Have You Chosen the Right People to Serve in Your Documents? Trustees and Executors and Agents, Oh My!
Many of our clients question whether they have chosen the correct people to serve as their trustees, executors, and agents. The purpose of this article is to clarify the responsibilities of these various positions and the characteristics needed to be effective. First, let’s clarify — there are many positions in the estate planning documents. For example, there are three types of trustees, two types of agents, and one executor. It’s very easy (and common) to get them confused. The easiest way to understand the responsibility of each position is to understand the task of the position. As indicated, there are three trustees, the “silent partner” co-trustee, the “disability” trustee, and the “death” trustee. The silent partner co-trustee serves with a Trustor/Trustee when that person would otherwise serve alone. For example, my wife and I are Trustor/Trustees. When one of us passes away, instead of the survivor serving alone, the survivor serves with our oldest son, who is the silent partner co-trustee. This accomplishes two things: In the event the survivor is temporarily ill, my son can take care of the finances. If the illness is more permanent, the silent partner becomes the disability trustee and addresses the financial needs of the survivor. When the survivor passes, the disability trustee becomes the death trustee and settles the estate. It is very common to have the same person serve in all three capacities so the transition from one position to the next is seamless. To
use an analogy: Upon the death of the first spouse, the silent partner trustee becomes the “co-pilot.” Upon the permanent disability of the surviving spouse, the silent partner becomes the disability trustee or the “pilot.” Upon the death of the surviving spouse, the disability trustee becomes the death trustee or the “pilot” who then lands the plane. The same scenario occurs with a person who is not married, except the silent partner co- trustee is active immediately, not at the death of a spouse. Their responsibilities are the same as discussed earlier. During that period of time when the disability trustee is serving, that person should also be named as the agent under the Financial Power of Attorney. This is a completely different document than the Trust where the three trustees are named. Again, it is critical that the people you name as silent partner trustee and disability trustee also be named, in the same order, on the Financial Power of Attorney. The task is to provide for your financial needs when you are disabled, and both of these documents give them the power to do their job. Surprisingly, the executor doesn’t really do much. Their job (assuming all the assets are registered correctly in the name of the trust) is to simply transfer all of the personal, tangible property (furniture, jewelry, clothing, etc.) to the trustee of the trust. Then, the trustee distributes these items in accordance with the terms of the trust. This is why the death trustee and the executor should also be the same persons named in the same order.
That leaves us with the person named in the Advance Health Care Directive. The person named on this document will be making final health care decisions for you when you are unable to make them for yourself. This includes instructing your doctor to withdraw your life support when the time comes. So, whom do you choose to carry out these various responsibilities? Once the responsibilities are clear, so is the answer. The person you name as trustee (all three) and the agent you name in the Financial Power of Attorney needs to be someone you trust. They do not need experience, familiarity with the responsibility, or anything else; they simply need to be someone you trust. The person in this position will receive plenty of guidance and direction from our firm when the time comes. Furthermore, they can consult with and hire people to help them accomplish their responsibilities. The person you choose to make health care decisions for you needs to be someone who will follow your personal health care directions. This may require a visit with the person you have chosen to discuss the details of your wishes beyond what is stated in the formal document, the Advance Health Care Directive. Hearing your wishes verbalized will certainly help the agent know what to do when the time comes to make these types of decisions. Remember to review your annual package and evaluate whether the choices you made still work for you. If not, let us know, and we can make any adjustments you desire.
2 PrestonEstatePlanning.com
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