Estate plans involve many moving parts.
Said moving parts involve different roles, and from there, each role requires unique personal traits.
Read on for an overview on the key people involved in an estate plan and how to choose them.
What roles are involved in an estate plan?
Before you can make decisions around choosing the right people in your estate plan, you must first understand estate planning’s key roles and know that each role requires different personal characteristics.
Traditionally, there are five people involved in estate planning:
- Personal Representative
- Guardian
- Direct Power of Attorney (DPOA) Agent
- Health Care Agent
- Trustee
Personal Representative
What is a personal representative?
As an individual chosen to administer a deceased or dying person’s last will and testament (the will creator’s role is called the testator), the personal representative’s role is to carry out the testator’s affairs when they pass away or become incapacitated.
How is a personal representative appointed?
In most scenarios, the testator will name and indicate the personal representative in their will before death, but in cases where the will is absent or invalid, a probate court will name someone on the personal representative’s behalf, usually in accordance with a respective state’s succession laws. If a named personal representative refuses to accept their role, an alternate, or contingent, personal representative will be appointed – by either the testator or the court – instead.
What to consider when choosing a personal representative?
Qualified
All your hard estate planning work will be for nothing if you name an invalid representative. Qualified personal representatives must:
- Possess a clean criminal record, with no felonies, arrests, or incarceration time
- Be 18 years of age or older
- Be a US citizen
- Live within the US
Young and in Good Health
To prevent one estate plan from crossfading into another, name two personal representatives. While a second personal representative is not required for a valid will, naming a second younger and healthier successor increases the likelihood that the right person will outlive you and the will you create.
Additional personal representatives can be named via two ways – explicitly in the will’s language, or via a mechanism. An example of a mechanism is to indicate that any children over a certain age (e.g. 25) at the time of the testator’s death will be able to act as a successor co-personal representative.
Good Financial History
A previous and long-standing pattern of bankruptcies, spending addiction, and credit defaults are more than just warning signs that a potential executor is irresponsible with money.
The above can also impact the ability to get bonded. As a form of trust fund insurance required by many court systems, bonding pays beneficiaries if a personal representative absconds with estate funds.
Ensure your potential personal representative can responsibly manage finances by making credit checks (with the candidate’s consent) part of your estate planning process.
Responsible
Some qualifications, such as data and degrees, can’t be measured through objective means, and responsibility is one of them.
And though responsibility is the most important personality trait in an executor, it looks different for everyone. Measure for it by asking yourself:
- Is a potential executor able to get and maintain gainful employment?
- Are they able to support themselves and (if applicable) their household through said employment?
- Does the prospective executor consistently make good lifestyle choices?
- Does the executor-to be possess any behavior patterns that may create a conflict of interest between their affairs and the testator’s wishes?
Guardian
What is a guardian?
Children are an indelible and priceless part of estate planning. And if children are part of your family, it’s important to name a guardian in your will.
A guardian takes care of your children in the event of the testator’s death or incapacitation. They also manage your children’s financial affairs until a designated age.
What to consider when choosing a guardian?
Clean Criminal Record and Psychological Profile
A child’s safety is the first and most important aspect to consider when selecting a guardian. With the prospective guardian’s consent, conduct a criminal background check before naming them in an estate plan. Charges concerning domestic abuse, child exploitation, and illicit substance use or trafficking, no matter how distant, should be instant disqualifiers.
Another area to evaluate in a guardian is their psychological profile. Familiarize yourself with the red flags for disordered, neglectful, or abusive interpersonal relationship patterns and observe how on prospective guardian relates to others before naming them in your will.
Stable Career, Financial, and Living Situation
Housing, food, and steady parental income constitute a child’s basic needs. A potential guardian must demonstrate the ability to consistently provide nutritious meals, clothing, and a safe, clean home that has adequate space and privacy. Ideal guardians should also work jobs with a regular schedule and that require infrequent travel or relocation.
Life Stage
Material wealth alone, however, isn’t enough to qualify a guardian.
