Five Important Considerations When Choosing Your Estate Planning “Financial Helpers”

One of the most difficult decisions when preparing an estate plan is choosing who should be your financial helpers.  By financial helpers, I mean those people or entities who will take care of your money, investments, home, finances and other assets, if you are not able to and after your death.  These include your successor trustee if you have a trust, the executor of your will and your financial power of attorney.  For more information about estate planning, click here.

Your trustee is the person or entity managing and distributing the assets in your trust.  While you are alive and well this is probably (but now always) you.  Your successor trustee typically steps in if you are incapacitated and after your death. Your executor, or in Missouri, your personal representative, distributes any property that passes under your will.  Your financial power of attorney handles your financial affairs while you are alive but are unable to handle them yourself.  Your financial power of attorney can write checks on your behalf, sign contracts for you, sign your taxes and otherwise manage your day-to-day financial affairs.  To learn more about a financial power of attorney, click  here.   All of the financial helpers listed here must act as a fiduciary in regard to you, meaning they must always act in your best interest when serving in their financial helper role.

As you can tell from the description, these are incredibly important roles.  Here are five considerations that should be kept top of mind when choosing these helpers.

1. You Must Trust Them Completely.

Trust is critical for the people you appoint to these roles.  They will have a significant amount of power over your finances.  My sisters are pictured here because they are my financial helpers.  If I were to become incapacitated and after my death, they’re my appointed helpers.  I trust them to do the right thing for me and my boys.  And there is no doubt in my mind that they would.  I’m fortunate to have them in my life.  Not everyone has a loved one they would trust with their finances.  If you do not have someone in your life you would trust 100% to handle your finances, you might be better off choosing a corporation, like a trust company or fiduciary services firm, to serve as your trustee, executor, and financial power of attorney.

2. They Must Have Some Financial Knowledge.

They must have the ability to manage your finances, and be familiar with banking, property ownership and investments.  They do not have to be financial whizzes, accountants or investment bankers but they must have a working knowledge of how personal finance works.  Someone who has never filed a tax return, handled a bank account, or managed household finances is not the right person for this job.  You also need to believe that they will not make dumb decisions with your finances or be taken advantage of by a bad actor.

3. They Must Have Time or Be Able to Make Time.

Administering an estate and serving as a power of attorney can, at moments, be time consuming.  Handling accounts, selling real estate, reporting and making distributions to beneficiaries can take time.  It is not consistently a lot of time, but your financial helpers will need to be available, or able to make themselves available, when they’re needed.  The good news is that even for a super busy person, they still might be able to serve in this role, because they can delegate some of the more time-consuming tasks to experts, like accountants or lawyers.

4. They Must Be There.

This may seem like a no-brainer.  Duh.  But sometimes, depending on our age, it might be wise to choose someone younger and healthier than ourselves.  We want a financial helper who is there when we need them, so choosing someone older than us, such as a parent, might not be the best plan.   Another consideration is whether they live nearby.  Given that so much can be done remotely, this is not as important as it once was.  But it can make things easier if your financial helpers live near you.

5. Should You Choose a Person or an Entity?

 The answer to this question depends on your personal situation.  Do you have family or friends who you trust to serve.  How complex is your estate?  What concerns do you have?  Even if you have family or friends you could appoint, do you want to burden them with this task?

One last note, once you think you have decided who you want to serve as your financial helpers, don’t forget to ask them if they’re willing.  Your loved ones may be honored that you trust them with this important duty.  That said, in some cases, your chosen helper may not be willing, or even able for reasons you may be unaware of until you ask, to take on this role.

Contact our St. Louis office at 314-303-3218 for assistance preparing your estate plan and choosing your financial helpers or to discuss other questions regarding estate planning or elder law.

** The choice of a lawyer is an important decision and should not be based solely on advertisements.

Written on 10/22/2022 by Stephanie Copp Martinez, JD.