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Healthcare POA

How to Pick a Trustee, Executor, and Agent Under a Power of Attorney

While the term fiduciary is a legal term with a rich history, it very generally means someone who is legally obligated to act in another person’s best interests.  Trustees, executors, and agents are all examples of fiduciaries.  When you pick trustees, executors, and agents in your estate plan, you’re picking one or more people to make decisions in your and your beneficiaries’ best interests and in accordance with the instructions you leave.  Luckily, understanding the basics of what each of these terms means and what to consider when making your choices can make your estate plan work far better.

Trustee

A revocable living trust is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals.  In many revocable living trusts, you will serve as the initial trustee and will continue to manage the trust assets as you had in the past.  Your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or during your incapacity.  Like each of the following individuals involved in your estate planning, it’s best to have a trusted person or financial institution carry out this vitally important role.

It’s important to make the language in your trust as clear as possible so that your trustee knows exactly how to handle various situations that can arise is asset distribution.  Lastly, your trustee will only control the assets contained within the trust — not the rest of your estate, the reason why completely funding your living trust is crucial.

Powers of Attorney

Your power of attorney is the document in your estate plan that appoints individuals to make decisions on your behalf if you become unable to do so yourself.  There are a few different types of powers of attorney, each with their own specific provisions.  There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals.  Here are two common types to cover in your estate plan:

Financial Powers of Attorney

Financial powers of attorney grant individuals the ability to take financial actions on your behalf such as purchasing life insurance or withdrawing money from your accounts to cover your expenses.  A person who acts under the authority given in a power of attorney is generally called an agent.  Regarding financial decisions, an institution like a trust company, can also be named.  Keep in mind that trust companies will charge a fee for this service.

Health Care Powers of Attorney

Health care powers of attorney cover a wide range of specific actions that can be taken regarding an individual’s medical needs such as making decisions about the types of care you receive or who will be providing the care.

Executor

Your executor is the person who will see your assets through probate, if necessary, and carry out your wishes based on your last will and testament.  Depending on your preferences, this may be the same person or institution as your trustee.  You might also see this position designated as personal representative, but it means the same thing.

Some individuals chose to go with a paid executor.  This is usually someone who doesn’t stand to gain anything from your will, and is often the best choice if your estate is large and will be divided among many beneficiaries.  Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on your family or friends.

Being an executor can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job.  They will probably need to hire a CPA to help sort out your taxes and a lawyer to assist in the process.  Of course, if there’s a dispute, attorneys, appraisers, mediators, or other professionals will undoubtedly need to be involved.  Choosing a spouse or someone else intimately involved in your life can be convenient because they may already be familiar with your assets and have an easier time making sure your wishes are carried out.  However, because of the time involved and the nature of some assets, they may not be up to the task at the time.

Get in touch with us today

Let us help you make the process of picking your trustee, powers of attorney, and executor as smooth and headache-free as possible.  Once you have these choices in place, you’ll be able to rest easy knowing that your estate plan is in good hands no matter what life brings.  Call or contact us to make an appointment today.

Not Just Death and Taxes: 5 Essential Legal Documents You Need for Incapacity Planning

Comprehensive estate planning is more than your legacy after death, avoiding probate, and saving on taxes.  Good estate planning includes a plan in place to manage your affairs if you become incapacitated during your life and can no longer make decisions for yourself.

What happens without an incapacity plan?

Without a comprehensive incapacity plan in place, your family will have to go to court to get a judge to appoint a guardian or conservator to take control of your assets and health care decisions.  This guardian or conservator will make all personal and medical decisions on your behalf as part of a court-supervised guardianship or conservatorship.  Until you regain capacity or die, you and your loved ones will be faced with an expensive and time-consuming guardianship or conservatorship proceeding.  There are two dimensions to decision making that need to be considered: financial decisions and healthcare decisions.

Finances during incapacity

If you are incapacitated, you are legally unable to make financial, investment, or tax decisions for yourself.  Of course, bills still need to be paid, tax returns still need to be filed, and investments still need to be managed.

Healthcare during incapacity

If you become legally incapacitated, you won’t be able to make healthcare decisions for yourself.  Because of patient privacy laws, your loved ones may even be denied access to medical information during a crisis and end up in court fighting over what medical treatment you should, or should not, receive (like Terri Schiavo’s husband and parents did, for 15 years).

You must have these five essential legal documents in place before becoming incapacitated so that your family is empowered to make decisions for you:

  1. Financial power of attorney: This legal document gives your agent the authority to pay bills, make financial decisions, manage investments, file tax returns, mortgage and sell real estate, and address other financial matters that are described in the document.

    Financial Powers of Attorney come in two forms: “durable” and “springing.”  A durable power of attorney goes into effect as soon as it is signed, while a springing power of attorney only goes into effect after you have been declared mentally incapacitated.  There are advantages and disadvantages to each type, and we can help you decide which is best for your situation.

  2. Revocable living trust: This legal document has three parties to it: the person who creates the trust (you might see this written as “trustmaker,” “grantor,” or “settlor” — they all mean the same thing); the person who legally owns and manages the assets transferred into the trust (the “trustee”); and the person who benefits from the assets transferred into the trust (the “beneficiary”).  In the typical situation, you will be the trustmaker, the trustee, and the beneficiary of your own revocable living trust.  But if you ever become incapacitated, your designated successor trustee will step in to manage the trust assets for your benefit.  Since the trust controls how your property is used, you can specify how your assets are to be used if you become incapacitated (for example, you can authorize the trustee to continue to make gifts or pay tuition for your grandchildren).
  3. Medical power of attorney: This legal document, also called a medical or health care proxy, gives your agent the authority to make healthcare decisions if you become incapacitated.
  4. Living will: This legal document shares your wishes regarding end of life care if you become incapacitated.  Although a living will isn’t necessarily enforceable in all states, it can provide meaningful information about your desires even if it isn’t strictly enforceable.
  5. HIPAA authorization: This legal document gives your doctor authority to disclose medical information to an agent selected by you.  This is important because health privacy laws may make it very difficult for your agents or family to learn about your condition without this release.

Is your incapacity plan up to date?

Once you get all of these legal documents for your incapacity plan in place, you cannot simply stick them in a drawer and forget about them.  Instead, your incapacity plan must be reviewed and updated periodically and when certain life events occur such as moving to a new state or going through a divorce.  If you keep your incapacity plan up to date and make the documents available to your loved ones and trusted helpers, it should work the way you expect it to if needed.