CHOICE OF AGENTS, TRUSTEE AND EXECUTOR

                Among some of the hardest choices a couple needs to make in preparing an estate plan are who should serve in the various roles necessitated by death or disability.  These include agents under health care and financial powers of attorney, trustee under a revocable trust and executor, or personal representative, under a will.  It is also important to choose people or institutions to serve as backups in these roles in case the initial person or institution cannot serve.  In a blended marriage these decisions can become complicated.

                A husband and wife should select a person to serve as his or her agent under a health care power of attorney to make medical decisions if the principal is unable to make those decisions.  A financial institution cannot serve in this role.  In addition a person should select someone to be his or her agent to make financial decisions in what is called a “general durable power of attorney” (GDPOA). The GDPOA can be drafted narrowly to allow the agent to only make certain financial decisions or broadly to allow gifting and make changes in estate plans.  A bank or trust company could be an agent under a GDPOA.  However most financial institutions are reluctant to serve in this role if there are family members that could serve.  You can see the conflicts that could result if a spouse makes decisions that could impact the children from a prior marriage. In an ideal world the spouses should meet with adult children of a prior marriage to discuss the issues and make decisions.

                Trusts are flexible agreements that can be structured to provide who should control assets in case of death or disability.  Financial institutions are more willing to serve as trustee or successor trustee since there is a written agreement giving it directions on the assets. A person or persons can serve as trustee, with or without a bank or trust company.  Since trustees can serve for a long time, the choice of trustee(s) and successor trustee(s) should be carefully considered.  If there is likely to be conflict within a blended family on the death or disability of a husband or wife then having a bank or trust company be a trustee or co-trustee will help reduce concerns among family members.  However the trustees can only administer the provisions of the trust. Therefore the language in the trust should be clear on control and distributions from the trust.

                Finally the decision on who should serve as the executor or personal representative of a will could result in conflicts among family members. If a couple has a trust or trusts that do or will contain most of the couple’s wealth then a will may not need to be administered.  If there are some assets that need to go through probate the probate will transfer assets into a trust for distribution.  In such a situation the role of executor or personal representative will be mainly ministerial and thus should not be a source of conflict.  In this situation the executor or personal representative should be the same as the trustee of the trust.  However if there is no trust to administer assets then the choice of executor or personal representative should be considered carefully since administration of the will is critical to distributing assets to beneficiaries.  Again a bank or trust company could serve as executor or personal representative to avoid family conflicts.  Thus a couple in a blended family has many critical choices to make in assigning roles in case of disability or death.