Guardian candidates must also be at a compatible life stage for raising and providing for children. For example, a single early career professional in their mid-20s might be too preoccupied with building their future, while a late career professional might be too focused on winding down into retirement and launching adult children.
Proximity
Moving is stressful for children of all ages. Minimize stress by only considering guardians within close proximity to the testator, such as those within the same state or region. Avoid selecting guardians that live in other countries or other areas with significant cultural differences.
Personality and Beliefs
Creating a nurturing, secure, and stable home environment involves more than just loving children. It requires patience, a good sense of humor, and the ability to adequately respond to another’s needs and emotions, even if they’re negative. A compatible belief system is another important aspect in a potential guardian, as the guardian’s religion (if any), morals, and parenting practices must mirror the child’s original parents.
Durable Power of Attorney (DPOA) Agent
What is a DPOA Agent?
In estate planning, everything must be indicated in writing, and a DPOA is a written document where you appoint one or more persons to act on your behalf in the event of your death or incapacitation.
A DPOA is one of two agent types in estate planning. And unlike the above executor and guardian roles, a DPOA is only active when the testator is still alive. After the testator’s death, the DPOA’s role dissolves and the will’s instructions activate.
Why is a DPOA important?
DPOA is the most overlooked role in estate planning, as it’s common for testator’s to believe incapacitation won’t happen to them.
Never believe incapacitation can’t happen to you. Besides saving your loved ones precious time, emotional, and financial labor during an already stressful time, a DPOA provides a clear decision-making path through opaque court proceedings, healthcare billing practices, and hard medical decisions.
Health Care Agent
What is a Health Care Agent?
Ideal for those with strong wishes around their medical care, a Health Care Agent’s role is dual-faceted.
On one end, they receive the DPOA document from the executor, and on the other, they initiate the medical decisions outlined in the DPOA.
Note that the Health Care Agent cannot override any health care preferences outlined in the executor’s living will.
What to consider when choosing a Health Care Agent?
Familiarity with Medical Practices
Acting as a Health Care Agent is first and foremost about making healthcare decisions on the testator’s behalf, which means the named agent must be familiar with medical procedures and the language that surrounds them.
While this doesn’t necessitate medical degrees, it does mean selecting someone who can question procedures. And when they don’t understand a medical procedure, they must know where and how to look to find the answers.
Logical and Strong-Willed
Personal emergencies involve intense, judgement-impairing emotions, especially if a loved one is caught in the crossfire. Hence why your Health Care Agent must be an interpersonal triple threat.
They must have strong boundaries, so they know where the testator’s wishes, family pressure, and their own emotions begin and end. They must be assertive communicators who can challenge a doctor’s treatment and testing decisions. And in the event of making a life-and-death decision, the right Health Care Agent must be able to detach from their own desires.
Trustee
What is a Trustee?
A trustee is a person legally appointed to manage the property in a trust. A trustee’s duties include:
- Managing assets, such as maintaining real estate properties and earnings.
- Keeping records of trust expenses, tax filings, and tax returns.
- Distributing assets to beneficiaries, in accordance with instructions in a will.
Select testator’s may also name a successor trustee in their estate plan. A successor trustee is an alternative who manages a trust when the primary trustee is unable to perform their role.
What to consider when choosing a trustee?
Organized
Ensuring a trust continues to grow and endure after the testator’s death is a trust’s modus operandi. Tax returns, record keeping, and account activity tracking are regular parts of ensuring a trust is properly managed and distributed. To keep track of them all without getting overwhelmed, lost, confused, or hit with money-siphoning penalties, fines, and fees, as trustee must be skilled at organizing and keeping track of large amounts of information.
Good Judgement
Money is all about numbers, but don’t let its cold and mathematical nature fool you. It’s also inherently tied to emotions, particularly if it involves assisting troubled loved ones or escaping worrisome conditions.
The above is why a testator should consider a prospective trustee’s judgement and the ability to say “no” under pressure before naming them in their estate plan. Remember that a trustee’s primary duty is to administer a trust in accordance with the testator’s wishes and applicable laws, irrespective of a beneficiary’s desires or influence.
