One of the most important tasks when planning your estate is deciding who you will choose to be your fiduciaries or so-called “decision makers”. These are the individuals you select to make critical decisions if you are unable due to illness, disability, or death. Your fiduciaries are responsible for making decisions regarding your health care and finances.
Since each of your decision-makers serves a distinct role, let’s examine their tasks and whether you should assign the same person to each role.
- Health Care Power of Attorney Agent: This person will make health care decisions for you if you are unable due to incapacity. Your chosen agent should understand your values and be willing to advocate according to your wishes when speaking to medical professionals.
- HIPAA Representative: This person(s) has the authority to receive protected health information. While this role does not always grant decision-making abilities, your healthcare agent cannot do their job without access to this crucial information.
- Financial Power of Attorney Agent: This grants someone you trust the authority to handle your financial affairs, which can include paying your bills, managing investments, and making other financial decisions on your behalf. Choosing the right agent is a decision that requires careful consideration of trustworthiness, financial knowledge, and availability.
- Executor/Personal representative. This person is tasked with settling your probate estate upon your passing, which includes carrying out the instructions in your Will, settling your debts, and distributing your assets.
- Trustee: If your estate plan includes a Trust, your Trustee will manage Trust assets both during incapacity and following your death. You should choose a level-headed person with a reasonably good amount of business acumen. Exactly how complicated the process will be depends upon the circumstances.
- Guardian of Minor Children: While this person may not be making decisions for you, they will care for your children if you pass while your children are minors. The guardian will make sure that the child has food, clothing, shelter, and education. You also want to consider a guardian who can provide the love, support, and guidance you wish your child to have.
Should the same person fill all of these fiduciary roles?
It depends. There are special circumstances to consider for each role.
What is the geographic location of the person? This matters far more for health care decisions and guardians than for financial matters which can often be managed from afar.
What is the individual’s skill set? It may make sense to appoint your daughter who is a nurse to make health care decisions while your son who is an accountant may be better suited for financial decisions. You should also consider their financial responsibility and general reliability.
However, there are also reasons why having different people occupy different roles can be problematic. What if the Health Care Agent wants to spend an exorbitant amount of money on care, but the Financial Power of Attorney and Trustee do not agree? What if the Financial Power of Attorney and Trustee are not the same, so they are managing different financial assets separately that would be more efficient as one?
Whenever you are creating your estate plan, you must take care in making these decisions and remain practical. Remember, it is always best to work with an experienced estate planning attorney who can help guide you through each role and what it may entail for your fiduciaries.
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