Q: What factors should I consider when choosing a personal representative, a trustee, or an agent?
A: In continuing this series of columns on common mistakes made during estate planning, choosing the wrong fiduciary (someone who has a job to do under the Will or a Durable Power of Attorney) is always close to the top of the list of errors. All too often a relative is chosen because "I have no one else" or "that is what everyone does."
A personal representative (also called an executor in some states) should be a detail person who will timely settle the affairs of the deceased, locate assets, and distribute property either the way it is titled (that is, joint tenancy and beneficiary designees) or the way set out in the Will.
If the selected person does not have the needed skills, he or she should be able to recognize such limitations and bring in people to perform such duties. Often a spouse or a child is automatically chosen. Sometimes it works out. Sometimes it does not. Be realistic.
Just as with a Personal Representative, your trustee does not have to be "a jack of all trades." If certain skills are needed (such as making investment decisions or doing tax returns), the trustee can always hire someone to handle such details.
An individual trustee should be someone who has been known for awhile and whose judgment you feel comfortable with. Give the trustee the discretion to do whatever is necessary but maybe also provide a letter or memorandum outlining your thoughts and feelings. If the person was properly chosen, the trustee will use and "follow" your roadmap, even though such instructions are not binding.
I work with banks a lot and feel they do a great job. But remember banks are more expensive, are less likely to follow "informal" thoughts and feelings, and are much more fluid. Personnel seem to come and go (especially as banks are bought and sold) and in fact, I am told a local bank has shifted its trust decisions to Nevada.
An agent is the person who makes decisions under the authority of a Durable Power of Attorney while the principal is alive and has not revoked the Power.
First, remember one person does not have to make all the decisions. For example, one agent can be selected to make medical decisions and another to make personal/business/financial decisions.
For medical decisions, select the best person but give preference to someone local, if possible, because decisions often need to be made quickly and personal interaction with medical personnel is often desirable. But for backup agents, select people you really wish to use regardless of where each might be located.
For non-medical decisions, the location of the agent is not quite as important. Sometimes the age of the potential agent might cause one to pause. But again, pick the best person first and then maybe consider age when choosing backup agents. Thus, give thought to whom you choose and do not go with a knee-jerk reaction of appointing a relative to these key positions.
There are other fiduciaries, but the three outlined above are the most critical and are where the greatest problems arise as to the quality of people put into these fiduciary positions.