Author: Suzanne Candela

When you establish a trust, you nominate someone to be the trustee. If you are creating a revocable living trust, you will likely be the initial trustee. You will also want to name successors or backup trustees to step in and manage the trust’s affairs if you can no longer manage the trust yourself. The trustee is in charge of managing the trust’s accounts and property. Specific duties can include collecting income, paying bills and taxes, making investment decisions, buying and selling property, providing money for you (during your lifetime) and your loved ones according to the trust’s instructions, keeping accurate records, and generally keeping things organized and in good order.

Key Takeaways

• You can be the trustee of your revocable living trust. If you are married, your spouse can be your co-trustee.
• Most irrevocable trusts do not allow you to be a trustee.
• Even though you can be the trustee, you may not always be the best choice.
• You can choose an adult child, a trusted friend, or a professional or corporate trustee to act as trustee.
• As a trustee, you can hire certain individuals or professionals to assist you or any successor trustee in managing your trust. 
• Naming someone else to be a co-trustee with you helps your co-trustee become familiar with your trust, allows your co-trustee to learn firsthand how you want the trust to operate, and lets you evaluate your co-trustee’s abilities. As a practical tip, if you decide to add a co-trustee, you may want to talk to your banks and other financial institutions to learn their co-trustee policy. Some do not like to work with co-trustees in general, while others require that the terms of the trust state that each co-trustee can act independently of each other (rather than requiring both co-trustee’s signatures or authorization for all acts on behalf of the trust).  

Who Can Be Your Initial Trustee

As previously mentioned, you can be your own trustee if you have a revocable living trust. If you are married, your spouse can be a co-trustee. If either of you cannot manage your affairs or dies, the other can usually continue to handle your financial affairs without interruption. Most married couples who own accounts and property together, especially those who have been married for some time, usually elect to serve as co-trustees.

However, you do not have to be your trustee. Some people choose an adult child, trusted friend, or relative to serve in this capacity. Some individuals prefer a professional or corporate trustee (e.g., a bank trust department or trust company) due to their experience and investment skills. Nominating someone else to serve as trustee or co-trustee of your trust does not mean you lose control. The trustee you nominate must follow the instructions within your trust and may ultimately report to you. In many cases, you can even replace your trustee if you change your mind or the arrangement is not working out how you had imagined.

When to Consider a Professional or Corporate Trustee

A professional or corporate trustee is valuable in several instances. You may feel as though you are not able to serve as trustee for a variety of reasons. If you are elderly, widowed, or in declining health with no children or other trusted relatives living nearby, and your other potential candidates may lack the time or ability to manage your trust, a professional trustee may give you peace of mind that your affairs are being handled appropriately. Or, you may simply not have the time, desire, or experience to manage investments by yourself at any age or health status. Also, certain irrevocable trusts may not allow you to act as a trustee due to tax law restrictions. In these situations, a professional or corporate trustee may be exactly what you need: they have the experience, time, and resources to manage your trust properly and help you meet your investment goals.

What You Need to Know

Professional or corporate trustees will charge a fee to manage your trust. Usually, the fee will be based on the value of the trust’s accounts and property they will manage. Although these fees can be high, you may consider them worthwhile, especially considering their experience, the quality of the services provided, and the investment returns a professional trustee can deliver.

Actions to Consider

• Honestly evaluate whether you are the best choice to be your own trustee. Someone else may do a better job than you, especially with regard to investing your money. However, if you choose to be the trustee of your own trust, you can still hire financial advisors to assist you in making the right investment choices. You do not have to do everything yourself.
• Depending on your situation, it may be a good idea to nominate someone to serve as co-trustee with you now. This eliminates the time a successor would need to become knowledgeable about your trust, your accounts and property, and your beneficiaries’ needs and personalities. It would also allow you to evaluate whether the co-trustee is the right choice to manage the trust in your absence.
• Evaluate your trustee candidates carefully and realistically. Some may assume that their oldest adult child would make a good trustee. Unfortunately, birth order may not accurately indicate financial management skills.
• If you are considering a professional or corporate trustee, talk to several and compare their services, investment returns, and fees.

We can help you select, educate, and advise your successor trustees so they will have support and know what to do next to fulfill your wishes. Give us a call today. 

