Aside from not having estate planning, one of the most common things I see as an estate planning and elder law attorney are people not having the right people in place to serve as Personal Representatives, Successor Trustees, Powers of Attorney and Health Care Agents. These people are collectively known as your fiduciaries.
Choosing the right fiduciaries is just as important as having an estate plan in the first place, because your fiduciaries are the people who execute the plan you have created.
I advise all of my clients to spend a good amount of time considering who should serve as their fiduciaries.
For Personal Representatives (called Executors in other states), you are looking for a person who can administer your estate in the court process known as probate. This job requires someone who is trustworthy above all else, because they will be handling the assets of your probate estate and dividing them according to the terms of your will. As we know, money makes people do funny things and for some folks, money makes them act improperly. In my opinion, being trustworthy is the number one thing I would be looking for in a Personal Representative. For most people, this is an adult child. Keep in mind any sibling rivalries when you are naming one child over the other. Proximity is also important. If two children are equally trustworthy but one lives far away, you should choose the local child, as the probate process requires a lot of time (for which they are usually paid a fee) to complete.
For Successor Trustees of a living trust, trustworthiness becomes even more important (as indicated by the title “trustee”). This is because a living trust, if properly funded, will avoid the probate process all together and the Successor Trustee will be acting independent of the court’s supervision. With a trustee, proximity is also important. As with Personal Representatives, the person you name as your Successor Trustee should have the time, inclination and competency to serve in their capacity.
Depending on the circumstances and size of your estate, a corporate fiduciary is sometimes an excellent candidate, such as a trust company or bank, to serve as a Successor Trustee. This is especially helpful where you don’t plan on giving your beneficiaries their inheritance immediately upon your death or where you have a conflict in the distribution of your estate. An example of this would be you would like to bypass an inheritance for one child and instead give the money to a grandchild. The bypassed child has an obvious conflict of interest (depending on the circumstances) in acting as a trustee for monies given to their child instead of them. On the other hand, corporate fiduciaries can charge quite a bit in fees to serve as a fiduciary. All of this needs to be weighed with your estate planning attorney to figure out the best course of action for your specific circumstances.
With a Financial Power of Attorney, you are looking for trust, proximity and financial competence to make decisions for you if you become incapacitated. This role also requires someone who can make tough decisions if they need to be made and if necessary, can make those decisions quickly and effectively. As with Successor Trustees, much of the decision making in this role is not supervised or subject to court review.
Healthcare Agents make healthcare decisions for you if become incapacitated. It’s a different role than your Financial Power of Attorney but similar in the sense that you need someone who can make a decision. Someone prone to paralysis in stressful situations or who is afraid to take a path which could have serious consequences for you is not an ideal candidate. In this role, conversations with doctors and those in the medical field can and will certainly assist your Healthcare Agent, so anyone you choose should not only be able to make decisions but understand the decisions that must be made as to your treatment, prognosis and any medications. Proximity is especially important because the ability to act quickly is a strong possibility in this role. Emergency medical situations occur and incapacity can occur very quickly, rather than over time as most people usually imagine.
As with all fiduciaries, having alternates is also very important, especially where the fiduciary you name is of similar age. Remember, your estate plan is created today, but may not go into effect for years. Fiduciaries pass away, become incapacitated themselves, you may no longer be in contact with them or you may no longer want them to act before someone else. Keeping your estate plan updated as your life changes is therefore extremely important. Your estate plan can and should be altered as necessary.