If you are considering putting your estate plan together you may want a little background as to what role fiduciaries play. Different documents do different things and you may be asked about who you will name as your successor trustee, executor, or agent for health care. Each role has unique responsibilities so here I will provide a brief summary:
Executor
An executor is a person named in your Will to steer your assets through probate court and ultimately distribute those assets to your named beneficiaries. Your executor will use probate estate funds to pay debts, taxes, and funeral and burial expenses. This position takes effect only after your death.
Trustee
If you have a Trust, you have named a trustee to manage, invest, and distribute those assets in your Trust. These duties take effect if you become incapacitated and continue after your death. A trustee’s powers are limited to those assets held in your Trust with no power over assets outside of the Trust. A trustee's specific duties are unique to the terms of your Trust and are dictated by the type of assets being held in trust such as real estate or equities in a brokerage account.
Agent for Power of Attorney
As part of a comprehensive estate plan, most estate planners include a Power of Attorney for finances. The person you name as your agent, or “attorney-in-fact,” is charged with making financial decisions on your behalf. The attorney-in-fact’s powers control non-Trust assets and are effective only during your lifetime. Where the attorney-in-fact’s power stops, the executor’s power begin.
How They Operate Together
If you become incapacitated, the authority granted to your attorney-in-fact will be activated under your Power of Attorney, and the power granted to your successor trustee will be activated in your Trust. The scope of their respective decision-making authority will depend on the extent to which you have provided authority in each document. Your trustee has exclusive jurisdiction and control over the assets in your Trust and your attorney-in-fact has jurisdiction, subject to any limiting terms in the Power of Attorney, over everything else. If you have a trust and have funded it with all of your assets, your attorney-in-fact is going to thank you for making life relatively easy.
Agent for Health Care
An Advance Health Care Directive gives another person authority to make medical decisions for you if you are unable to speak for yourself. You can state exact healthcare preferences and make specific limitations on that authority. Most people name their spouse, partner, a relative, or a close friend as their health care agent. What's most important is that you trust the person absolutely -- and that you feel confident discussing your wishes for medical care with him or her. Your agent need not agree with your wishes but must completely respect your right to get the kind of treatment you want.
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