While the term fiduciary is a legal term with a rich history, it generally means someone who is legally obligated to act in another person’s best interest. Trustees, executors, and agents are examples of fiduciaries. When you select people to fill these roles in your estate plan, you are picking one or more people to make decisions in the best interests of you and your beneficiaries and in accordance with the instructions you leave. You should also choose multiple backups for each of these roles in case your first choice is unable or unwilling to act when the time comes.

Understanding the basics of what each role entails and what to consider when making your choices can help ensure that your estate plan is effective. 

Trustee

A revocable living trust is often the center of a well-designed estate plan because it is the best strategy for achieving most people’s goals. You (as the trustmaker) will usually serve as the initial trustee and continue to manage the trust’s accounts and property in the same manner that you did before the trust was created. You will appoint a successor (backup) trustee in the trust agreement to be responsible for ensuring that your wealth is managed in accordance with your wishes after your death or during your incapacity (when you can no longer manage your affairs). It is best to have a trusted person or financial institution carry out this vitally important role. 

Your successor trustee will control only the accounts and property owned by the trust. If you own accounts and property in your sole name—that is, not as the trustee of your trust—your successor trustee will not be able to manage those items upon your death or incapacity. You will have to rely on your financial power of attorney to give someone the authority to manage those accounts and property while you are incapacitated. 

When you pass away, accounts and property in your sole name without a beneficiary designation may have to go through the probate process. Probate requires your executor to step in and manage those items and ultimately distribute them to the people who have priority under state law (who may not be the people you would have chosen). This is why it is of the utmost importance to appoint the right person to be your successor trustee and to fund your living trust fully.

Powers of Attorney

Powers of attorney are the documents in your estate plan that appoint individuals to make decisions on your behalf if you are alive but unable to do so yourself. There are a few different types of powers of attorney, each with their own specific areas of responsibility. We can help you decide which types of powers of attorney you will need based on your current situation and future goals. Here are two common types to include in your estate plan:

• Financial Powers of Attorney 

Financial powers of attorney grant the fiduciary you select the ability to take financial actions on your behalf, such as purchasing life insurance or withdrawing money from your bank accounts to cover your expenses. A fiduciary who acts under the authority given in a financial power of attorney is generally called an agent. Your agent is only able to manage the accounts and property that are not owned by your trust. If an account or property is owned by the trust, it is the responsibility of the trustee to manage that item, as discussed above. You can name an individual as your agent or, in some circumstances, you can name an institution, like a trust company. While in most states your agent is permitted to charge a fee for acting as your agent under a financial power of attorney, keep in mind that trust companies generally charge higher fees and will likely not waive fees like your loved ones might.

• Healthcare Powers of Attorney and Related Documents

A healthcare power of attorney allows you to name a trusted person to make or communicate your medical decisions on your behalf when you cannot do so yourself. These decisions may range from deciding what surgeon to use to whether to remove you from life support. Other documents can be used in conjunction with the healthcare power of attorney to cover specific actions that can be taken regarding your medical needs, such as making decisions about the types of care you wish to receive or who can access your medical information.

Executor

Your executor (called a personal representative in some states) is the person who will see your accounts and property through probate, if necessary, and carry out your wishes based on your last will and testament if you have one. Depending on your preferences, your executor may be the same person or institution as your successor trustee. 

Some individuals choose to name a professional as their executor. The professional is usually someone who does not stand to gain anything from the will and can be a good choice if you own a great deal of different property and accounts to be divided among many beneficiaries. In other words, the more complex your estate and distribution scheme, the more it may make sense to have a professional in charge. A professional may also make sense if you do not have someone you personally know who can serve as the executor. Family or friends may serve, but it is important to consider the amount of work involved before placing this burden on someone who has little time or experience administering the estate of someone after they pass away.

Being an executor can be hard work and may have court-dictated deadlines; it is crucial to pick someone you know will be up to the job. They will probably need to hire an accountant to help sort out your taxes and a lawyer to assist in the process. If there is a dispute, then attorneys, appraisers, mediators, or other professionals will undoubtedly need to be involved. Choosing a spouse or another loved one to serve as your executor may be convenient because they may already be familiar with what you own and have an easier time ensuring that your wishes are carried out. However, because of the time involved and the nature of some accounts and property, they may not be up to the task at the time. 

Get in Touch with Us Today

Let us help you make the process of picking your trustee, agents under powers of attorney, and executor as smooth and headache-free as possible. Once you have these choices in place, you will be able to rest easy knowing that your estate plan is in good hands no matter what life brings. Call us to make an appointment today.

