A comprehensive estate plan does more than direct who will receive your money and property after your death. It also provides instructions for managing your affairs during your lifetime and identifies the people who will act for you if you are unable to act for yourself. An effective plan generally does the following:
- Outlines your wishes for managing and distributing your money and property during your lifetime and after your death
- Documents your healthcare preferences if you become unable to make or communicate medical decisions
- Designates trusted individuals to carry out financial, legal, and healthcare decisions on your behalf
Choosing these decision-makers can be difficult. Family conflict, geographic distance, a lack of available relatives, or an unconventional support network may mean that a family member or close friend is not the best choice. Even someone you trust personally may lack the time, experience, organization, or willingness required to serve effectively.
Many of the individuals appointed to manage your property or financial affairs—such as trustees, personal representatives, and agents under financial powers of attorney—serve as fiduciaries. A fiduciary has a legal duty to act in accordance with the governing document and applicable law, including duties to act loyally, carefully, and in the interests of the person or beneficiaries they serve.
When a suitable friend or family member is unavailable, hiring a professional fiduciary may provide experience, neutrality, and continuity. However, not every professional offers the same qualifications, services, or fee structure. Asking the right questions can help you determine whether a prospective fiduciary is qualified, trustworthy, and well suited to carry out your wishes.
Financial Decision-Makers
- Executor or personal representative.This person administers your estate after your death. They collect and manage estate assets, pay valid debts and expenses, complete required filings, and distribute the remaining property to your beneficiaries or trustee according to your estate plan and applicable law.
- Successor trustee of a revocable living trust (if applicable). This person takes over management of the trust when the current trustee dies, resigns, or becomes unable to serve. Depending on the circumstances and the trust’s terms, the successor trustee may manage and use trust property for your benefit during your lifetime and distribute the remaining property to your beneficiaries after your death.
- Agent under a financial power of attorney. This agent conducts authorized financial and legal transactions on your behalf, such as managing accounts, paying bills, or signing documents. The scope of the agent’s authority and when that authority becomes effective are governed by the power of attorney and applicable state law.
When selecting an agent to handle your financial transactions, several options may be available to you beyond family and friends:
- Ask if your bank or financial institution has a trust department. Because they are already familiar with managing your accounts, they may be a good fit to step in and assist you if needed.
- Interview a private trust company that specializes in managing money on behalf of individuals. They are likely well equipped to handle the administrative tasks associated with being a financial decision-maker.
- Consider asking your certified public accountant (CPA) or financial advisor if they are willing to act on your behalf or if they know someone who can.
When interviewing potential candidates, consider asking the following questions:
- How do you charge for your services? Ask whether fees are hourly, based on a percentage of the assets, subject to a minimum, or calculated another way. Also inquire about additional expenses so that you can understand how the total cost may affect your estate or beneficiaries.
- How do you document the transactions you conduct, and who may access those records? Careful recordkeeping and appropriate transparency help ensure accountability while protecting sensitive financial information.
- How long does it typically take to administer an estate or trust of this size and complexity? Although timing depends on the circumstances, the answer can help you evaluate the fiduciary’s experience, workload, and approach to resolving matters efficiently without sacrificing accuracy.
- How often do you communicate with the beneficiaries and my family members?It is important that everyone is on the same page and that the lines of communication remain open, even at your death, to help avoid potential conflicts after you have passed away.
- Do you require specific provisions in the estate planning documents or any additional paperwork before agreeing to serve? Your estate planning attorney should review these requirements to ensure that your documents grant the necessary authority and will operate as intended when the fiduciary takes over.
- What have been your most successful and most challenging experiences administering an estate or a trust? The response may reveal how the fiduciary approaches difficult situations, communicates with beneficiaries, resolves conflicts, and defines a successful administration. It can also help you determine whether the professional’s experience and working style align with your needs.
Personal Care Decision-Makers
These roles often feel like the most difficult to fill because you are asking someone to look after your safety and welfare as well as that of any pets you may have. Accordingly, each role has unique considerations:
- Agent under a medical power of attorney. This agent makes or communicates your medical wishes if you become unable to make or communicate them yourself. In addition to appointing an agent, consider completing an advance directive or living will with the assistance of your estate planning attorney. These documents can communicate your treatment preferences to your agent and healthcare providers.
You may also wish to prepare a letter of instruction explaining, in your own words, the types of treatment you would or would not want. Although such a letter may not carry the same legal authority as an advance directive, it can provide valuable guidance when difficult or unexpected decisions arise.
If you do not have a suitable family member, you may consider appointing a trusted friend or, where permitted, a qualified professional. State law may prohibit certain individuals, including some healthcare providers or employees of healthcare facilities, from serving unless an exception applies.
- Caretaker for your pet. This person provides a safe and loving home for your pet if you become unable to care for them. Because the law generally treats animals as personal property, simply expressing your wishes may not be enough. Speak with the proposed caretaker in advance to confirm that the person is willing and able to serve, and consider providing funds and written instructions for your pet’s ongoing care.
If no family member or friend is suitable, certain animal welfare organizations, veterinary programs, or foundations may be able to care for your pet or help identify an appropriate permanent home. Any arrangement should be confirmed with the organization in advance and properly incorporated into your estate plan.
When interviewing potential candidates for your personal care decision-makers, consider asking the following questions:
- Do you charge for your services? Some professionals and organizations charge fees, while friends or family members may not. Understanding the anticipated cost allows you to set aside sufficient funds and determine how those expenses will be paid.
- When and how should you be contacted if your assistance is needed? Because you do not know when you will need their assistance and will likely not be the one contacting them, it is important that you have an easy way for someone else to contact them in an emergency.
- Is there additional information or paperwork needed to carry out your role? Confirm that the person or organization has, or knows how to access, the necessary legal documents, contact information, medical preferences, pet-care instructions, and other relevant records before an emergency occurs.
Uncertainty about whom to appoint to these important roles can delay the estate planning process, but it should not prevent you from moving forward. We can help you evaluate your options, identify appropriate decision-makers, and create a plan that protects you and those you care about. Contact us to discuss how to put trusted decision-makers in place before they are needed.
Call Santaella Legal Group, serving all of California, at (925) 831-4840, or reach out to us here.