One of the most important features of Estate Planning is to give individuals of your choosing the power to make decisions for the benefit of yourself and your loved ones if or when you are unable to do so. The alternative to such planning is to allow the courts to decide who will make such decisions—a process which can be costly and time consuming.
This newsletter will focus on the positions that are filled by Estate Planning documents and issues to consider when choosing people to fill such positions.
Guardian
A Guardian is named by a parent in a Will to look after a child’s well being and assets if both parents are deceased during the child’s minority (age 18 in Illinois). When a Will and Revocable Living Trust work together and the assets for the benefit of the child are left in trust, the trustee of the child’s trust will manage and distribute the trust assets for the benefit of the child. A trust also allows the parent to determine an age beyond 18 when the assets will be distributed to the child. In such cases, the Guardian’s primarily responsibility is to look after the well being of the minor child and any assets of the child outside of the trust.
A named Guardian may be an individual or couple. The creator of the Will may also impose conditions on the guardianship, such as “Bill and Mary, so long as they are married to each other.” Issues to consider in selecting a Guardian for your minor children include (a) geographic location, (b) whether the individual is willing and able to raise your children, (c) whether your children get along with any children he or she already has and (d) whether you would want the individual to serve even if his or her financial, geographic or social status changed.
Executor
The Executor of a person’s estate is named in that person’s Will and is primarily responsible for administering the decedent’s estate as provided in the Will. Generally, the creator’s spouse (if applicable) is named as the first Executor. It is best to name a single Executor followed by successors rather than naming co-Executors in order to ensure that the estate is administered as efficiently as possible. An Executor may be an individual or a corporate fiduciary (a bank or trust company).
When a Will and Revocable Living Trust work together, the Executor’s primary responsibility is to ensure that any assets that the decedent left outside of his or her trust get transferred to the trust to be administered and distributed by the Trustee as provided in the trust document. This is done by opening the probate estate (if necessary) and closing the estate when all assets have been transferred to the trust.
Trustee
The Trustee, named in the trust document, is responsible for managing and distributing the trust assets as provided in the terms of the document. Generally, the creator (Grantor) of a Revocable Living Trust will be the Trustee during his or her life. Like an Executor, a Trustee may be an individual or financial institution. Successor Trustees should be individuals that you trust to manage trust assets, make distributions for the benefit of trust beneficiaries and work closely with accountants and attorneys.
Although serving as Trustee can be a significant responsibility, it is generally recommended that individual Trustees, rather than Co-Trustees, be named.
Health Care Agent
A Health Care Power of Attorney is generally effective immediately and appoints an Agent to make decisions regarding your health care in case you are unable to do so for yourself. The document also reflects your decisions regarding organ donation and life-sustaining treatment. Effective July 1, 2011, Illinois has passed a new law which updates the short form for this document by incorporating provisions in accordance with the Health Insurance Portability and Accountability Act that allows your Agent to access your medical history.
Property Agent
A Property Power of Attorney is generally effective either immediately or upon the finding of incapacity by your physician and appoints an Agent to make decisions regarding your assets. Similar to the new Health Care Power of Attorney law, effective July 1, 2011, Illinois has passed a new law which updates the short form Property Power of Attorney. Though the form is provided by state law, there are several decisions to be made when executing a Property Power of Attorney, including the powers that are granted to your Agent, how incapacity will be determined and the succession of Agents.
It is important to understand the responsibilities of each of these positions before determining who should be named to act. If you have questions regarding these positions, please feel free to contact me at any time with general questions or those concerning your documents.