If you have overheard any estate planning discussions, you have likely heard the words “guardian” or “trustee.” In estate planning, deciding who will ultimately be tasked with caring for your minor child or managing funds for their benefit is an important decision that requires consideration of many factors. 

Although there is no substitute for you as a parent, a guardian is someone who steps in when you pass away to assume your parental role and raise your minor child through legal adulthood. Conversely, a trustee manages the financial legacy you leave behind for your minor child. As a parent, you need to consider the skills and characteristics each role requires to ensure that you nominate the right people for the benefit of your child and their inheritance.

Who Makes a Good Guardian?

When choosing a guardian, the top consideration is who will love and raise your child like you would. Keep in mind the potential guardian’s religious beliefs, parenting style, interest in extracurricular activities, energy level, and whether they have children. You may want to consider where the individual lives and whether they have the capacity to provide daily love, care, and support for your child.

Who Makes a Good Trustee?

While the guardian you choose may be great at caring for your children, they may not be great at managing money. For this reason, it may make sense to place the financial management of your child’s funds in someone else’s hands. The person responsible for managing your child’s inheritance is the successor trustee or trustee. Not surprisingly, when choosing a trustee, the most important characteristic is that they manage finances well. However, they often do not need specialized knowledge or training. This individual can seek assistance from financial professionals should the need arise. The trustee must be able to manage the funds in accordance with your intent and pursuant to the trust’s instructions. 

Consider whether your potential trustee will agree and comply with the way you have structured the payout plan for your child’s inheritance (for example, giving your child a portion of their inheritance at different ages). If they do not agree with your wishes, it may be difficult for them to enforce them. Likewise, if you want to give your successor trustee discretion in managing funds and distributing inheritances rather than setting forth ages at which distributions are to be made, you should ensure that your trustee will use their discretion in alignment with your intent. In short, you want to choose a trustee to manage your child’s inheritance who will act in your minor child’s best interest within the limits you have set forth in your estate plan documents. 

Should They Be Different People or the Same?

Whether you select the same person to act as guardian for your minor child and successor trustee for your child’s inheritance will likely be based on the ability and capacity of the specific person. Some people may have the skills required to manage both roles effectively, which can simplify certain aspects of the process because the guardian will not have to go to someone else to request distributions to care for your minor child. 

On the other hand, not every person can do both jobs. With two different people serving in these roles, you can ensure that you have the right person for each job if one person is not ideal for both. Also, some individuals choose to designate a guardian from one spouse’s family and a trustee from the other spouse’s family to establish a system of checks and balances. This approach ensures that both sides of the child’s family are equally involved and each individual remains accountable. If you choose two different people for the roles of guardian and trustee, consider how the two get along, as they will likely have to work together and coordinate frequently while your child is under the age of majority.

Seek Help to Make Your Decision

While the estate planning process can be daunting, it does not have to be. Contact a knowledgeable estate planning attorney to help guide you through this process. We can explain your options and help you determine the best plan that will follow your wishes while meeting your family’s needs.

We know it is difficult, even horrific, to imagine someone else raising your children. However, you must consider who you would choose to fill this important role. Otherwise, a judge—a stranger who does not know you or your wishes, your child, or your relatives and friends—will determine who raises your children if something happens to you. Depending on state law, your children’s guardian could be a relative you do not get along with or, less commonly, a stranger you have never met. 

No one will ever be you or parent exactly like you. More than likely, however, someone you know could do a decent job providing for your children’s general welfare, education, and medical needs if you can no longer do so. Parents with minor children must name someone to raise their children in the event both parents die or are otherwise unable to care for them before the children become adults. While the likelihood of you and the children’s other parent both passing away or becoming unable to parent your children is slim, the consequences of not naming a guardian can be severe and are well worth contemplating and addressing.

If no guardian is nominated within your will or separate writing, if recognized and allowable in your state, a judge will decide who raises your child. Anyone can ask to be considered, and the judge will select the person they deem most appropriate. Families tend to fight over the custody of children when a loved one dies, especially if money is involved. On the other hand, if you name a guardian, the judge will likely support your choice as long as the individual you select is willing and able to take on the responsibility of raising your children.

How to Choose a Guardian

Your children’s guardian can be any individual you feel comfortable with, whether they are a relative or friend. Here are the factors our clients have considered when selecting guardians (and backup guardians). 

