Drafting your will requires you to think carefully about who you would appoint to handle important duties on your behalf once you have passed away.
These persons are called fiduciaries and if they accept the position you have assigned them they hold a duty to the people over whom you have appointed them to act. It is also important to select successor fiduciaries who would assume that position if the person you chose as your first option does not accept the responsibility of the position or is otherwise unable or unavailable to do so.
The first fiduciary you must choose is the person responsible for administering your estate when you pass.
If you select a male to this position he is referred to as an Executor. If you select a female she is known as the Executrix. For our purposes let’s assume it is a male. The Executor’s job is to follow the will to the letter and execute on your final wishes. This means that he must submit the Will to the Surrogates Court for a process known as probate which allows the court to monitor and approve the Executor’s actions.
The Executor must ensure that all of your creditors have been paid to the extent possible, to distribute your assets in the way you designated in your Will and file the appropriate tax returns for you and your estate. It is important to select someone to this position who is business and finance savvy. The Executor need not handle all these affairs alone.
He may and should hire an attorney to assist him with the probate and an accountant to assist with the filing of the tax returns. The position of executor is generally a paid position. Each state’s law governs the fees to be paid to the executor. Generally, the executor need not accept the payment but the executor is entitled to it.
The second fiduciary you must select when drafting your will is a Guardian for your children if they are still minors when you die.
It will be the Guardian’s job to raise your children and act as surrogate parents. Selecting a Guardian is often the hardest decision my clients have to make. If the children have a surviving parent, that parent will remain the parent and no Guardian would be appointed. It is only when both parents are deceased that a Guardian need be appointed.
There are many factors to consider when selecting a Guardian. You must select someone who will be a good nurturer to your children; who will raise them in the way you would; and who shares your values. You must select someone who has the bandwidth to handle your children in their lives. Do they already have children of their own? Do they have the capacity to handle more children or any children for that matter? Do they have jobs that would accommodate raising children? Do they travel extensively? Are they married? If so, are they happily married to a spouse who would raise the children just as well as the Guardian himself or herself?
For example, you may think your sister would make an excellent Guardian but you think her husband would not be a good role model for them. Perhaps he has a temperament that is not conducive to raising children. Perhaps he has an anger management problem or simply doesn’t like children. If you selected your sister as Guardian what would happen if she too passed away during their minority. It would now be your sister’s angry widow who would be raising the children.
What if you wanted to select one of your parents as Guardian but perhaps they are getting up in years. Or perhaps they are already enjoying their retirement playing golf and tennis. Would they really be able to serve as Guardian? Clearly, there are a lot of factors to consider when selecting a Guardian.
Lastly, if you create any of the trusts we discussed above, you will have to name trustees to manage the trusts.
These trustees will have the fiduciary duty to manage the assets appropriately on behalf of the beneficiaries. In the case of a marital trust, the trustee will manage and distribute the assets to the surviving spouse. In the case of a minority trust, the trustee will manage and distribute the assets to the children (or other young beneficiaries) for whom the trust was created. In this later case, some clients ask about whether the trustee of the minority trusts will be the Guardian. The answer is that it is not necessarily so.
Some clients feel that if they are entrusting their children to the Guardian they have selected they clearly trust the Guardian enough to handle the money being left to the children. Others prefer to create a system of checks and balances and to bifurcate these responsibilities. In other words, they would prefer that the Guardian concentrate on raising the children and that a separate trustee, perhaps someone more financially savvy than the Guardian, be entrusted to manage the assets.
They may also feel that the Guardian may not be able to refuse their requests for the assets left to them. Perhaps they would feel so badly that the children lost their parents that they wouldn’t be able to say no to them. In this situation it may be more advisable to appoint a separate trustee to handle the money who can be more objective when it comes to distributing the assets to the beneficiaries. In this way you can create a system of checks and balances between the guardian and the trustee who will manage the assets for the children, essentially dividing those responsibilities.
Alternatively, you may feel that your selected guardian has the wherewithal to handle both raising the children and the assets in which case you need not divide those responsibilities at all.
Either way, the proper designation of your fiduciaries is critically important.
We invite you to contact us to learn more about estate planning and the services we offer.