member? What if I don't have any family or don't trust my family? I have heard of a trustee. Do I need one? And what is a trustee?
The term “fiduciary” is defined in the South Carolina Probate Code and includes five different positions. These are agent, guardian, conservator, personal representative, and trustee.1 A fiduciary can be an individual, such as a family member, friend, or a professional, such as an attorney, financial advisor, or accountant. A fiduciary may also be an entity such as a trust company or financial institution. This article will discuss only a fiduciary acting as a personal representative, trustee, or an agent under a power of attorney.
An agent is named in a power of attorney and can make decisions for a client during their lifetime. A personal representative will manage the assets of the client once they die and will distribute the assets pursuant to the terms of the client's will or the South Carolina intestacy statute. A trustee can either manage the assets for the client during their lifetime, after their death, or both.
Agent
An agent is appointed by a client (the “principal”) to help the principal with financial and/or health care decisions during their lifetime. The guidelines for the agent are detailed in two different documents, a Health Care Power of Attorney and General Power of Attorney, or as it is sometimes known, a Financial Power of Attorney. The Health Care Power of Attorney is governed by Article 5 of the Probate Code and details the powers and requirements of an agent.2 Typically, these include the ability to make both the day-to-day and end-of-life health care decisions for the principal when the principal is unable to m make them for themselves (sometimes defined as “incapacitated”). If a client has not signed a Health Care Power of Attorney and health care decisions must be made when the principal cannot make them, the Probate Court may appoint a guardian who may or may not be the person (or entity) the individual would have chosen.[3]
As to all decisions not health care related, the principal can appoint an agent to make decisions on their behalf in a General Power of Attorney. Unlike the Health Care Power of Attorney, a General Power of Attorney may allow the agent to make decisions for the principal when they still can make decisions for themselves. A General Power of Attorney is governed by Article 8 of the Probate Code and may grant powers to the agent such as the authority to sell real property, open and manage financial accounts, and sign tax returns.4 There are certain powers that must be specifically granted in the power of attorney, such as the ability to update and amend beneficiary designations, access safe deposit boxes, and fund and modify trusts.[5] If an individual does not execute a General Power of Attorney and is unable to do so, the Probate Court may appoint a conservator to make financial decisions for the individual, who may or may not be the person that individual would have chosen. Therefore, both Health Care and General Powers of Attorney are important. These documents ensure that the principal has their health care and financial decisions made by the person of their choice, and not by someone chosen for them.
Personal representative/trustee
After death, the agent's authority ends, and the assets of the client (now the “decedent”) must be controlled and managed by either a personal representative or trustee. If the assets were in the name of the decedent at the time of death and not titled in a manner to pass outside of probate, then the assets will be handled by the personal representative, whose authority and duties are laid out in Article 4 of the Probate Code.6 The personal representative's primary responsibilities are to marshal the assets owned by the decedent on the date of death, inventory them, satisfy the last debts of the decedent, and then distribute the assets to either the decedent's heirs or devisees.
If a client wishes to achieve continuity in the management of their assets during their lifetime and after death, the client may create a trust agreement with a trustee. In many situations, the client who establishes the trust (the “settlor”) will also serve as their own trustee. However, if...
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