Fiduciaries & Agents
One of the most important decisions that you will need to make to complete your estate plan is naming one or more individuals (or organizations) to serve in some capacity on your behalf or on behalf of your estate. Depending on their role in your estate plan, these persons are commonly referred to as an agent, a fiduciary, a guardian, a conservator, or a custodian. More specifically, your estate plan will involve one or more of the following:
Trustees
A trustee is the person responsible for managing the property transferred to the trust. In most cases, the person creating the trust (the “settlor”) will serve as the initial trustee and will continue to do so until death or disability. Upon the settlor’s death or disability, a “successor trustee” assumes responsibility for the proper management and distribution of the trust assets. If the successor trustee takes over on account of the settlor’s disability, they will manage the trust assets for the settlor’s care, comfort, and support. If the successor trustee assumes the trusteeship upon the settlor’s death, they would first pay the settlor’s proper debts, taxes, and expenses of administration. After paying debts and expenses, the successor trustee would then distribute the remaining trust assets in accordance with the instructions set forth in the trust document.
Attorney-in-Fact (Agent named under a Power of Attorney)
The attorney-in-fact named under a power of attorney form provides lifetime disability management of finances and property. In a trust-based estate plan, the attorney-in-fact often takes a subordinate role to the successor trustee because most of the client’s assets are held in trust. As such, the successor trustee is often primarily responsible for providing financial management in the event of disability. However, even in trust-based plans the appointment of an attorney-in-fact is prudent because there are often assets, such as IRAs, 401Ks, and other retirement accounts that are not transferred into the trust. For these reasons, having a properly executed power of attorney form provides a mechanism for the management of assets in the event of disability for clients with trust-based estate plans and non-trust estate plans.
Guardians
A guardian or guardians would be the caretakers of your children in the event you and their other parent or legal guardian pass before they turn 18. In simple terms, your guardians are the persons or person who would fill in as mom and/or dad. The most common way to nominate and appoint guardians for your children is in a Will.
Personal Representatives (formally known as Executors)
Commonly referred to as an executor, a personal representative is the person appointed by the court to administer the probate estate of a deceased individual. The personal representative is generally charged with paying the decedent’s valid debts, taxes, and expenses of administration and distributing the remaining assets of the probate estate in accordance with the terms of the decedent’s Will. In a trust-based plan, one of the objectives is to avoid probate, so when clients have a properly funded trust-based plan there is no need for a probate proceeding, and in those cases a personal representative is never appointed.
Health Care Agent (Agent named under a Health Care Directive)
The person nominated agent under a health care directive serves as the client’s agent when speaking to doctors and other health care professionals in the event the client becomes unable to participate in making their own health care decisions. A properly appointed health care agent (under a properly executed health care directive) may give “informed consent” on behalf of the client for the administration of certain treatments or to the withholding or discontinuance of treatment. The health care agent is often called upon to make decisions relating to the client’s end of life care, but the health care directive also allows the agent to determine where the client should reside when the client requires care outside of their home.
Conservators
A conservator or conservators would be the person(s) in charge of holding and managing your children’s inheritance in the event you and their other parent or legal guardian pass before they turn 18. Sometimes our clients appoint the same person(s) to be guardian and conservator, but it is also common to name different individuals as guardian and conservator. There is no right or wrong way to go about deciding who to appoint, and it just depends on what you are comfortable with, and whether you believe the role of guardian and conservator can be fulfilled by the same person(s) or if those roles should be separated. The role of a conservator is also very analogous to the role of a trustee in a revocable trust plan or a testamentary trust plan.