Fiduciaries have the ability to determine the fates of family relationships and financial security. However, most people don’t realize the potential consequences of these surrogates’ actions. As a result, they don’t give sufficient thought to whom they appoint to these important roles.
Let’s examine some of the major potential surrogates:
Attorney-in-Fact: This is the person who acts for you under a power of attorney.
Healthcare Agent: This is the person who acts for you under an advance medical directive.
Trustee: If you create a trust, you’ll create some limits in the trust agreement, and the trustee has the authority to make the final decisions about managing the investments, making distributions, paying taxes and other aspects of managing the trust.
Executor: This person manages and distributes your estate after you pass away. Also known as a personal representative, the executor is charged with carrying out the wishes expressed in your will and other estate planning documents.
Social Security representative payee: Social Security will appoint someone to manage the benefits of someone who is unable to do so; usually it’s a family member or friend. The beneficiary can contact Social Security and identify a specific individual as their appointee, and the Social Security Administration will consider the request.
Long-term care insurance lapse designee: Most insurers now allow the insured to choose an individual who’ll get a notice if the LTC premiums aren’t paid. You also can name an alternate payee who’ll receive and manage benefit payments, when you can’t.
Agent for funeral decisions: States have varying regulations about who can make funeral decisions, and some have laws recognizing the appointment of an agent.
Financial account designees: When opening a financial account, some people like to select the transfer on death (TOD) option, or they open joint accounts with a relative or friend. This allows someone else to manage the account, when he or she isn’t able and who will inherit it without going through probate.
One issue with many of these surrogate designations is that different people frequently are named for tasks and responsibilities which overlap making it imperative that agents are able to work together in the best interest of the person for whom they serve. Another issue is that people often are appointed without being asked or even told until they have to act. Finally, the person named to handle these responsibilities must be qualified.
Speak with your estate planning attorney to be sure you have consistency and avoid conflicts between the different surrogates.
Reference: Forbes (July 23, 2018) “Defusing The Time Bombs In Your Estate Plan”