Selecting Agents, Successors and Trustees for You and Your Family

A woman came into my office with her daughter. She was here for estate planning. She had carefully filled out our requested questionnaire. I reviewed it with her. The questionnaire had important information we need to discuss her estate plan. That information includes the family, health status, citizenship status, assets/property, and who they want to make medical decisions and financial decisions if they need help or are unable to make decisions.

As we reviewed the agents for financial and medical decisions, she had listed all four of her children from oldest to youngest in each category. We discussed the suitability and availability of each child on the list. The first child was out of the state and too emotional to make medical decisions for her. The second was bad managing money. The third child was incarcerated. Only the fourth child, who happened to be with her, was a willing, able, and suitable agent.

This is pretty common. People frequently just list the children without much thought from oldest to youngest, just assuming that children will make decisions for the parents.

Also common is a client coming with a list of prospective agents and successors, but not having spoken to them about whether they were willing and able to serve.

Clients with “troubled children” who need protection trusts, often select other children to be trustees. This is a mistake. Absent a child with a serious disability, siblings do not make good trustees for siblings. They want to be siblings, not trustees responsible for managing assets and making distributions.

When considering who should be your agents, executors, or trustees consider the following:

1. Our families have busy lives. We struggle to manage our commitments and expectations of many people. It is difficult to balance the time and attention needed to serve elderly parents or siblings with disabilities.
2. Some of the rules governing financial powers of attorney can be complex. Every bank and financial institution seem to have their own rules.
3. Some people, and non-professionals in particular, are so concerned about violating a rule or making a mistake that they fail to act. Being afraid to make a mistake and not taking action is a serious mistake itself.
4. Family relationships can be ruined. Most of us want to be children to our parents and brothers and sisters to our brothers and sister. We do not want to be in charge of managing their lives. If a brother wants money from a trust and the sister trustee has to say no, the family relationship can be ruined. The phrase “sibling rivalry” has new meaning when siblings are clashing over money.

Most of us are not good at being both family and a manager of a relative’s money.

As a practical matter, most of us feel that we can trust our responsible children. And often we have to leave assets in trust for a child, but there is not a lot of money to hire a professional. There are two solutions.

First, if you need to have a child as trustee, is to appoint a trust protector. A trust protector is a person or entity named within your trust who can appoint or replace trustees. If a child trustee is having difficulties with a child beneficiary, the trust protector can appoint another trustee, either temporary or as a co-trustee or as a permanent replacement. It just depends. Trust protectors are named in the trust, but not compensated unless called upon to act. So naming a trust protector is a practical and economical solution.

Second is to name a professional after the child trustee. The second position professional can be “activated” by the request of either the trustee or beneficiary. Depending upon the circumstances, the professional trustee can be permanent as a solo or a co-trustee or just serve temporarily.

The value we give to our clients is not just taking a list and putting it on a form. We take time to counsel clients on the best choices and practical alternatives that will work when the time comes for a helper to act.