With all aspects of estate planning, there are many variables that you need to address. The aspect that my clients and I spend the most talking about is how and when property is to be given to their kids or other beneficiaries. Most of the time, this is all that people think about when they think of estate planning. However, recent meetings and recent events compel me to bring up another point that is often overlooked when clients just think about where their property will go after they die: Who should be in charge of the administration?
When you are writing your estate plan, whether it is a last will and testament, a revocable trust, or you are just depending upon beneficiary designations and powers of attorney, the person you name as your fiduciary is going to be the person that has the most power ensuring your written wishes are adhered to. If you have minor children and you want to ensure that, if something were to happen to you, your minor children were cared for and they didn’t get all their inheritance at age 18, then you need to put someone you can trust in that position to follow your directions.
Likewise, if you are worried about becoming elderly and incapacitated, and must name someone as power of attorney, you should look at who will have your best interests in mind, not just your closest relative. A horror story that I am in the process of correcting involved an elderly woman who named her nephew as agent. The nephew used the POA to gift out, mostly to himself or his kin, over $250,000 from the estate (over a 16 month period)! This woman did not have millions in assets (total value of her gross estate prior to wrongs was only about $600,000), so the value removed almost equaled 1/2 of her lifetime net worth!
Now, not everyone will try to take advantage, but not everyone is honest enough to serve in a fiduciary capacity. I cannot tell you who will be best to serve for you when we write your estate plan, but prior to coming meeting with any estate planning attorney, you need to be aware of the power these fiduciaries wield and who you would trust in caring for you, your finances and your children’s inheritances.