A comprehensive estate plan includes several documents that accomplish three key things. First, they lay out your wishes for the handling of your money and property during life and at death. Second, they explain your medical wishes if you are no longer able to make them yourself or communicate them to others. Third, they name the trusted individuals you want to carry out your financial and medical wishes.
For some people, choosing trusted decision makers is easy. For others, it may be more difficult due to strained family relations, geographical distance, or the lack of living family members. While most advisors and attorneys counsel clients to choose family members or close friends as these key actors, this may not always be an option. In such a case, you may consider hiring someone to act in these important positions.
Let’s look at some of the important decision makers you may need to select, options for whom to consider if you do not have a family member or friend who can fill the role, and questions to ask the prospective decision maker.
Financial Decision Makers
Personal Representative or Executor. This trusted individual, appointed in your will, is responsible for gathering all of your accounts and property, approving and paying your outstanding debts, and distributing your remaining assets to your named heirs or trustee. This person’s task is to wind up your affairs at your death, which can be time-consuming and sometimes challenging.
Successor trustee of a revocable living trust. Serving after you, this trusted person or entity is charged with managing, investing, and distributing the money and property from your revocable living trust to you during your lifetime and to your chosen beneficiaries after your death.
Agent under a financial power of attorney. Your agent is an individual you choose to carry out financial transactions on your behalf (such as signing a check or managing a bank account). Subject to your state law, the type of authority and when the agent may act on your behalf can be specified in the financial power of attorney.
When it comes to selecting someone to handle your financial affairs—whether at your death or during a time when you are unable to manage them yourself—there are several options available to you beyond family and friends.
- Consult with your estate planning attorney. Your attorney can help you weigh your options. They may be able to recommend someone that they have experience working with that would be a good fit, based on your assets, goals, and needs.
- Ask if the bank or financial institution where you already have an account has a trust department. Because they are already familiar with managing your accounts, they could be a good fit to step in and assist you if needed. Some financial institutions will not be a good solution. Many do not have a dedicated team to address these needs or may have fees that prove to be unreasonable for your circumstances.
- Interview a private trust company that specializes in managing money on behalf of individuals. Because their job is to manage money and make distributions, they are well-equipped to handle the administrative tasks associated with being a financial decision maker.
- Consider asking your certified public accountant or financial advisor if they are willing to act on your behalf or if they know of someone who can. Because of industry regulations, some advisors are not able to act in this regard for their clients.
When interviewing potential candidates, consider asking the following questions:
- How do you charge? You want to know how much the service will cost in order to ensure that there will be money left over to give to your beneficiaries.
- Do you keep records of the transactions you conduct on my behalf? Who has access to these records? An individual who manages another person’s finances is considered a fiduciary, which means that they owe a duty to that person to act in their best interest according to the law. A certain level of transparency can put you at ease because you will know that even if you cannot manage your financial affairs, the right people will get the information they need, and the wrong people will not.
- How long does it take to administer an estate of my size? Because time equals money in a lot of instances, you want to ensure that the professional you hire will wind up your affairs as expediently as possible, without cutting corners.
- How often do you communicate with the beneficiaries and my family members? It is important that everyone is on the same page and that the lines of communication remain open, even at your death. This can help avoid potential conflicts after you have passed away.
- Do you require that any special language be included in the estate planning documents or any additional paperwork be completed? Your estate planning attorney will want to ensure that the documents that are being prepared will function properly when the professional financial decision maker needs to step in.
- What has been your best experience administering an estate or trust? If you are meeting with the individual who will be in charge of handling your affairs, this question can help you get a sense of what they value and how they do their job. This will also help determine if you would be an ideal client for the professional.
- What has been your worst experience administering an estate or trust? Take this opportunity to learn from others’ mistakes. Preparing ahead of time for smooth management and administration means that your financial needs—and those of your beneficiaries at your death—can be better met in a timely fashion.
Personal Care Decision Makers
Sometimes these may be the most difficult roles to fill because you are asking someone to look after your safety and welfare, or that of your beloved pet. Accordingly, each has unique considerations.
Agent under a healthcare power of attorney. This trusted individual is responsible to make or communicate your medical wishes if you become unable to make or communicate them yourself. In addition to naming someone, make sure you have completed a comprehensive healthcare power of attorney to make your medical wishes are clearly known. It may also be helpful to provide additional detail outside of the legal document to explain the types of medical decisions you would and would not want made on your behalf. Such instructions can be extremely helpful to guide your agent when difficult decisions must be made.
If you have no trusted family member to be your medical agent, your decision may be more difficult. Because of the sensitive nature of making medical decisions for another person, consider naming a close friend or trusted professional. It’s worth noting that state law may prevent certain professionals, such as doctors, from acting as an agent, unless an exception exists.
Caretaker for your pet. You will need to select someone to take possession of and continue caring for your beloved pet if you are no longer able to care for it due to your incapacity or death. Although the law may treat these members of your family as just personal property, if you want to ensure that your pet is taken care of, you need to thoughtfully consider who will be able to care for it.
If there is not a suitable owner among your family or friends, there are many organizations that may be willing to either take your pet or help your loved ones find a suitable forever home for it.
When interviewing potential candidates for your personal care decision makers, consider asking the following questions. Some of these questions are the same as those offered above for choosing financial care decision makers, but you will want to dig deeper when discussing them with these candidates because you are entrusting these individuals with caring for you and your pet.
- Do you charge for your services? Some organizations may charge while others may not. It is important that you know ahead of time so money can be made available to cover these expenses.
- When and how should you be contacted if your assistance is needed? Because you do not know when you will need their assistance, and you will likely not be the one contacting them, it is important that you have an easy way for someone else to contact them when needed.
- Is there additional information or paperwork needed to carry out your role? You will want to make sure that the person or organization has all the necessary information prior to an emergency.
Not knowing whom to appoint to these crucial roles can make it more difficult to start or complete your estate planning process. Do not let this initial uncertainty prevent you from taking the necessary next steps to protect yourself and those you care about. Call us today so we can help you consider your options and ensure that you have trusted decision makers in place to help you when needed.