Description: An agent is a person or entity that manages the assets of others for various reasons. You may need an agent to provide beneficiaries in your estate plan, for investments, or for charitable donations. Each type of agent has specific duties based on the type of will you have created, but they all have general duties according to the law.
How does an agent work?
Description: An agent is a person who holds and manages property rights on your behalf. You give the agent these property rights by signing a legal document. We can say that the agent represents you and has specific legal authority to act on your behalf.
Property is something of value that you have the legal right to own and use, such as money, buildings, investments, and vehicles. Business assets, such as intellectual property including copyrights and patents, are also considered property.
Estate is the total property – real property (land and buildings) and personal property (everything else including cars and bank accounts) – that an individual owns before it is distributed through a living will or a will after death.
Executors vs. Agents
Description: An executor is a type of agent tasked with executing the instructions in the will. The entity responsible for managing the property stated in the will, including those created by the will. Executors can be individuals, bank agents, attorneys, or other professionals.
An agent can be involved in managing the estate if there is an active will in the estate. This is referred to as a “testamentary will.” The will instructs the executor to form the estate and transfer some real property into it, which will then be managed by the agent named in the will. The agent manages the testamentary estate after the administration process is complete.
Types of Agents
Description: The will is a legal document created by an individual to protect their assets and, after their death, to protect the beneficiaries – those appointed to receive the assets.
A critical part of preparing the will is selecting the agent. You can choose an agent for estate planning, tax planning, medical planning, and charitable donations, and the agent can manage and invest the property in the will during the lifetime of the will’s creator, after their death, or both.
Some specific types of agents include:
- Investment agents: They make daily decisions regarding investments in a personal portfolio or a business investment account.
- Estate agents: They take responsibility for matters when the will’s creator dies or becomes incapacitated and cannot manage their affairs themselves. In this case, the will’s creator is the primary agent and the successor agent is the secondary.
- Bankruptcy agents: These are special agents appointed by the Department of Justice in the United States to manage and oversee the bankruptcy process of an individual or business. They typically take legal control of the assets during the administration period before the bankruptcy liquidation.
- Charitable agents: They manage the assets in charitable foundations and distribute them to designated charities according to the wishes of the estate owner.
Duties of an Agent
Description: The agent stands in a fiduciary position to the grantor (the person who gives authority to the agent). The agent is in a trusted position representing the testator or person preparing the will or estate.
The agent’s duties include:
- Accounting for all funds in the person’s estate or will.
- Loyalty to the person’s wishes (no conflict of interest).
- Obedience to all legal orders of the grantor.
Other duties of the agent include:
- Acting in accordance with the will document, as long as the terms are legal.
- Avoiding conflicts of interest and remaining neutral with beneficiaries, prioritizing the document.
- Keeping the estate’s property and assets separate from assets owned by others.
- Exercising reasonable care and skill in managing the estate and investing the estate’s assets.
- Diversifying investments unless it would be imprudent to do so.
- Maintaining detailed records.
- Providing periodic reports to beneficiaries and federal and state agencies.
Tax Duties of Agents
Description: Taxes must be paid on the income generated from estate assets during the life of the estate, and taxes may include both income taxes and inheritance taxes. The Internal Revenue Service requires the filing of income tax returns on income and gains and losses from estate and will assets on IRS Form 1041 annually. There may be additional inheritance taxes after the death of the will’s creator, the person who created the will.
Is
Can Anyone Be an Agent?
Description: It is common to think of asking someone you know to be your agent so you can save some money, but this is not without some drawbacks. Managing a will requires a specialist who can navigate the tax, legal, and agency obstacles. It is best to find a lawyer who specializes in the type of will you wish to set up to assist you in its preparation. Due to the laws and regulations surrounding wills, appointing a professional agent – such as a chartered agency (a profit-making business) or a banking agency department – to manage your will may be a more viable solution.
Source: The Balance
Source: https://www.thebalancemoney.com/what-is-a-trustee-3505115
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