Estate planning is a crucial aspect of financial and familial management that ensures an easier transition of assets and responsibilities in the event of one’s incapacity or passing. The individuals entrusted with the responsibilities to carry out the decedent’s wishes, the decision makers, are essential to the estate planning process. Due to the complexity of estate planning, the nomenclature and scope of duties of decision makers can often be confusing.
During a lifetime, the owner of the assets and the person who initiates the estate planning process is the primary decision maker in any estate plan. If there is a trust, that person is the grantor. If there is a will, that person is called the testator. The grantor or the testator are responsible for making all decisions, such as asset division, selection of beneficiaries, and designating fiduciaries.
The grantor of the trust appoints a trustee. During the grantor’s life, the grantor typically serves as the trustee and manages the trust assets. Upon the death of the grantor, the designated successor trustee manages the assets and distributes them to beneficiaries pursuant to the trust’s terms. Trustees are fiduciaries; thus, they owe a fiduciary duty to act in the best interests of the beneficiaries.
The testator of the will appoints the personal representative. This individual is responsible for administering the estate according to the terms outlined in the will. The administration of the estate includes inventorying the assets, settling debts, and distributing the assets to the beneficiaries. This occurs during the probate process under the court’s supervision.
An attorney-in-fact, or an agent, is an individual appointed in the power of attorney by the principal to make decisions on their behalf if the principal is incapacitated or unable to make decisions for themselves. The attorney-in-fact manages financial affairs and makes health care decisions during the principal’s incapacity.
A person can also nominate their guardian in case guardianship must be established in the future. A guardian, appointed by the court, will provide for the protected person’s basic needs, making health and financial decisions on behalf of the protected person as needed.
In their estate plan, a parent can also nominate a guardian for their minor children. A guardian of a minor, appointed by the court, will assume the responsibility of caring for the minor children and making their health and financial decisions on their behalf while they are underage. Beneficiaries are not decision makers in the estate plan, but their designation is crucial as they are the individuals or entities who receive assets or benefits as outlined in the estate plan.
Lastly, an estate planning attorney, a financial advisor, and tax specialist may be the indispensable professionals who assist the testator or grantor in creating and executing a comprehensive estate plan. They provide legal and financial advice, draft necessary documents, and ensure the estate plan complies with relevant laws and regulations.
The estate planning involves various decision makers, each with their specific roles and responsibilities. By understanding their roles, one can ensure protection for themselves and their loved ones. It is essential to carefully consider and designate these individuals to ensure that the estate plan is executed correctly.
Natalia Vander Laan is a Minden attorney