Estate planning is a family, and sometimes friend, affair. When you finally sit down and begin thinking about how you want to plan for your family’s future, you have to consider the people who are going to be impacted by your estate plan. I don’t just mean those who will be your beneficiaries, but rather the people you have chosen to handle your affairs.
Depending on your situation, you may want to fill five primary positions: Power of Attorney, Medical Power of Attorney, Executor, Guardians, and Trustees. These are your “fiduciaries.” You may have heard the term “fiduciary” in legal or financial conversations. A fiduciary is someone with a legal responsibility to handle certain affairs on behalf of someone else. These five positions are there to handle specific aspects of your affairs on your behalf or the behalf of your estate when you still living but unable to manage your affairs and after you have died.
POWERS OF ATTORNEY AND MEDICAL POWERS OF ATTORNEY
These two documents allow you to determine who has the authority to make certain decision regarding your finances and health while you are still living if are not able to do so. Unlike Guardianship, discussed below, a power of attorney does not reduce or diminish your rights. It merely allows another to act on your behalf if you need someone to step in.
GUARDIANS
A guardian is someone who has the authority to make all decisions for a person under the guardianship. This is to be used in situations where there is a minor in need of a guardian or when an adult is incapacitated and is no longer capable of making decisions.
There are two types of Guardians you may need to consider: one for your children and one for yourself in the case of incapacity. The Guardians for your children can be named in your will or in a separate guardianship document should there be a concern of incapacity. As for naming a Guardian for yourself in the case of incapacity, Texas allows you to designate a guardian prior to need. The Guardians can be Guardians of the estate, who handle the financial side, or Guardians of the Person, who can make decisions on behalf the minor or incapacitated person.
A Guardian of the Person should be someone you trust to make decisions you would agree with for yourself and your children. A Guardian of the Estate is someone you would trust to make sound financial decisions in the interest of your estate. A Guardian of the Person and Guardian of the Estate do not have to be the same person. Before you designate your Guardians talk to them about what you expect from them and how they might manage your affairs.
TRUSTEES
If you choose to set up a trust, you will need to appoint a Trustee. Similar to a Guardian of the Estate, you want a Trustee who is financially competent. There are professional trustees through banks and other financial institutions that serve as Trustees for large estates, but for most families, whose estates are more modest, a Trustee will usually be a family member or close family friend. The Trustee will be the one holding the checkbook and making all the financial decisions regarding the trust you have set up.
EXECUTOR
The Executor is the person who handles the legal aspects of having your Will verified and administered. When choosing how to fill this position, you want to think about the personalities of those around you. This person needs to be a detail-oriented person who can manage deadlines and isn’t overwhelmed by having to deal with attorneys and legal paperwork.
Above all, remember these positions can be a significant responsibility. It is not a family popularity contest. It is important to choose the right person for the right job.
When you engage in estate planning, there are more concerns than merely deciding who will receive the heirlooms. Think about the people who will be the best fit for these crucial positions and then discuss them with your estate planning attorney.