Estate Planning Tips: How to Pick POAs, Health Surrogates and Trustees

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Death and incapacity are hard topics to discuss and even more difficult to plan for. We would like to think the good times will go on forever. However, we know that is not reality. To help with the challenging decisions of who to choose to represent us, here are some estate planning tips.

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Both death and incapacity, to some extent, will reach many of us at some point in our lives. Therefore, we need to make the appropriate preparations, which entails completing our estate planning documents. The most common and important documents are the last will and testament or trust, power of attorney and health care directive. For my clients, one of the most difficult parts of the process is selecting the correct representative to serve in each role. Below are some considerations to take when selecting representatives to each of these positions.

Power of Attorney

As we grow older, we become less able to manage our own affairs. A power of attorney appoints a representative(s) to handle our affairs for us on a broad scale. It is a very powerful document, and the obvious primary concern is appointing someone you trust. Remember, most likely you will not be completely competent when it is necessary to use this document, so appointing an individual(s) you trust is paramount.

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It is also advisable to select someone who lives in close proximity to you. Handling someone’s affairs from a distance can be difficult. It is really a hands-on experience, so if you can appoint someone close to you, that would make the job easier and more effective.

Finally, I always advise my clients to appoint multiple powers of attorney who can act independently of one another. There is a lot of work that is involved in managing a person’s affairs. It might be too much for one person who also has their own life to manage. I find it works better if the work is spread out among multiple people so not any one person feels too overwhelmed.

Health Care Directive

This document appoints someone to make a medical decision for you if you are unable to do so yourself. Most everyone appoints their spouse as the primary person to make that decision.

The real question becomes who to appoint as the successor representative(s). If you are fortunate enough to have a person in the health care field as a family member, then the choice may be an easy one. For the less fortunate, it should be a compassionate person with the skills necessary to be able to discuss your situation with treating physicians and make the right decision on your behalf.

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This is not the time for a committee, so I recommend picking a succession of individuals instead of having co-representatives. Having more than one agent could cause an issue if they both do not agree on the best way forward.

Personal Representatives and Trustees

Most likely a spouse will be the primary appointment, whether that be as a personal representative under a will or a trustee of a trust.

If you have chosen to complete a will document, it is best to discuss your alternate choice with an attorney before making a selection because restrictions on appointment can vary from state to state. In Florida, an out-of-state resident cannot be a personal representative unless they are related to you. Many states have similar restrictions.

Trusts do not have such restrictions. If you are a high-net-worth individual and have a more sophisticated estate plan, you might want to consider the services of an independent fiduciary, such as those provided by a bank or other trust advisory institution. If you don’t fall into the high-net-worth category, then you may want to consider these options when making your selections.

Distance or proximity to you or your home state should not be a factor. Today, out-of-state agents can operate just as easily as in-state alternatives. A majority of probate and trust administration can be handled electronically, so physical presence in the state of the decedent is not necessary.

You need to select an individual who not only has the aptitude, but the time to perform the administration that you are going to require. Time is a key factor because there is a significant amount of work involved in every estate.

Finally, since most estates involve handling money and assets to a certain extent, you must appoint someone with the morals to fairly carry out your objectives.

Need an Estate Planning Checkup? Now Is the Perfect Time

There are unique characteristics to consider when selecting a representative(s) for the different roles outlined above. It is imperative to select the right agent that fits each unique position. They may be the same person or different people as your situation dictates. Keep the above factors in mind when making your decision, and you will be on the right track.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Richard Ricciardi is an estate planning attorney and partner at Powell, Jackman, Stevens & Ricciardi, P.A. in Fort Myers, Fla. Richard obtained his Master of Laws Degree in estate planning and elder law, which required extensive additional education tailored specifically to advanced issues in estate planning, including business succession planning and taxation issues affecting estate transfers. Richard represents clients with a variety of debt issues, personal representatives, trustees, beneficiaries in probate or trust administration and singles and couples in preparing estate planning documents.