• How well the children and potential guardian know one another and whether they enjoy spending time together
• Parenting style, moral values, educational level, health practices, and religious or spiritual beliefs 
• Where the guardian lives; if it is far away, your children would have to move from a familiar school, friends, and neighborhood to a new and unfamiliar location
• The age and health of the guardian-candidates:
  • Grandparents may have the time but not the energy to keep up with a toddler or teenager. 
  • An older guardian may become ill or pass away before a child is grown, so your child could potentially face the loss of an additional parental figure.
  • A younger guardian, especially a sibling, may be too focused on establishing their own lives, especially if they are finishing college or starting a career.

WARNING: Serving as guardian and raising your children is a big deal; do not spring this responsibility on anyone without speaking with them about your expectations and ensuring they are willing and prepared. Ask your top candidates if they would be willing to serve, and ensure you name at least two alternates if your first choice cannot serve.

Who Is in Charge of the Money?

Raising your children should not be a financial burden for the guardian, and a candidate’s lack of finances should not be the deciding factor. Ideally, you can provide enough money (from your accounts, property, and life insurance) to provide for your children after you pass away. Some parents also earmark funds to help the guardian buy a larger car or house or build an addition onto their existing home so there is plenty of room for taking on the responsibility and addressing the needs of extra children.

Additional Factors to Consider When Deciding Who Manages the Children’s Money

• In some circumstances, naming a person separate from the guardian to manage your children’s inheritance may be a good idea. That person would fill the role of your successor trustee and manage the money and property set aside for the children in a trust designed for them. The guardian would be responsible for the day-to-day raising of the children.
• Under appropriate circumstances, having the same person raise the children and handle the money can simplify things because the guardian would not have to ask someone else to make distributions for the children’s benefit.
• In some situations, the best person to raise the children may not be the best person to handle the money, and it may be tempting for them to use this money for their own purposes. So, dividing the responsibilities may be particularly beneficial and avoid the misuse of any money you leave for your children’s benefit.

Let’s Continue This Conversation

We know thinking about death or your potential inability to care for your child is not easy, but do not let that stop you from creating a proactive plan to address the unexpected. We are happy to talk this difficult topic through with you and legally document your wishes so that they are enforceable at your death. Understand that you are not bound to your initial selection and can change your mind and select a different guardian at any time. The chances of actually needing the guardian to step in are usually slim (we always hope this is the one nomination that is never needed). However, your job as a parent is to provide for and protect your children, so begin planning by calling our office for an appointment.

Your estate plan may include powers of attorney that allow a trusted person to act on your behalf and advocate for you with regard to medical and financial matters when you cannot do so yourself. But do you have a similar document in place that gives someone the authority to care for your minor children when you are not able to? 

A comprehensive estate plan covers contingencies not only for you but also for your minor children. A delegation of parental authority (DOPA), often called a power of attorney (POA) for parents or parental POA, allows you to give a nonparent the legal authority to make certain decisions for your minor child. 

Delegating your parental authority to another person in a legal document can help ensure that your child receives the care they need when you are out of town on business or vacation. The document typically does not require a court order and does not supersede your parental rights. 

Why Use a DOPA or Parental POA?

Up until a certain age, your kids rely on you for almost everything. You might not realize just how much they depend on you until you are not there for them. 

Even when you leave the kids with a babysitter for a short period, it can quickly become apparent from the long list of instructions you provide just how many important tasks and details a parent is responsible for daily. 

As kids grow older and become more independent, they often require less from you. However, until your child reaches age 18, you are legally responsible for their well-being, and there are some things—such as receiving medical treatment or entering into a contract—for which a minor child must obtain parental permission. 

A DOPA or parental POA is a document that temporarily allows someone else—known as an agent or attorney-in-fact—to care for your child and act on their behalf similarly to the way you could. This tool is commonly used when a parent is leaving the state or country for a personal or work trip or when a parent is facing incarceration, military deployment, long-term medical treatment, or risk of deportation. 

This document does not override or interfere with your parental rights regarding the care, custody, and control of your child, but it does permit a caregiver to act in your stead on important matters like taking them to the doctor, excusing them from school, attending and consenting to school activities, inspecting and obtaining their records, and making decisions during an emergency. 

Not having a DOPA or parental POA for your minor child could mean that crucial care cannot be provided in a timely way—or at all—in your absence. It could also mean that in an emergency, the school or some other authority could make a choice based on their policies and procedures about your child’s care that you may not agree with. 

How a DOPA Works

The legal form you use to give quasi-parental rights to a third party may go by different names in different states. 

