Estate Planning Basics, part 2: Trustees and power of attorney

In part 1 of Estate Planning Basics, I explained what documents should be included in your estate plan and some of the differences between a will and a trust to help you decide which option best fits your family’s needs.

As a reminder, a complete estate plan should include:

  1. A will or trust
  2. Financial power of attorney
  3. Health care power of attorney
  4. Living will or advance directive
  5. Long-term care insurance

Almost all of these documents require you to name a fiduciary. Many people find it difficult to decide who should act on their behalf, disbursing assets and filing the necessary paperwork. Consider the following tips for making that important decision.

Who should be your fiduciary or power of attorney?

Your fiduciary is just a fancy name for the person who is acting on your behalf to carry out your intentions, established by your will or trust. Your fiduciary is sometimes also called your trustee or your power of attorney (POA) depending on the role they are fulfilling.

What makes a good fiduciary and how do you know if you should name a professional trustee?

  1. Trust: Your power of attorney should be someone you trust, but also someone you think others involved will trust and accept. If you think there will be conflict or jealousy by choosing one child or friend over another, we recommend naming a professional trustee.
  2. Time: Managing your estate after you pass can be incredibly time consuming. Find someone who has the time or can make the time to do it. One of the most common reasons our organization is named as trustee is that a person’s children all live and work out of state, making local management of things like selling their house or filing documents unnecessarily burdensome for their family.
  3. Tough decisions: Despite your best efforts to provide detailed instructions, your power of attorney may need to make a tough decision that will be unpopular with others involved. This is especially true with a health care POA carrying out an advance directive.
  4. Attention to detail: Someone who makes sure all the i’s are dotted and t’s are crossed is invaluable. There will be legal forms to submit and finances to balance. Is the person you choose capable of handling these tasks?
  5. Grief: Remember that your loved ones will be grieving your loss. If you don’t want them to have to manage the business side of your death on top of their emotions, it can be helpful to name a professional trustee.

The most common disbursement for a will or trust is “to all my children in equal shares.” If your situation will be anything other than this, we highly recommend a neutral party, like a trustee. A common example is loaning money to one child who might believe that loan should be forgiven without penalty upon your death or leaving the money to one child inside a trust while the others receive distributions outright, causing questions of fairness.

Sometimes a neutral party is chosen because there is existing family drama, but lately it is more common for clients to come to us because they simply don’t want to burden their families and want that family harmony to continue.

The real gift you leave behind

Not every person or financial institution is willing to handle this type of post-death work. Be sure to ask anyone ahead of time if you would like them to serve as your trustee or power of attorney.

Finally, remember that more than money or possessions, the real gift you leave behind should be peace of mind. Asking an estate-planning expert for help now reduces the chances that your loved ones will feel overwhelmed later.

Attorney Alyssa Chance is a vice president-trust officer at State Bank of Cross Plains (SBCP). She brings experience from private practice working in family law and estate planning to her role in SBCP’s Wealth Management Division.

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