One of the most important issues that arises in estate planning is selecting the people who will manage your assets and obligations when you no longer can.
Early in my law practice I realized that many, if not most, clients aren’t even aware of this as a problem. Clients just pick one of their children they think has a good grasp on money management. They usually haven’t thought about a successor to that person should he or she be unable to serve as a trustee or personal representative. I learned to get into that conversation early in the process and accept that it’s going to take a while.
In a recent design meeting with new clients, let’s call them Bob and Marlene, the conversation went something like this.
“So, let’s talk about your trustees, about who’s going to manage things for you when you no longer can,” I said.
“Well, that’ll be our oldest son, Rob. He has a level head,” they quickly answered.
“Tell me a little more about Rob,” I asked. “What is his background that qualifies him to manage your money and investment accounts? And how about his making personal decisions when you’re disabled and can’t take care of yourselves personally?”
The conversation revealed, as it often does, this was the first time they’d actually thought about it. While it had nothing to do with loving their children equally, it had everything to do with how they pictured each child in the role of trustee. Both parents felt strongly they preferred their middle child, Susan, to make personal decisions about their day to day living when the time came. But, as Bob put it, “I don’t want her anywhere near my checkbook.”
It appeared to pose a quandary. How to choose? We discussed the possibility of choosing a bank or other type of corporate trustee. That could remove the children from consideration completely and eliminate the chance of hurting their feelings or picking the wrong one.
We ultimately reached a conclusion to not eliminate anyone. Bob and Marlene set up a panel of trustees that included all three of their children with Susan assigned the duties of the personal trustee and Rob the duties of financial trustee. All three, by majority vote, would decide when an issue was not obviously placed under one category or the other. Bob and Marlene even required the panel to consult on a regular basis with an established financial planner and the family’s accountant.
A carefully designed trustee panel often offers the solution to a seemingly difficult problem. Managing your affairs when you no longer can isn’t easy. It’s not black and white. It’s about a lot of gray areas with a lot of subjective decision making.
But we want it to work, and that’s why it’s important.