All About Estates

Teamwork: An Essential Piece in Estate and Incapacity Planning

This blog was written by Maggie Dalke – Estate and Trust Consultant with Scotia Wealth Management

They say that “teamwork makes the dream work.”  In an estate and incapacity planning context, you will need to create a team to execute the vision you document in your Will and incapacity planning documents. This team could include:

  • Executor(s);
  • Power of Attorney(s) for Property;
  • Power of Attorney(s) for Personal Care;
  • Guardian(s) for Minors; and/or
  • Trustee(s) for any trusts created during your lifetime and/or after your passing.

These are five separate appointments, and one should be mindful of how the various roles may interact as part of a broader team.  We will look at how these appointments work together and items to consider before choosing your estate planning ‘dream team’.

  1. Working Together: Financial and Personal Care

At a macro level, these roles can be generally divided into work that is done in terms of property/finances (Executor, Trustee and Power of Attorney for Property) versus personal care/health (Attorney for Personal Care and Guardian for Minor Children).  Those fulfilling the financial roles are compensated and may include a professional trust company.  On the other hand, the personal care roles must be a family member or a friend.

When deciding how to divide up the roles it is helpful to think through what roles will be working in tandem.  For example, a Power of Attorney for Property and a Power of Attorney for Personal Care will need to work directly together.  Similarly, for a minor beneficiary, the Trustee for a minor’s trust and a Guardian for minors will need to collaborate to fulfill their related but separate duties.

For this reason, it is very important to review with clients that these individuals or entities trust each other, can communicate effectively, and are well suited to the roles.

  1. Financial/Accounting Roles May Overlap

It is also important to be aware of how any financial roles may need to account to and transition from one to another.  For example, if someone has lost capacity and names a Power of Attorney who acts on their behalf, that Power of Attorney will eventually need to account to the Executor.  And once the Executor has taken over from the Power of Attorney, that Executor may eventually need to account to a separate Trustee of a testamentary trust.

Before each role takes over from the previous appointment it would be advisable that they review the accounting from the previous role and maybe even ask for a formal passing of accounts as needed. As noted, if the parties named sequentially do not get along, this can create conflict, delay, and/or liability.

  1. Thinking Ahead Before Acting

It is also advisable for each new appointment to think ahead before acting.  This means closely examining the legal document in which a fiduciary is appointed, as well as subsequent legal documents that deal with the same property to be administered.  For example, it may be integral for a Power of Attorney to review a donor’s Will or memorandum of personal property, and any testamentary trusts before exercising their discretion.  The estate may have specific bequests to a beneficiary or into a trust that should not be liquidated.  This advice is also helpful for an executor who would be working with a different trustee on a testamentary trust.  The executor would need to carry on their administration in a way that is conducive for the trustee to properly establish a trust.  If the executor or attorney does not look ahead, any future appointed fiduciary may be hesitant to inherit liability caused by the previous appointment’s short-sightedness.

Given the potential liability in slip ups between the various roles, it might be tempting to just choose one individual to oversee the whole process.  A spouse is a common first choice for all the roles, but is it fair to ask just one individual as an alternate appointment to dedicate the time required?  Being an Attorney, Executor and then a Trustee could take decades away from a family member’s life.  If not your spouse, who could make such a significant time commitment?  In considering all your options, a trust company – a team of estate and trust professionals – could be a more reliable appointment to build out your estate planning dream team.





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