Is there a bomb ticking quietly in your estate plan? The chances are good that there is, says Forbes in “Defusing The Time Bombs In Your Estate Plan.” The only question is; how big will that explosion be? The “bombs” are the people, or the individual, who you name to act on your behalf.
Whether they act during your lifetime or after you pass away, these individuals frequently can make or break your estate plan. They can determine the fates of family relationships and financial security. However, most people don’t realize the potential consequences of their surrogates’ actions. As a result, they don’t give sufficient thought to whom they appoint to these important roles.
Let’s examine some of the major potential surrogates:
Agent: This is the person who acts for you under a power of attorney or advance medical directive.
Trustee: The trustee has the authority to make the final decisions about managing the investments, making distributions, paying taxes, and other aspects of managing the trust. The decision making process can be guided or restricted by your instructions. In a properly prepared plan the trustee(s) will be the most important people you appoint.
Executor: This person manages and distributes your estate after you pass away. Also known as a personal representative, the executor is charged with carrying out the wishes expressed in your will and other estate planning documents.
Social Security representative payee: Social Security will appoint someone to manage the benefits of someone who is unable to do so; usually it’s a family member or friend. The beneficiary can contact Social Security and ask that a particular individual be appointed, and they will consider the request.
Long-term care insurance lapse designee: Most insurers now allow the insured to choose an individual who will get a notice if the LTC premiums aren’t paid. You also can name an alternate payee who will receive and manage benefit payments when you can’t.
Agent for funeral decisions: States have varying regulations about who can make funeral decisions, and some have laws recognizing the appointment of an agent.
Estate planning attorneys ask clients to make sure to tell their selected surrogates about their roles well in advance. If they don’t know they have been chosen and aren’t familiar with the estate or the decedent’s wishes, it makes a difficult situation even harder. Another issue occurs when the responsibilities and tasks of different surrogates overlap. When you make your decisions about who will act on your behalf, as yourself, honestly, do they have the qualifications and strong backbone to do what you’re asking them to do?
In our office we have created the Family Care MeetingTM where we have a meeting in our office with our clients, trustees, agents and other surrogates, along with other advisors (financial planners, CPAs and insurance professionals). This meeting is not only to explain what the plan is, but also to go over any sensitive areas or potential issues specific to that client’s family and plan. The goal of the meeting is to properly prepare those who will need to make decisions and to take action when you can’t. The Family Care MeetingTM is an essential part of the estate planning process.
To learn more about conducting a Family Care MeetingTM and choosing and establishing executors, agents, and trustees, schedule your consultation today by visiting our website!
Reference: Forbes (July 23, 2018) “Defusing The Time Bombs In Your Estate Plan”