By Marguerite C. Lorenz, EA, CTFA, CLPF
July 2009

Most people consider estate planning only in terms of what happens to the assets they own (or who inherits) when they pass away. I think it’s more effective to think of your Trust as a business in itself that includes assets, income, payables and tax returns. The job of Trustee (or CEO of the Trust) has a great deal of liability and brings responsibility, sometimes involving years of work. To create an effective plan, it’s important to understand the job you’re “hiring” for, as the person you select may be responsible for your care (medical, physical and social needs) as well as your assets while you are very much alive.

Choosing the right person to put your plan into action is one of your most important life decisions. This is a great opportunity to get clear on what your next five years look like and what would happen (to your family or business) if something happened to you. Ideally, you’ll be updating your plan every few years. Here’s a brief description of each of the standard estate planning documents and the job title related to it:

• The Trust – Successor Trustee. You are the first Trustee of your Trust, which operates when you’re alive and after you’ve passed away. It can control important issues like how you choose to live, who you choose to support, how you will be cared for if you become incapacitated, the standards others have to follow to receive your generosity, and who’s in charge of getting the work done, etc.
• The Will – Executor. Your “Last Will and Testament” is your written plan for your assets after your death. Often, a “Pour Over” will is used in conjunction with the Trust documents and instructs the Executor to put assets into the Trust if this wasn’t accomplished before death. This document also lists whom you’ve selected as guardian(s) for minor children.
• Power of Attorney for Finance – Attorney-in-Fact (or Agent). This document may have different titles and yet it has far-reaching instructions; it’s only in effect while you’re alive. We recommend you read all your documents and understand when your attorney-in-fact can begin serving you.
• Advance Health Care Directive – Agent for Healthcare. Your selected agent may be the one to decide what medical procedures will be performed on you when you cannot speak for yourself. We recommend a friend or family member who’s close to you serve as agent. For those who don’t have someone to select, consider an alternative, like a professional fiduciary.

Every estate plan gets adjusted as your life grows and changes. Please speak to your Estate Planning Attorney and Financial Advisor regarding specifics in your plan. An experienced attorney will have insights into tax benefits, charitable donations, and your plans for the last years of your life, and will be able to explore your choices with you. Long before you choose to stop doing the work as Trustee yourself, you’ll need to tell your attorney whom you select to do the work of implementing your plan. We urge you to get your wishes known and put into writing, as this is the best way we know of to avoid probate, maintain your quality of life, and sustain family harmony.

Marguerite C. Lorenz is a California Licensed Professional Fiduciary who works with clients to keep their estate plans up-to-date and put them into action. To learn more, visit www.MyTrustee.net.