People often ask themselves “Who is the best choice for executor?” That is an important consideration, but there are actually several roles to consider when working on your estate plan. Creating an estate plan includes assigning a person (or persons) to several different financial roles: someone to oversee financial affairs either at your direction or once you are incapacitated (Power of Attorney), someone to be the successor trustee of a trust, someone to act as the legal guardian of your estate in the event you later need one (or your childrens’ estates), and someone to be the executor of your will. According to a recent article from Kiplinger, these people are critical to caring for you while you are living and after you have passed. The title says it all: “How to Choose Your Trustee or Executor of Your Will.”
The person managing your estate and the Power of Attorney may have broad discretionary powers, so you’ll want to be sure they are prepared to follow your wishes, even if they aren’t the same as their own. Individuals appointed in these roles are considered fiduciaries and have a legal duty to put your interests above theirs.
An executor must carry out the terms of your will. It is not just an honor, it is also a big job. The executor must gather the assets that are part of your estate, pay the debts of the estate, and distribute the remaining assets according to the terms of your will. There are many duties and responsibilities of an executor, so they should be chosen with care. Sometimes a family member makes sense, sometimes it does not. Some factors to consider include age, ability to perform the required tasks, proximity to the testator, the time requirements of managing the estate, and family dynamics.
Trustee duties depend upon the directions in the trust. If a trust owns a family business, farm, or a portfolio of investments, you’ll want a trustee who understands your family’s business, farm, or investments. The trustee should know they can hire advisors and others who help them if they are unfamiliar with the assets in the trust and recognize a need for professional help.
Trustees need to read the trust and its provisions and understand its requirements. An estate planning attorney can help the trustee become more comfortable with their role. A letter outlining the grantor’s intent, the reason for the trust and desired goals can also be helpful.
Many people choose their child or the guardian of a minor child to be their successor trustee. Taking on this role should be discussed with the individual. If the trustee is asked to oversee assets for a minor child until they turn 30, it’s a long-term commitment. If the trustee is also the guardian of a child, the trust language should clarify if the assets are to be used for the child’s maintenance.
A non-family member is sometimes better if the family can pay the fees. A trust department at a qualified bank or a professional trustee can take on this role. The professional trustee typically charges a percentage based on the value of the trust assets. Fees based on the value of the entire taxable estate may not make sense if the trust is simple and doesn’t require a lot of management.
A consultation with a skilled estate planning attorney should include discussions of who is available to serve as a successor trustee. Estate planning attorneys have seen all kinds of complicated family dynamics and can help you come up with options for people or organizations to serve as trustees or executors. Contact the Law Office of Christina Brengel to begin your estate planning journey today.
Y Reference: Kiplinger (April 25, 2024) “How to Choose Your Trustee or Executor of Your Will”