Minnesota and Idaho, for example, use the term delegation of parental authority. Washington refers to it as a power of attorney for parents. Oregon calls it a power of attorney over a child. North Dakota calls it a power of attorney for care and custody of minor child. And Florida refers to it as a designation of healthcare surrogate for minors.

State law can also vary on the specifics of how the document works. Some states limit a DOPA to a maximum of six months from the date it is signed, after which time a new agreement must be signed. In other states, a DOPA is good for up to one or two years. 

States may have different requirements for completing and validating the document. State law might require a DOPA to be notarized before it takes effect, and there may be a requirement to inform the other parent about the agreement, with limited exceptions. If the person who is going to care for your child lives in a different state, you may need to fill out a DOPA form in that state as well. 

Despite these differences, DOPAs work similarly in most states and share the following traits: 

• A separate DOPA needs to be filled out for each minor child. 
• A parent can withdraw a DOPA at any time. 
• The person named as attorney-in-fact can be any adult. They do not have to be a family member or US citizen. 
• The DOPA does not take away your right to make decisions for your child. You can still overrule a decision made by the attorney-in-fact. 
• DOPAs are not transferable. 

DOPA forms typically state that the attorney-in-fact has all of the power and authority that the parent or guardian has (except the power to consent to marriage or adoption). They also provide the option for a parent to delegate to the attorney-in-fact only specific powers and responsibilities that are listed in the document. 

Other Considerations for a Parental Power of Attorney

The person you choose to make decisions for your child should be someone you know well and trust. But it may be worth asking if they would make the same choices you would make in the types of situations that could come up. 

You cannot expect your attorney-in-fact to be completely aligned with you on every conceivable scenario. While they will probably be able to check with you about a nonemergency decision, they will still need a degree of autonomy to act independently and exercise their best judgment if something unexpected happens and you cannot be reached right away. 

Choosing a close friend, family member, neighbor, or another responsible adult with whom you share similar values can help ensure that you are in accord about most important issues. 

The person you choose should be somebody your child is familiar with and comfortable around so that your child is receptive to their care and authority. Discuss the appointment of the short-term caregiver with your child and talk about your upcoming trip with them. 

Extended time away from a parent can be difficult for a child. Establishing expectations and a schedule of how often you will check in—both with your child and the caretaker—can keep everyone on the same page and ease the apprehension surrounding your absence. You know your kid best, though, and frequent check-ins might make them more anxious. 

In addition to emotional considerations, there are some practical points to keep in mind as you get ready to embark on your trip: 

• Schools, doctors, banks, and other individuals and organizations should recognize and accept the power of attorney. However, double-check to make sure that this is the case before leaving. Your child’s doctor or school may have their own forms that are needed to access records, pick them up from school, or authorize care for them. 
• Make copies of the DOPA so that the attorney-in-fact can give them to authorities who might need proof that they are in charge of the child. Keep at least one copy for yourself. 
• Estimate ahead of time how much it will cost to care for your child while you are away and ensure that there are adequate funds to pay for their needs. You may want to give the caregiver money or leave them a credit card. 

The attorney-in-fact should also have the following information about your child: 

• School name and phone number 
• Teacher’s name
• Medical insurance information 
• Names and phone numbers of healthcare providers
• Allergies (food, medicines, and environmental) 
• Daily routines and activity schedules 
• Contact information for friends and friends’ parents

Your profession, travel destination, and the type of trip you are taking could potentially put you at risk. The US government encourages travelers to high-risk areas to enroll in the State Department’s Smart Traveler Enrollment Program, develop a communication plan with loved ones, and discuss a plan with them about care and custody of children. 

Add an Up-to-Date Estate Plan to Your Travel Checklist

Traveling out of town when you have children can be stressful for them and for you. There is no substitute for a parent’s love and care. But if work or other circumstances keep you away from your children, a DOPA or parental POA might be the next best thing. 

A comprehensive estate plan should also cover a permanent guardianship arrangement for your children on the off chance that a worst-case scenario unfolds while you are away. 

Part of estate planning is thinking about what could happen to you and putting measures in place to protect your family. Your current estate plan may not address childcare and guardianship issues, or you might need to make updates to your plan to reflect current circumstances, such as the birth or adoption of a child, divorce, or nominating a new guardian in your will. 

You cannot protect your children from everything. But you can leave as little to chance as possible with a well-thought-out estate plan. To create or update your plan, schedule a meeting with an estate planning attorney.

