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Choosing the Right People for Your Estate Plan

In many respects, estate planning is about people more than property. Your estate consists of all the things you own, but your estate plan consists of who will receive what – and, critically, who will manage your property when you are no longer able to make those decisions yourself.

As such, an important part of estate planning is considering who will fill various important roles, both before and after your passing. In particular, we’re speaking of your executor, trustee, and powers of attorney.

The four key roles in an estate plan

Depending on whether your estate plan involves creating a trust, you will need to designate up to four people to fill these critical roles: two within your lifetime in the event that you become incapacitated, and two to take care of your estate after your death.

  • A financial power of attorney is responsible for your financial decisions, such as paying bills or managing investments. (Note that your power of attorney need not be an actual attorney.)
  • A healthcare power of attorney is responsible for making healthcare decisions on your behalf. A living will is a document that guides your healthcare power of attorney in that capacity.
  • An executor or personal representative is responsible for managing your estate; that is, all the assets remaining in your name when you pass away.
  • A trustee is responsible for managing a trust.

Having four roles to fill does not, of course, mean you have to pick four individuals. You can choose the same person to serve in multiple capacities, or you can assign a different person to each role. You can also pick multiple people for a single role, but we generally advise against it, because…

Picking one person per role makes the process smoother

Suppose, for instance, you choose two personal representatives for your estate, thinking that two heads are better than one when it comes to making important financial decisions. In practice, this means your co-executors will have to put two signatures on every document and be consulted on every decision, which can get logistically challenging over the course of a long process. The average estate takes 16 months to settle, and being able to move steps forward with a single signature makes that process far less frustrating.

Beyond those logistical hurdles, though, naming two personal representatives has the potential to devolve into a serious battle if your personal representatives disagree on a decision. They may even have to go to court to settle a dispute. The last thing you want your heirs to deal with after your passing is a contentious disagreement over the estate.

What you can – and should – do instead is designate a contingency (that is, a backup) for each role, in case the person you pick predeceases you or otherwise is unable to handle the responsibility. For instance, married people often name each other as their personal representatives, which is perfectly fine, but you should give some thought to your backup person to ensure your wishes are respected when you are both gone.

Make your choice based on ability, not status

While estate planning is absolutely an intensely personal process, it is also, at the end of the day, a business decision. You are under no obligation to choose, for example, your oldest child if another family member may be better suited for the responsibility, nor are you required to choose a family member at all. If your estate is complex, or if your relatives don’t have the ability or inclination to handle the job, consider choosing a professional such as an attorney or an accountant as your agent.

It’s also important to consider how the transition will go when the person you choose steps into the role, particularly for powers of attorney because it is not always immediately obvious when you are incapacitated and your agent needs to take over your affairs. Your banks and financial institutions need to be prepared to speak with this person, and the agent needs to know where to locate your assets and accounts.

Ideally, whoever you choose to manage your affairs will already be involved in managing them prior to your death or incapacity – which again brings the choice back to competence and trust. Someone who is already “in the loop” on your finances and healthcare is best positioned to step in when you are no longer able to make those decisions.

Remember to revisit your estate plan periodically

We generally recommend that our clients revisit their estate plans every three to five years, or possibly more frequently if they are in declining health or otherwise have reason to believe their situation may change soon. When you review your estate plan, consider whether your designated personal representative, trustee, and power of attorney are still in a position to take on the responsibilities you’ve assigned to them. Are they still in good health? Have their life situations changed? Don’t hesitate to make a change if that’s what’s needed to ensure that your last wishes are honored.

As you might imagine, having an attorney’s advice on these types of decisions goes a long way. An estate planning lawyer can not only help you choose the right people for each responsibility, but also ensure that your estate planning documents are drafted and filed in such a way that the transition goes as smoothly as possible. Don’t wait until you’re in a crisis; act now to secure your legacy by getting experienced legal help.

Brown & Jensen is a law firm based in Mesa, Arizona.

Probate & Estate Planning

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