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Foley, Foley & Pearson News

Monday, August 22, 2016

Who is in Charge?

We all like to be in charge because it gives us a sense of control.  This is particularly true when it comes to managing our finances and a personal health.  None of us really think about giving up control or worse losing control.

The funny thing about control is it is ultimately an illusion.  Death and disability are outside of our control.  That is the essence of what estate planning is about—passing control to other people or loved ones upon death or disability.  

What is the person in charge called and what do they do?

The person(s) who take charge of your financial or health care affairs have different names, titles, and duties depending on the legal document that gives them authority.  Sometimes a person in these positions is simply called a “fiduciary,” which describes the duty imposed by law to perform their duties impartially.  See the article titled What are the Duties of a Fiduciary? also in this newsletter.  Here is a list:

  • Personal Representative or Executor—A person who is nominated by the last will and testament to take charge of the probate estate of the decedent.  The Personal Representative is required to take control of assets of the probate estate, pay creditors, file a final tax return, provide an accounting to the beneficiaries, and distribute the property of the probate estate as directed by the will. 

  • Successor Trustee—A person who is appointed to take control of assets held in a trust.  The duties of a Successor Trustee of a trust are similar to that of a Personal Representative.  The difference is that a Personal Representative derives authority under the directions of the will and confirmed by the probate court.  A Successor Trustee can take charge of all assets held in the name of a trust without going to court.  However, the Successor Trustee must still pay creditors, file a final tax return, provide an accounting to the beneficiaries, and distribute property as directed by the trust.

  • Agent—A person appointed to act under a power of attorney.  The scope of an agent’s authority under a power of attorney can be very broad or narrow.   Most powers of attorney give broad authority to the agent to act on behalf of the Principle to manage their financial affairs and provide financial support.

  • Health Care Agent—A person appointed to act under a health care power of attorney or health care directive.  The health care agent is allowed to make decisions about where the principal lives, health care treatment, and end of life decisions including the discontinuation of medical treatment under a living will or advanced directive.

  • Guardian—A person appointed by a court to care for an incapacitated person.  Typically a guardian is unnecessary when the incapacitated person has signed a health care directive.  Guardian is also the name of the person who is named in the will to care for minor children if both parents are deceased.

  • Conservator—A person appointed by a court to take care of the finances of an incapacitated person.  Typically a conservator is unnecessary when the incapacitated person has signed a durable power of attorney or living trust.

Is the work hard?

The work of a fiduciary isn’t particularly difficult but it can be inconvenient, time consuming, and tedious.  Keeping track of paperwork and details is important.  The fiduciary is also required to put the interest of creditors or other beneficiaries in front of themselves and make sure that the process is fair, equitable, and done according to law and the directions contained in the legal document that appoints them. 

Fiduciaries may hire professional help including financial advisors, attorneys, or accountants to assist them in performing their work.  We recommend that successors get help from experienced professionals because it will ultimately make the process easier and faster.  It will also help the successor from making mistakes that cost time and money or from becoming personally liable for those mistakes.

Who should be named?

It is common for people to name family members or adult children to serve as agents, Personal Representatives, Successor Trustees, guardians, and conservators.  The right person depends upon family circumstances, but being level-headed, compassionate, fair, diligent, patient, tactful, and calm under pressure are excellent attributes for people performing these functions.  Having legal knowledge, financial savvy, accounting, and bookkeeping skills are helpful but not essential.   It is a good idea to avoid individuals who are combative, critical, selfish, disorganized, egotistical, rude, inflexible, greedy, and prone to deceitfulness, lying, or unlawful behavior. 

Sometimes it works out well to name multiple people to serve together as agents, Personal Representatives, Successor Trustees, guardians, and conservators.  However, make sure that the people named are compatible and able to work as a team.  It isn’t unusual for siblings to have difficulty getting along or working together, therefore, naming multiple children to serve in this capacity is not automatic.

If it is impossible to find a family member who can fairly perform these duties, a professional bank, trust company or CPA may be a good choice.  While there may be additional costs associated with hiring a professional to handle your affairs, it may ultimately save time and money by avoiding squabbles, disputes, and mistakes.

Should they be paid?

In one word, “yes!” Handling financial affairs and medical decisions for another person is stressful, time consuming, and subjects the person to personal liability to others.  We always recommend that family members be paid a fair fee for their time and efforts.





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Foley, Foley & Pearson, P.C. is a full service Estate Planning law firm. We offer our clients services in Probate Administration, Estate Taxes, Wills, Trusts, Disability and Incapacity Planning, Estate Administration, Corporate and Business Law, Business Succession Planning, and Planned Giving and Charitable Bequests.