You may think that if you die while you are married, everything you own will automatically go to your spouse and children. But you are actually thinking of state rules that apply if someone dies without leaving a will. In legal jargon, this is referred to as dying intestate. In that case, the specifics will vary depending on your state’s law, but generally, your spouse will receive a share of what you own, and the rest may be divided among your children or parents, depending on your situation. Exactly how much your spouse will inherit depends on the state law, though.  

Now, it may seem like so far, so good. Your spouse is getting an inheritance, and so are the kids. But here are some examples of how the laws can fail in many common family situations.

First, when it comes to who will get your money and property, most states’ laws presume that a family comprises a married couple and their biological children. But because that is not how many families are structured, things can quickly become legally complicated.

One analysis identified 50 different types of family structures in American households.¹ Approximately 40 percent of all marriages in the United States are remarriages for at least one spouse,² and—through adoption and stepfamilies—millions of children are living in blended families. Unfortunately, the laws have not kept up, and absurd results can occur if you rely on intestacy as your estate plan. Stepchildren whom you helped raise (but did not legally adopt) may end up with no inheritance, while a soon-to-be-ex-spouse may inherit from you.

For example, Carey and Blake each have a child from a prior relationship (Carey has a daughter, Rose; Blake has a son, Whitley) living with them full time. During the course of the marriage, Carey and Blake have a child together named Penny. Carey and Blake treat all three children the same. Yet when Carey dies without a will or trust, her family must rely on state law to determine who receives Carey’s assets. Everything that was owned solely by Carey is divided between Blake, Rose, and Penny. Although treated like a son, Whitley would be entitled to nothing. This may not be the outcome Carey would have desired. Without an estate plan, however, nothing more can be done. With a will or trust, you can control what happens to your money and property and who will benefit from your hard work, essentially eliminating the risk of regrettable results.

Another issue with relying on state law is that none of the transfers to your loved ones happen automatically. Your family must open a probate estate with the court and go through the process specified in state law before your property can transfer out of your name and into theirs. This process can be long and costly. It is also public. Many people would prefer that an inventory of their property and the details of their family life be kept out of the public eye. Perhaps the best way to keep your matters private is by creating and funding a revocable living trust while you are alive and have the legal capacity to do so.

Furthermore, if both parents of minor-aged children die without an estate plan, then the children are left without a legal guardian. Kids do not automatically go to a godparent or grandparent, even if that is what everyone knew the parents had intended. Instead, a court will appoint someone to be the children’s guardian. In such situations, the judge seeks to act in the children’s best interests and gathers information on the parents, the children, and the family circumstances. But the decision is up to the court; the judge, following the priority listed in the state’s law, may not choose the person that you, as their parent, would have chosen. If you had created a valid will during your lifetime, you would have been able to communicate to the judge whom you would have liked to appoint as guardian.

What if you and your spouse are separated?

State law decides what happens to your money and property if you are separated from your spouse when you die. In some states, the court ignores your separation and still considers you legally married. If the state intestacy law (which, again, applies if you die without a valid will) grants spouses a share of your property at your death, as most do, then your estranged spouse may be entitled to all or a portion of it when you die.

Also, some state laws or court orders prohibit you from disinheriting your spouse after you file for divorce but before it is finalized unless you have a prenuptial or postnuptial agreement. Without one of these agreements, you can try to omit your spouse from your will or your trust, but state law may kick in to require that a surviving spouse (who, again, is treated as being legally married to you) be given a share of what you own.

If you are separated from your spouse and your divorce is pending, talk with your divorce lawyer and an estate planning attorney about your options.

The best way to safeguard and pass along what you have worked so hard to build is to talk to a qualified estate planning attorney. Protect yourself, your family, and your money and property by contacting us today.

1. David H. Lenok, The 50 Most Common Family Types in America, WealthManagement.com (July 20, 2016), http://www.wealthmanagement.com/high-net-worth/50-most-common-family-types-america. ↩︎
2. Jannik Lindner, Remarriage Trends: Statistics Show Complex Dynamics for Couples Blending Families, Gitnux (July 17, 2024), https://gitnux.org/remarriage-statistics. ↩︎

Estate planning is not just for the wealthy. Every adult should have an estate plan, yet surprisingly, most Americans do not. The perceived cost of creating one is among the most cited reasons for a lack of estate planning.

The consequences of not having an estate plan can become more costly in the event of death or incapacity than the upfront costs associated with creating estate planning documents like a will, power of attorney, and healthcare directive. At the same time, we recognize that many Americans are facing very real economic difficulties. 

