An estate plan must contain enough information to complete three goals:
- It must explain how you want your assets managed both during your life and at the time of your death.
- It should make your preferences clear when it comes to medical care in the event of your incapacitation.
- It should name the people you trust to fulfill the financial and medical goals in your plan.
The last goal listed, choosing the right people to trust, might seem straightforward at first. But you need to think it through. Your choice could negatively affect the family dynamic. The person you trust most might not be geographically convenient to accomplish the necessary tasks. You might not have surviving family members capable of making these important decisions.
The most common advice from lawyers is to pick someone in your family or circle of close friends, but this may not be possible for you. If that’s the case, you should know that you can hire a professional to accomplish one or more of the key goals laid out in your estate plan.
The following is the first part of a two-part series to help you understand the roles that need to be filled, the people you can find to fill them, and the things you should learn about anyone you’re considering to help you fulfill your estate planning wishes. Part two discusses the considerations when choosing a health care agent and pet caretaker.
Types of Financial Decision Makers
Executor or Personal Representative
This role is laid out in your will. The person chosen must collect information about your assets, settle your remaining debts, and see to the distribution of your assets according to your wishes.
This is basically the person responsible for doing the work that makes your last will and testament effective when you pass away. The process can take a lot of time and effort.
If you have a living trust as part of your estate plan, then most of these duties will transfer to the person you name as successor trustee.
Successor Trustee of a Revocable Living Trust
Most revocable living trusts are initially managed by their creators. The successor trustee is the person chosen to handle your revocable living trust after you have died or become incapacitated. Their job is to manage, invest and distribute the assets in the revocable living trust to you while you’re still living and to the people of your choosing upon your passing.
If you have a trust-based plan, then the successor trustee will also be responsible for settling your debts and distributing your assets.
Agent Under a Financial Power of Attorney
A financial power of attorney grants the chosen agent some level of authority over your business and financial affairs. The person you choose could open accounts, write checks and conduct other business on your behalf. It’s important for the person you name as your financial power of attorney to understand California law.
Using Professional Financial Decision Makers
If you have a trust-based estate plan, then selecting the successor trustee is a key task. The successor trustee will have most of the responsibilities and authority over your financial matters in life and death.
Choosing someone to manage your financial affairs, whether temporarily or on an ongoing basis, is difficult. You may need to consider more than just your family and friends to find the right fit. To explore your options, you may want to do the following:
- Check with the banks where you already have an account as to whether there is an existing trust department. You already have a relationship with them and presumably trust them with some level of control over your financial health.
- Research companies that oversee private trusts. These businesses help individuals manage their accounts and make distributions according to the terms of the trust. They have expertise in the legal and financial requirements of making these decisions.
- If you work with a certified public accountant or financial advisor, you could ask whether they’re equipped and available to serve in these capacities. They may also have connections to other individuals they can refer you to.
Interview Questions for Financial Decision Makers
Here are a few questions you should consider asking when looking for someone to act on your behalf:
- What do your services cost? There is no point in hiring someone if the cost of their services will drain your assets to nothing. The point is to pass along something to your family or chosen beneficiaries.
- What is your record-keeping like? Will all transactions be documented? Who can see this documentation? You aren’t leaving your financial life in the hands of just anyone. A fiduciary has a legal obligation to act in your best interests. The ability to track every transaction can help you ensure that everything is done properly.
- What is the estimated timeframe for estate administration? The size and complexity of your estate is a variable. Still, a professional should be able to give you an estimate of how quickly your estate can go through the process. A speedier process could save money and leave more for your beneficiaries, provided everything is done correctly.
- What is your communication like? An estate plan can dramatically impact the lives of those involved. Beneficiaries and family members should be clear about what’s going on. Good communication, including around the time of your death, can go a long way toward easing stress and preventing unnecessary disputes.
- Are there specific language requirements or documents you need included in the estate plan? You’ll need to determine whether there is special language or paperwork your financial administrator will need. If so, work with your estate planning attorney to get everything in place as quickly as possible.
- What does perfect estate administration look like? If you know what situations your potential fiduciary prefers, you might better understand how they approach their work. If your situation is similar to their ideal situation, they might be the right choice for you.
- What does bad estate administration look like? On the other side of the spectrum, it might be helpful to know what has caused other estate administrations to go wrong. Understanding the flaws in other people’s estate planning journey can help you avoid those same pitfalls. You can adjust your plan to help ensure that the process goes smoothly for you and your beneficiaries when the time comes.
Having the right people in the right roles can make a tremendous difference in estate planning and probate and estate administration. But the right person is not likely to jump out of the woodwork. You need to take affirmative steps to find a fiduciary who will ensure that you and your beneficiaries are protected.
Call the Law Office of Janet L. Brewer in Los Altos at 650-325-8276 or contact us online for estate planning representation. Our experienced team can explain the process and take you through your options. We can help you put the right people in the position to make critical decisions on your behalf.
