Estate Planning and Choosing Who Will Fill Key Roles
Who in your life can you trust to honor your wishes? That’s the question at the heart of a lot of decisions you’ll get to make during estate planning. This process affords you the opportunity to put in place several layers of protection for your future and your loved ones’ futures.
The people you choose to fill the key roles in your estate plans may, in turn, be called to protect your best interest someday. I urge you to think carefully about who’s truly well suited for each job before you start estate planning, but don’t become overwhelmed by the gravity of these decisions. For now, I recommend thinking about your estate plans in terms of the next five years.
A common trap people fall into when it comes to estate planning is decision paralysis. And I empathise, afterall, you are potentially making decisions about who will care for your children or who will ensure your wishes are followed. However, I urge you to not let the decision itself prevent you from completing your estate plans. That’s why I encourage my clients to think of it as a five-year plan. After that, you can revisit your plans and make changes as necessary. In fact, you can change your plans at any time!
Choosing a Trustee
Trusts can be useful estate planning tools for people of all ages, family structures and income levels. You may utilize a trust as a way to pass assets to your heirs, and/or help your estate avoid probate. Parents of minor or disabled adult children often establish trusts to provide for their kids’ needs after they’re gone. As the grantor (creator) of a trust, you’ll get to decide how and when any assets held by the trust are distributed. The trustee is the person or institution that manages and controls the assets and ensures that your wishes are followed.
Trustworthiness and fiscal responsibility are key traits for a good trustee. The person in this role has a fiduciary duty to act in the best interest of the trust and its beneficiaries, even if it conflicts with their own best interest. Choose someone who you know to have good judgment and who has some experience managing money.
Take family dynamics into consideration if you’re thinking of appointing a relative as trustee. The person in this role must be able to treat all beneficiaries equally, and may have to make decisions that one or more beneficiaries disagree with. If you’re concerned about causing conflict with your choice, you may want to pick a non-family member or a trust company to act as trustee.
Choosing a Guardian
For many parents, choosing a guardian for their children is the most emotionally wrought part of estate planning. There’s no bigger decision than who will raise your children in your stead.
As you consider the suitability of your closest loved ones for this role, consider factors including age, location, lifestyle, religious beliefs, financial stability and character. Your closest sibling or best friend may be a wonderful person—but what kind of life would your child have with them as a guardian? Can you trust them to provide the discipline, stability and emotional support that you want your child to have? Do they have good judgment and values that align with your own? If not, they’re probably not the right guardian.
Obviously, agreeing to act as a potential guardian is a big commitment. Whoever you choose should be willing to step into this role if necessary, so make sure to discuss the possibility with anyone you plan to appoint. It’s advisable to name at least two guardians in your will, in case the first person is unavailable or unwilling to take custody if the time comes.
Choosing a Personal Representative
Your personal representative, also sometimes called your executor, is the person who will oversee the settling of your estate after you die. Failing to name your chosen personal representative in your will means that the probate court will appoint someone for you.
Responsibility, organization and patience are important traits for a good personal representative. They’ll probably have to attend court proceedings, communicate with attorneys, submit your estate’s tax returns and complete a host of other administrative tasks over the course of many months. Don’t choose a personal representative who has significant financial problems or who has a contentious relationship with any of your estate’s beneficiaries.
Age and timing are also factors. If you name a spouse or sibling as your personal representative and then live into your 90s, it’s unlikely that your chosen representative will be able to fulfill their duties at that time. That doesn’t mean you should never choose someone who is your age or older; just consider what makes the most sense when it comes to your particular five-year outlook.
Choosing a Health Care Proxy and Power of Attorney
Health care proxy and power of attorney documents are essential components of your estate plan. Your health care proxy is a person you trust to make medical decisions on your behalf, while your power of attorney should be someone you trust to make financial decisions. (You may choose one person to fulfill both roles.)
Proximity can be important here. If you’re incapacitated by an accident or other emergency, your healthcare providers may need to make decisions about care quickly. Your power of attorney may need to sign legal documents and checks in person. Ideally, if you’re taken to the hospital, the people in these roles would be able to get there quickly too. You don’t want your health care proxy stuck on a plane while your doctors are making urgent decisions about your treatment.
Your health care proxy and power of attorney must be willing and able to follow your wishes, even if they disagree with those wishes. A health care proxy especially may have to make some very difficult decisions about ending treatment and withdrawing care. It’s common to choose a spouse or adult child for these roles, but you can choose anyone you trust.
These are all big choices. I recommend taking the time to weigh your options before you’re ready to create your estate planning documents. By the time you sign your will and other documents, I want you to have absolute confidence that you’ve made the right decisions for you.
If you have any questions about your own estate planning process, contact me today!
Julie Ladimer is the founder of Ladimer Law. She has been helping people complete their estate planning since 2014. She has been named a Rising Star by Super Lawyers three years running and received a Boston Magazine Five Star Professional award.