Having somebody else pay for your estate plan can help with cost-related concerns. In most cases, it is perfectly fine for another person to do so. But as great as the gift of estate planning is, attorneys have certain ethical and professional obligations to their client—in this case, the person creating an estate plan—regardless of who is paying for it.

The Cost-of-Living Crisis Hits Estate Planning

In 2024, just 32 percent of Americans have a will, according to a survey from Caring.com.¹ This finding is counterintuitive when you consider that about two-thirds of Americans said that having a will in 2024 is “very important” or “somewhat important.”²

The percentage of Americans who say having a will is important has remained about the same in recent years, even though estate planning rates have declined. So, what gives? 

Procrastination and the (mistaken) belief that they do not have enough money and property are the top reasons people neglect to establish their estate plans. Sixteen percent of Americans told Caring.com that they don’t have an estate plan because it is “too expensive,” which ranked third on the list of estate planning barriers.³

Around one-third of US workers say they are living paycheck to paycheck and have almost no money for savings after paying their monthly expenses.⁴ Approximately 37 percent of Americans say they cannot afford an unexpected expense over $400, and 21 percent report having no savings at all.⁵ Nearly half of young adults (18 to 34 years old) say they received financial help from their parents in the past year.⁶

When a Third Party Pays for an Estate Plan: Setting Expectations 

The co-director of the Center for Retirement Income at The American College of Financial Services told CNBC that the perception of cost is “clearly one of the things” that keeps people from preparing a plan.⁷ 

Perceived costs associated with estate planning are often more of an issue than actual costs. However, estate planning cost concerns—real or imagined—remain a significant barrier to completing a plan. In any case, having an estate plan is better than not having one. 

It is sometimes said that estate planning is a gift that a person gives to themselves and their family, buying the peace of mind that comes with having a legacy plan in place. However, when an estate plan is a gift from one person to another, certain aspects must be made clear from the outset so that both the plan creator and the payor can enter the process with realistic expectations.

What to Expect from the Attorney

Attorneys are subject to professional codes of conduct. We must work in the client’s best interest. Our professional duties to clients include practicing with competence, maintaining confidentiality, and avoiding conflicts of interest. In the context discussed here—where one person is paying for another’s estate plan—the person creating the estate plan is the client; the payor is not. 

Generally, the duties we owe to clients do not extend to nonclients, even if the nonclient is footing the bill for the client. If one person pays for another’s estate plan, and a lawyer prioritizes the interests of the payor to the same degree as the plan recipient, this could constitute a conflict of interest, especially if the payor is also a beneficiary (i.e., they stand to inherit from the estate plan).

If the payor is in the room during an attorney-client discussion without the appropriate waivers and acknowledgments, this could further jeopardize client confidentiality and potentially breach our professional duty to the client. 

What to Expect from the Planning Process

The person paying for the estate plan is welcome to drop by our office and make payment. Beyond that, there is no requirement for them to be present at any stage of the estate planning process, but their presence might depend on the specific circumstances, such as your wishes or your level of comfort with accommodating their attendance at certain meetings. 

If you decide to allow the payor to attend our meetings, you must sign a waiver of attorney-client privilege allowing this. The payor must also sign a document acknowledging that they are not our client. 

Once these matters are settled, the planning process can begin. What exactly that process looks like depends on the estate planning strategies and tools that will best carry out your wishes. 

Assuming you create a will, you must choose who will receive your money and property when you die and who will oversee the winding up of your affairs, including giving your beneficiaries their inheritance and settling any outstanding debts. 

We also recommend that every client have a plan for their incapacity. This plan addresses who will make medical and financial decisions for them if they are alive but unable to communicate. 

Put Your Wishes in Writing

If someone has offered to pay for your estate plan, we encourage you to accept their generous offer. However, this arrangement may involve additional considerations and documentation. 

To reiterate, we represent the person getting an estate plan. We do not represent the person paying for the plan, and we cannot let their wishes or opinions interfere with our professional judgment or client’s wishes.

As long as this is clear to all parties involved, we can start the planning process immediately, although some extra paperwork might be required if the payor attends our meetings. 

No matter who pays for an estate plan, we are here to make sure your wishes are put in writing and carried out. And since updating an existing estate plan is typically much less expensive than creating one from scratch, you may be able to pay for any future changes out of your pocket. Call us today to get started with creating or updating your estate plan.

