Choosing the right people to carry out a plan is often just as important as designing the plan correctly. We spend a great deal of time in our estate planning meetings discussing who to choose for a variety of key roles. These roles include financial roles, like estate administrator, and personal roles, like guardians for minor children and powers of attorney for health care.
This post discusses the various roles and the skill set necessary in each.
Estate Administrator
The estate administrator is the person who will settle an estate. In a will, this is called a personal representative (formerly, executor or executrix). In a trust, this is a called a trustee. Regardless of the term used, this is the person who (with assistance from our office or another attorney) wrap up the client’s affairs, pay any bills and final expenses, sell property that needs to be sold, and make sure all property is distributed according to the decedent’s plan.
The first key skill set for an administrator is that they are trustworthy. Administrators will be trusted to manage money and property that belongs to others, and it is essential that they act appropriately. Second, an administrator must have some financial ability. They do not need to be a CPA or financial planner, but they should be able to sell real estate, keep track of bills and records, and be able to work with banks and other institutions. Finally, they must be generally able to work well with others (particularly, other beneficiaries and professionals) and communicate effectively. If a person meets those three criteria, they will be an effective administrator. If they are missing any of those criteria, they will likely struggle.
We often are asked whether an administrator needs to be local. Being local does make the job easier, particularly when dealing with real estate. However, it is possible to administer an estate from across the country. Typically, when we work with out of town administrators to settle an estate, we tell them to come to Wisconsin for a week or two to secure real estate and connect with professionals who will sell real estate and handle other functions that require a local presence. So all things being equal local is good, but if there is a choice to be made having a capable administrator is more important than having a local one.
Trustee for Continuing Trust
Some plans call for some or all of the estate to go to a trust fund for people who cannot manage money for themselves. In most cases, this person is a child or grandchild who is too young to manage money for themselves. It may also be a person with a disability who would lose public benefits if they received money directly.
If a plan includes a trust fund, the client needs to name a trustee to manage the trust fund for the minor or disabled person. The person will work with a financial advisor to manage the funds, make decisions about distributions, and (with help from professionals) handle annual accountings and tax filings.
This is another financial role. Like the administrator, the trustee must be trustworthy, have some level of money management ability, have good judgment, and be able to work well with others.
Guardian(s)
For minor children, the parents must nominate a guardian or guardians who will have parental responsibility for minor children if the parents die while the child or children are minors. Just as parenting styles vary, different parents value different things when choosing guardians, such as child-rearing style, location, the kids’ relationship with the guardian, religious preferences, and so on.
This can be the trustee who would manage money for the children, but does not have to be. If the trustee and guardian are different people, they should be able to work well together.
Durable Power of Attorney
A second role is a power of attorney for finances (also called a durable power of attorney). This person assists in managing money during the client’s lifetime. This is a broad power to do everything from little things like paying bills to big things like selling a house or moving money from retirement accounts.
The skill set here is the same as the other financial roles. Like the administrator and trustee, the financial POA must be trustworthy, have some level of money management ability, have good judgment, and be able to work well with others.
Health Care Power of Attorney
The final role is health care power of attorney. A health care POA is the person who will make decisions for the client if they are incapacitated and unable to make their own health care decisions. This can include important decisions such as stopping treatment or removing life support.
The agent should be someone close enough to the principal (the client) to allow a conversation about feelings about quality of life and how much care is enough or too much. The agent should understand the principal’s values and how the principal feels about the amount of care they receive, and should be comfortable carrying out those decisions. (In other words, a person who would want a feeding tube removed should not name a relative who thinks it’s immoral to remove a feeding tube and can’t understand why anyone would do so.) The agent must also have the strength to make potentially difficult decisions.
As with other roles, having someone local is great if possible, but the most important thing is selecting the best person for the job.
Are you ready to put your estate plan together? Contact our office today to schedule a no-obligation initial consultation. We look forward to meeting with you.