When planning your charitable legacy, it’s important to appoint a fiduciary that acts on your financial behalf. But what exactly does a fiduciary do, and why are they important? Today, the Alzheimer Society of Canada and RBC Wealth Management, Estate & Trust Services partner up to give you insights and tips on choosing the right fiduciary for you.
Your charitable legacy
When it comes to supporting dementia research as well as programs and services for people with dementia and their caregivers, one of the most effective ways is to leave a gift in your Will. It’s simple, personal and can have a lasting impact.
While a charitable legacy is rewarding, it’s important to know the steps to take to plan it properly. Some of which includes preparing a Will and a Power of Attorney, and keeping these important documents up-to-date. For information and resources to help you with these matters, check out the Gift in your will page.
Also, to ensure that your estate is protected during your lifetime and at your passing, it’s essential to appoint a fiduciary that’s right for you.
What is a fiduciary?
A fiduciary is someone who stands in a special relationship of trust, confidence and responsibility to someone else. When someone takes up the duty of a fiduciary, they take on a position of trust and obligation on your behalf.
Both the executor of your Will and the attorney appointed under your Power of Attorney for property* are fiduciaries, as they assume special duties and obligations for your benefit. The trustee of any trusts established either during your lifetime or in your Will is also considered a fiduciary.
Your fiduciary plays an important role in ensuring your charitable intentions are realized now and in the future. For example, if you donate annually to the Alzheimer Society and wish for those donations to continue during any period of future incapacity, you may be able to express this wish in your Power of Attorney for property.
Also, a fiduciary doesn’t have to be an individual—a company could act in the role.
What are my choices?
When deciding who to appoint as your fiduciary, you have two basic choices:
- An individual – Most people appoint a family member or close friend.
- A trust company – Note that trust companies may not act as an Attorney for personal care.
Choosing the right fiduciary for your personal situation is crucial to the success of your estate plan. However, many people do not give this important decision enough thought. So, what should you be looking for in your potential fiduciary?
What qualities should my fiduciary possess?
In order to ensure that your affairs are properly managed in accordance with your wishes. your fiduciary should, first and foremost, be honest and trustworthy. In addition, your fiduciary should:
- possess good judgement,
- have the time and inclination to act,
- be located near you geographically for convenience (appointing a fiduciary who resides outside the country may create additional legal and/or tax concerns),
- not be in a real or perceived conflict of interest, and
- understand their duties and possess the required expertise to fulfill the role.
Whether your fiduciary is an executor or an attorney, the desired attributes are essentially the same. As such, many people appoint the same individual or company to both roles. Depending on the situation, the role of attorney may last for many years, which imposes long-term obligations and should be considered when choosing an attorney.
When should I consider appointing a corporate fiduciary?
A corporate (or professional) fiduciary can be the preferred choice for many individuals. A corporate fiduciary may be the best choice for someone who has:
- no qualified family members living close by,
- complex assets (e.g., high-net worth, commercial assets),
- a blended or non-traditional family,
- beneficiaries or assets located out of the country or province,
- family members with special needs,
- concern over the potential for family/beneficiary conflict, or
- a desire to ease the burden on loved ones at a difficult time.
A corporate fiduciary can be appointed to act alone, or as co-fiduciary along with a family member. The latter may be appropriate if you want to ensure continuity and personal input without imposing an administrative burden on a loved one. When appointing individuals to these important roles, a co- or alternate should be appointed to ensure there is always someone available to act.
What will a fiduciary do after I die?
At your passing, your executor may be called upon to engage in more sophisticated post-mortem planning in order to ensure that the charitable gifts in your Will are made in the most tax-effective manner. This is done to maximize the benefit for your estate and the recipient charity.
Choosing the right fiduciary for your personal situation is key to ensuring that you and your charitable legacy will be protected, both during your lifetime and at your passing. When preparing or updating your personal estate plan, always remember to seek legal and tax advice.
Want to learn more about leaving a charitable bequest to the Alzheimer Society of Canada? Visit the Gift in your Will page.
* For most of Canada, the person who sets up the Power of Attorney is known as the “donor,” and the individual chosen to act on the donor’s behalf is called the “attorney.” Here, the term used is “Power of Attorney for property.” Depending on the province/territory, the term used to describe a Power of Attorney document for property that can be used during the donor’s incapacity may vary. Some provinces/territories may refer to it as a “continuing” or “enduring” Power of Attorney. In Quebec, it is referred to as a “Protection mandate.” Please check with your jurisdiction’s legislation for the appropriate term.
RBC Estate & Trust Services refers to Royal Trust Corporation of Canada and The Royal Trust Company. This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and certain divisions of the Royal Bank of Canada. *Member-Canadian Investor Protection Fund. Each of the Companies and the Royal Bank of Canada are separate corporate entities which are affiliated. The information provided in this document is not intended as, nor does it constitute, tax or legal advice. The information provided should only be used in conjunction with a discussion with a qualified legal, tax or other professional advisor when planning to implement a strategy. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence. ©Royal Bank of Canada 2018. All rights reserved.