As estate planning attorneys we often get asked the following question, “Does my agent or trustee need to be well versed on how to do all aspects of their role?” Our answer isn’t a simple one or one standard answer that works for all our clients. However, we feel that it is important to discuss with our client that the agent they name in their documents should know that they’ve been named, the type of document they’ve been named in and generally what their role will be. We also encourage clients to share our information so we can provide assistance to the fiduciary if they become incapacitated and after death. We realize that we work with these documents every day but most agent or trustees have never done the job before and need some assistance when it is time to act.
With that being said, we do encourage our clients to discuss the documents with their trustee or agent if they are comfortable. First, the client needs to under the powers, duties, and responsibilities of the fiduciary they are naming under the documents. The client should also know that it is important to revisit these documents throughout the years so they can make sure the fiduciary they have named in their document is still the same person they want to act on their behalf if they become incapacitated and at death. Generally a client should revisit their documents every 3-5 years or if there has been a significant change in their finances, health or family.
It is also important to consider whether you want to educate your fiduciary. The first rule of acting as an agent or trustee is the rule against self-dealing. It is important for the fiduciary to understand the powers and limitations placed on them through the language of the document and that they should always be acting within the scope of authority provided to them.
An agent or trustee should also know the proper way to sign on behalf of the client. Again, this is often the first time the fiduciary is acting in this capacity so it’s natural that they would need some assistance on basics like the correct way to sign a check or other documents on behalf of the principal.
We often tell our clients that your fiduciary does not necessarily have to be well-versed in money management or investments, but they should be aware that they can work and hire professionals to help them do their job. We can assist by providing your fiduciary with a referral list of many trusted financial advisors in the area that can be a good resource for them.
One of the most important characteristics of your agent or trustee will be their record keeping skills. It is critical that they develop a system early in their role to keep track of the finances to minimize any potential questions and to make the process as easy as possible from the start. If your agent has any ongoing accounting or fiduciary reporting- like in a guardianship- it will save on hassle and expense later if they start a system early to be organized and to document the transactions.
While we believe the best guidance to our client is to encourage them to have a conversation with their agent or trustee, it does not always happen. As such, there are some resources available to the public that help the agent or trustee if they find themselves needing to act with little prior guidance. The Consumer Financial Protection Bureau (CFPB) has guides available on their websites for agents who are managing someone else’s money. The Conversation Project is another helpful publication that can be a good tool and resource to assist with discussing the role of someone else making health decisions for you. Of course, they should discuss their role with an estate planning attorney as well. Contact SinclairProsser today to review all your estate planning needs.
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