When it comes to estate planning, there are people you will have to give jobs to—whether it is taking care of your business, your kids, or someone taking care of you. These people are your fiduciaries; most of the time, there is no perfect person to carry out these tasks. With this in mind, we want your estate plan to anticipate the best-case scenario if something happens to you and you cannot take care of yourself or your affairs. Below are a few types of fiduciaries:
Guardians
In many familial situations, when parents have to leave the children at home for any length of time, grandparents are who we count on to take care of them. That is the ideal guardian (your substitute) for now. But practically speaking, will grandma and grandpa be ideal guardians, say, 10 years from now? While it’s true that grandparents can be a reliable option, the reality is that, depending on the current age and health of the grandparent, there is more possibility that diminished health and cognitive decline may make childrearing too big a task for some.
Another consideration is whether the guardian holds the same lifestyle and values as you do. “Lifestyle” is an all-encompassing term: approach to running a household, hobbies or interests, geography, health and fitness, religion, socialization, and education. You want to choose someone who will raise your children as close to how you would as possible.
Trustees and Executors
You need someone who you can trust and who is responsible with finances. These people are the handlers— they get stuff done. In most families, you can think of at least one person who is reliable in this arena.
If you’re utilizing a trust with discretion or a longer-term inheritance, you want to pick someone with superior judgment and management skills. In this situation, you will set guidelines that serve as a roadmap for the trustee, but the trustee will also have to use their judgment and discretion when doling out the trust assets. For example, you may establish a trust that provides for your children’s medical needs, education, and living expenses. When your child needs rent money while finishing school, who you choose as a trustee means the difference between providing your child with reasonable living expenses and providing an amount that is way above the cost of living (which accelerates the depletion of trust assets).
A Power of Attorney
Financial or Property Power of Attorney
Like a trustee, you will want this person to be responsible regarding finances. An agent in a financial or property power of attorney is responsible for duties such as paying your bills, paying your taxes, renewing the tags on your car, investing or otherwise managing your retirement accounts, etc. Thankfully, in circumstances where tasks can be carried out online, this person can very well be someone who is not local.
Medical or Healthcare Power of Attorney
This person should be someone you know is emotionally mature enough to handle sensitive situations where you are incapacitated. They should be able to function at a high level to make sound decisions, ask questions, ask for help when necessary, and be your advocate when you cannot speak on your behalf. They also need to be people with the personal fortitude to carry out your wishes (such as stopping treatment at end of life), even if it not what they would want for themselves.
Summary
Every appointment of fiduciaries should be carefully thought through before establishing them in your estate plan. Most of us have a knee-jerk reaction when asked who we would appoint for such personal and important roles. By default, we tend to throw out the names of those closest to us. But we’d like to challenge you to think a little deeper about what you’ll ask these appointees to do. A great exercise is to list the duties of each of these fiduciaries and then choose someone you can imagine performing those duties without profound hardship.
You’re invited to a FREE virtual workshop
If you would like to discuss your fiduciary appointment concerns with an attorney as soon as possible, great! We would love to hear from you. You can reach out to us here. We would also like to invite you to attend one of our informative and interactive workshops. You’ll leave the seminar with newfound knowledge on making your estate plan work for you, avoiding common pitfalls, and the answers to some of our most frequently asked questions.
