Important People You Need to Name When Estate Planning

Most people think about the flow of their assets when they think “estate planning” and while gifting, trusts, and taxes are obviously important I have found that there is something that takes precedence for most younger families and that is the naming of your Executor, Trustee and Guardian. Firms such as Estate Planning Attorney San Diego can help you with the naming of your Executor, Trustee and Guardian.

Naming an Executor

Black’s Law Dictionary defines executor

 A person named by a testator to carry out the provisions in the testator’s will

The Executor is person who is going to attempt and wrap up your estate.  This includes marshaling assets and paying expenses and then finally distributing the assets.  It is customary that someone would name their spouse as the first successor but I always insist my clients provide at least one successor.

Naming Your Trustee

If you are creating a trust for your surviving spouse, a trust for your estate tax purposes, a trust for your children or a trust for someone with special needs you are going to have to choose a Trustee.  If the Executor is the person who will be administering the testator’s intent for the person’s Last Will and Testament then a Trustee is continuing the intent for possibly years, decades or even a generations.

Naming a Trustee is a little more complicated than choosing an Executor because both the “rules” of the trust as well as the corresponding law determines who you can name.  For example if you are creating an estate tax sensitive Trust you can’t name your surviving spouse without limiting her ability to use that money in some way (usually an ascertainable standard) otherwise the amount will be included in his or her estate and you have done nothing.

Not only do you need to understand the guidelines of the Trust one must also take into account logic.  If you are creating a Trust for the benefit of children only to be funded if both spouses are dead then why would you name a spouse as Trustee? For the off-chance of a disclaimer? You would be shocked how often I see this mistake made by both attorneys and laypeople.

Naming a Guardian

When I prepare a Last Will and Testament for people in their early 30s it is amazing how much more important naming a guardian is than whether the assets are passing tax efficiently.  Customarily, the surviving spouse is going to be named as Guardian although that is just a formality.  The real issue is what happens when both spouses die.

Prior to meeting a couple I will have asked them to have that question answered because the fighting I have seen in my short career is just astounding.  Let them have that fight at home before they meet me!

Naming Your Fiduciaries and Guardians

I am often asked whether I advise to separate the person in charge of the money (Trustee) and the person in charge of the child (Guardian) and my answer is always the same; it has to do with whether you have one person in your life that can handle both.  There are wonderful care takers that should not be around large sums of money and there are people who are money-gurus but can’t take care of a kid.  If you have both in one person then it is not the worst thing in the world to put them in a position to help your minor children who just lost both parents.

Beyond appointing your alcoholic uncle or meth-loving sister as Guardian or Trustee there is no right or wrong answer when naming your Fiduciaries (Trustees and/or Executors) and Guardians.

2 Responses to Important People You Need to Name When Estate Planning

  1. Well needed post Evan! When we (finally) sat down and completed our wills with a lawyer we had to discuss all the options and people we wished to fulfill the roles you mentioned.

    By far choosing guardians was the hardest. It was something we discussed and we were so relieved that 1) we both came up with the same friends on our lists and 2) our friends were more than happy to accept.

    You had some great points, I’m including this at the top of my weekly round-up this weekend!

  2. Well said. In my state, if a court appoints a fiduciary agent your estate is going to be drained, and fast. They’re crooks who charge absurd amounts to do rather little, rather badly. If you haven’t named these people, an appointed fiduciary agent is exactly what your heirs will get.

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