1. 2024 Wills and Estate Planning Study, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey/ (last visited Aug. 26, 2024). ↩︎
2. Id. ↩︎
3. Id. ↩︎
4. Sarah Foster, Penny-pinching nation: More than a third of workers say they’re living paycheck to paycheck, Bankrate (Jul. 15, 2024), https://www.bankrate.com/banking/living-paycheck-to-paycheck-survey/. ↩︎
5. 37% of Americans can’t afford an emergency expense over $400, according to Empower research, Empower, https://www.empower.com/press-center/37-americans-cant-afford-emergency-expense-over-400-according-empower-research#:~:text=Greenwood%20Village%2C%20COLO%20%E2%80%93%20July%202,according%20to%20new%20Empower%20research (last visited Aug. 26, 2024). ↩︎
6. Rachel Minkin et al., 2. Financial help and independence in young adulthood, Pew Rsch. Ctr. (Jan. 25, 2024), https://www.pewresearch.org/social-trends/2024/01/25/financial-help-and-independence-in-young-adulthood/. ↩︎
7. Michelle Fox, Can’t afford an estate plan? Here’s what you can do without spending a fortune, CNBC (Jan. 3, 2021), https://www.cnbc.com/2021/01/03/cant-afford-an-estate-plan-what-to-do-without-spending-a-fortune-.html. ↩︎

You may think creating a simple estate plan should be easy and something you can do independently. Unfortunately, this is not the case. Estate planning laws vary greatly from state to state, can sometimes be complicated, and constantly change. An experienced estate planning attorney stays informed about these nuances and changes, so you do not have to. 

One wrong word, one missing signature, or one procedure not followed to the letter of the law can potentially render a last will and testament, revocable living trust, medical power of attorney, living will, or financial power of attorney ineffective. Also, certain planning tools are not available in all states. An experienced attorney can ensure that you are implementing the right tools correctly.

Though having an estate plan prepared by an experienced attorney may seem expensive, the value of the service and protections provided are worth the investment. With this investment, you are taking action to ensure that your wishes will be legally enforceable and followed so that your loved ones are taken care of in the way you want and that their inheritance is not left to the mercy of the courts or state law, or vulnerable to creditors, divorcing spouses, or lawsuits. 

All that being said, here are three simple things you can do to help manage the cost of setting up and maintaining your estate plan: 

1. Come prepared. Before you meet with your estate planning attorney, do your homework. Understand what you own, what you owe, whom you would like to inherit your money and property, and who should manage your affairs if you cannot do so while still living (also known as being incapacitated) and after you die. If subsequent changes need to be made to your estate plan to realign it with your evolving goals and needs, make a detailed list of possible changes so that you and your attorney can be on the same page and address your specific concerns.

2. Keep it as simple as you need. We want to ensure your estate plan legally expresses your wishes and is easy for your loved ones to carry out. Usually, the simpler your estate plan is (for example, your loved ones get their inheritances outright in one lump sum without any protections in place), the easier and more straightforward it will be for your attorney to draft and maintain. Generally, a more complicated estate plan (for example, a plan that includes continuing trusts, tax planning, or asset protection planning) will cost more, as it requires more time to prepare and a more experienced attorney. We caution you, however, from creating an estate plan that is overly simplistic and does not fully align with your goals just to save money on legal fees. A good estate planning attorney can recommend the “just right” estate plan to fit your needs without overcomplicating things and charging unnecessary fees for tools and features you do not need. 

3. Join your attorney’s estate plan maintenance program or sign up for their email newsletter. Some estate planning attorneys offer a periodic estate plan tune-up for their clients, sometimes called a maintenance program or client care program. These programs provide benefits to clients at a lower fee than if the client were to pay for these benefits individually. Alternatively, some firms offer email newsletters where you can learn more about estate planning, current developments in the law, and related topics. Being a part of a maintenance program or email list reminds you to think about your estate plan regularly (once a year or every few years depending on the terms of the attorney’s maintenance program, or on a more frequent basis depending on the firm’s email newsletter distribution calendar). Maintenance programs and email newsletters help you keep your estate plan current with changes in the law and your personal situation. Remember: an estate plan will only work to the extent that it continues to reflect your ever-changing wishes and needs. 

We understand that creating an estate plan can be a large financial investment in your future. We are committed to working with you to create the best possible plan to meet your personal and financial needs. Give us a call to learn more about the types of tools we can put in place to care for you and your loved ones.