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Legalese Made Easy For Estate Planning Clients

Have you ever been asked who you will appoint as your Trustee(s), Executor and Guardian? Most of us have no idea what these “legalese” terms mean. This can leave us feeling intimidated and unwilling to begin the estate planning process.

One goal of our law firm is to make the estate planning process comfortable and easy for our clients. Gaining a basic understanding of some of the legal jargon used by estate planning attorneys can really help ease the process. Here are some basics to start.
 
Estate Representatives: People who are named in estate planning documents, such as trustee(s), executor, and guardian are all Estate Representatives. Estate representatives are people or institutions who are named in your estate planning documents and appointed to play a role in your estate. They typically assist after you pass away; but can also help you and your estate while you are alive.

Estate representatives have different duties; and sometimes they are appointed by a court. Your representatives serve as fiduciaries, meaning that they need to act in good faith, and with the highest ethical standards. They have an obligation to act in your estate’s best interests and carry out important responsibilities. There are other types of estate representatives, but for simplicity, here are the most common ones.

• Executor/Personal Representative: An executor (in many states now called a Personal Representative) represents a deceased person’s estate and manages the distribution of assets according to a Last Will & Testament. It’s their responsibility to make sure that all assets in the will are accounted for and are transferred to the named heirs. The executor may distribute assets under a probate court's supervision. 

• Trustee(s): Trustees are individuals or entities named in a trust agreement to administer a trust. A trustee manages the trust property, and is responsible for distributing property to beneficiaries, in the manner instructed by the trust document. Most Trustees can take over management of a trust without court intervention. In the event of a trustee’s incapacity, or upon a trustee’s death, a “successor” trustee, whom you have previously chosen, can step in to take over control of the assets held in your trust. Sometimes you may want to have two trustees serving at the same time. This is a trust where more than one trustee serves at the same time. For example, a co-trustee can help a trustee beneficiary to manage their inheritance. Your attorney may suggest co-trustees for a variety of reasons.

• Guardian: A guardian is a person who stands in your place to make day-to-day decisions, on behalf of a child or an elderly parent, should you pass away or become incapacitated. Guardians play a vital role in protecting your family members and making sure that they get the care they need. Best practice usually calls for naming guardians in your Last Will & Testament.

The are other types of estate representatives that are less commonly talked about. They include a Trust Protector and “Last Resort” Beneficiary.

• Trust Protector: A trust protector is a person who can watch over the trust, the trustees, and the beneficiaries. They can intervene if necessary. For example, if a beneficiary suddenly becomes ill or develops a special need, a trust protector can be given the power to amend provisions, such as a distribution plan, to ensure the well-being of a beneficiary. The Trust Protector can act as a watchdog over the trust, and often will have the power to remove a trustee perceived as acting improperly. Trust protectors can change provisions of the trust to take advantage of changing state laws or tax laws.

• “Last Resort” Beneficiary: Though technically not an estate representative, a Last Resort Beneficiary often gets lumped into this category. Your attorney may ask you to select a charity, or individual, who will inherit your assets in the unlikely event that your heirs are deceased, and no one in your family remains to inherit your estate.

Now that you have a general understanding of the roles of estate representatives, it is important to consider the qualities to look for in an estate representative. As you consider your estate representatives, many factors will come into play. Typically, estate representatives are chosen based on a mix of tangible and intangible factors that make them ideal to serve in their chosen role.

Factors include:

• Personality Traits: Personality traits such as trustworthiness, reliability, integrity, organizational skills, communication skills, and even emotional intelligence can play a role in selecting the most appropriate representatives. These are some of the intangible factors that come into play when choosing estate representatives. 

• Fixed characteristics: Set factors such as age (are they younger), stage in life (married or parents), location (live nearby and a citizen), education (college graduate), profession & skills (attorney, CPA or financial expert), availability (they are retired), willingness to serve (they have time), and selecting a representative who understands your family history (close friend or relative) can have an important impact on this decision as well.

• Lifestyle Choices: Considerations such as religion, cultural values, life experiences, and financial views of a person, may also play an important role in this decision. Your estate representative may share your customs and traditions, such as going to church on Sunday, or celebrating certain holidays that are important to you.

It is recommended that you review these considerations with your estate planning attorney. Every state has different nuances that relate to estate representatives, and each person’s circumstances are different.

Talking through your thought process can often help crystalize in your mind the best choices for your estate representatives. Your estate planning attorney can help you clarify any questions or concerns that you may have about choosing your estate representatives, and they will be able to guide you through these oftentimes complex decisions.