The importance of knowing how to pick ‘em when it comes to your Estate Plan
You really know how to pick ‘em. I’ve been accused of that a time or two before, but we live and learn and move on. I want to talk about knowing how to pick the people that will administer your estate plan when the time comes, or those that will be there to help should you need them sooner than that.
There are a few things to consider when we’re choosing who should administer our estate when we pass. Most folks look to naming their adult children as their administrators. But what if you don’t have children? Or what if your adult child couldn’t competently manage the task of administering an estate? We must consider these issues, as well as what type of estate plan would fit best for you – in addition to what type of an estate plan would lend itself to easier administration for whomever you nominate. All these things – and more – should be considered when creating your estate plan.
A will-based estate plan. When we consider estate planning, we generally speak of two sorts of plans – a will-based estate plan and a trust-based estate plan. Let’s talk about wills. In Idaho we call the administrator of a last will and testament a personal representative (you may know them as executors). A personal representative takes care of your estate after you pass. They inventory property, they notify beneficiaries, and they distribute property when it’s the right time to do so.
A trust-based estate plan. Personal representatives are the administrators of wills. Trustees – more accurately, successor trustees – administer trusts. These individuals can help take care of you and your estate during your lifetime should you need it and administer your estate at your passing. Can you see an important distinction between the two types of estate planning so far?
A good estate planning attorney asks questions – and a lot of them. They ask about your assets, what kind they are, and where they’re located. They ask about your family and your friends. They ask about your plans, your wishes, and even your fears. They ask you to be frank and open with them. Most estate planning attorneys, I have found, are compassionate folks. We also must be frank and open with our clients. Talking about your families can be a sensitive topic but it helps us to better understand your situation so we can help you make the best decision for yourself, your estate, and those you leave behind.
So, should you pick a family member to administer your estate? Family members might be the wrong choice. An executor and a trustee are your fiduciaries and not your beneficiaries – these are two very defined roles. Can they be the same people? You bet. But you must view them separately when making the choice of who you select to be in charge. You might have to take a hard pass on Uncle Frank or Danny the Delinquent – who while may be the apple of your eye, can’t manage his way out of a paper bag, let alone manage your estate. This is where we start to draw larger circles to include friends, and other trusted individuals.
What about having your attorney be your personal representative or successor trustee. Seems reasonable, right? After all, they created the estate plan, who better to administer it? Many attorneys, including myself, are reluctant to act as administrators, and for very good reasons.
What about your CPA? How about a bank or another institution? This is where the conversation gets more nuanced. Should we have a third party, or corporate trustee administer the estate? Yes, and no. It depends. Your estate plan is individual to you and your family situation, if you have one. Family isn’t always the best choice. Who in your life would be the best choice? And don’t forget about those people who would be automatically disqualified as administrators, like minors or non-U.S. citizens.
I have witnessed the decision-making analysis of some of my clients when it comes to selecting administrators. It can be quite the anxiety-provoking experience, but it doesn’t have to be. That’s why I’m here. I ask the questions and we start to find the answers, together. I can help you figure out how to pick ‘em.
As an aside, and in honor of Father’s Day, I’d like to recognize someone who was picked for me and another I picked for myself. For my own father, Jack, I miss you more than words can possibly approach. I was the luckiest of girls to be your daughter. And to my own love, Nate. Happy Father’s Day, Sweetheart. I sure do know how to pick ‘em.
