Power of Attorney, Executor, and Trustee. Let's look at why this is standard practice and is automated within Encore's software and some considerations for those requesting an alternative.

A Successor Trustee/Executor/Power of Attorney is the person who would control your finances and the administration of your estate if you cannot due to your death, mental incapacity, or voluntary resignation. Generally, you will use the same individual to maintain consistency and avoid unnecessary complications.

Imagine this- You have a trust-based estate plan, your brother is your power of attorney- financial, your sister is your successor trustee, and your cousin is the executor.

Unfortunately, you were in an accident last month and are currently incapacitated. Your brother is currently serving as your financial power of attorney and just finished deciphering and organizing what bills and policies need to be paid. He also just finished providing the documentation these companies required for him to access your accounts.

Sadly, you passed away today. Now, your sister steps in to act as the trustee. She will now need to repeat the process your brother just completed. Uh-oh, she and your brother also have different investment philosophies. She is unhappy with some of his decisions... Your cousin also has some ideas of his own!

The list of possible complications compounds further as you involve more and more people. Unless you have specific circumstances warranting the need for multiple individuals to fulfill these roles, it is generally best for the same person to fill them.

There are several common complications that arise with this decision. We're not saying this isn't the best choice for you and your spouse. We're simply saying is usually NOT the best option FOR MOST married couples.

Imagine this: your spouse is incapacitated, and their sibling is acting as their financial power of attorney while you are living. If you were not selected as their initial Power of Attorney, what assets are they supposed to manage? What bills are they supposed to pay? Why go through the hassle when someone familiar with the family finances is still capable of doing so?

Now, the inevitable curve ball. You and your spouse have both passed away. You now have two separate executors trying to manage assets. Which, if there are minor children, may require them to work together for a long period of time. Possibly several decades. Will beneficiaries need to visit two trustees with requests, questions, and concerns? Will they use separate financial advisors?

The list of possible complications compounds further as you involve more and more people. Unless you have specific circumstances warranting the need for individual trusts and differing individuals to fulfill these roles, it is generally best for the same person to fill the roles within a marital (couples) trust.

Some examples that might warrant a need for differing individuals.

Most people ask someone who is financially responsible, would handle finances similarly to them, and is generally a good decision-maker. If you do not have a family member or friend with these qualities/characteristics, there are professional or corporate trustees who may be a better fit.

A revocable trust is a document (the “trust agreement”) created by you to manage your assets during your lifetime and distribute the remaining assets after your death. The person who creates a trust is called the “grantor” or “trustor.” The person responsible for the management of the trust assets is the “trustee.” You can serve as trustee, or you may appoint another person, bank or trust company to serve as your trustee. The trust is “revocable” since you may modify or terminate the trust during your lifetime as long as you are not incapacitated.

During your lifetime as the trustor/trustee, Encore's revocable trusts allow you to withdraw money or assets from the trust. You will maintain control of your assets and may continue to invest and manage your trust's property as you see fit. We think it's your money; you can do what you want with it!

Upon your death, the trustee (or your successor if you were the initial trustee) is responsible for paying all claims and taxes and then distributing the assets to your beneficiaries as described in the trust agreement. The trustee’s responsibilities at your death are discussed below.

Your assets, such as bank accounts, real estate, and investments, must be formally transferred to the trust before your death to get the maximum benefit from the trust. This process is called “funding” the trust and requires changing the ownership or beneficiary of the assets to the trust. You should consult with your financial advisor to determine which of your assets are appropriate for trust ownership.

A trustee is a third party who is authorized by a trustor to execute and manage trust assets. A trustee holds the title of the trust asset. Your revocable trust will need to include a trustee, assets/property, your wishes, and definite beneficiaries.

Trustees should perform their duties according to the terms of the trust and their actions should reflect the outcome you desire based on any specifics you expressed within your trust. Trustees are often guided by federal and state laws, and their performance should be solely in the best interest of the beneficiaries.

They are prohibited from using trust assets for their benefit. Where there are multiple beneficiaries, they are expected to act impartially. Any trustee managing investments should invest the estate's assets prudently. Trustees CANNOT comingle the estate's funds with their own. The trust should use a separate account in its name for management and investment. Trustees should keep clear and accurate records of all managed assets and provide them in a timely manner if requested to do so.

Serving as trustee is no simple task. While very important, the prudent investment of trust assets is not a trustee’s only responsibility. Your trustee’s exact powers and duties will depend on the instructions in your trust agreement. But, in general, your trustee will:

Your trustee may have broad powers or very limited powers. In either case, your trustee is a fiduciary and must follow a strict standard of care when performing trust functions.

The choice of a trustee is extremely important. You can name almost anyone as your trustee. Unlike the appointment of a personal representative of a probate estate, a trustee does not have to live in your state or be related to you. You can name yourself or any other individual (subject to tax considerations), or a corporate trustee, such as a bank or trust company. The individual trustee can be a family member, friend or professional advisor. Many individuals appoint family members or friends as successor trustee, to assume responsibility for the trust management and distribution after their death. When a family member or friend is chosen, consideration must be given to the person’s qualifications, the potential for friction with other beneficiaries, and the potential burden you are placing on that individual. Encore's trust agreement allows these individuals to hire qualified professionals to assist them in their duties, such as attorneys, accountants and financial advisors.

Like an executor, a trust may authorize an individual (the “trustee”) to act for the maker of the trust (trustor) after that person dies. Like an agent, the trustee may manage the financial affairs of the trustor’s estate. A trustee only has power over an asset that is owned by the trust. In contrast, an agent may have authority over all of the principal’s non-trust assets. Another important distinction is that a trustee makes decisions after the trustor dies. In contrast, the power of attorney expires upon the principal's death.

A trust may be used in addition to a will. This is because a trust can handle only the property that has been put into it. Any property of yours that is not placed in the trust either during life or at death in most instances escapes the control of the trust. It is the will that controls all property in your name at the time of death if the will is drafted properly.

Trusts can be helpful to speed administration and save taxes if they are drafted properly and funded during life with the property intended to be transferred by the trust. Often, however, unfunded or out of date trusts can add to the cost of settling estates, not lower it. It is best practice to regularly review any executed estate plan on a regular basis to ensure it reflects your current wishes and situation.

Most states will not allow you to intentionally disinherit your spouse without a properly executed marital agreement. Usually, state laws give a surviving spouse a choice to take either the share provided under the will or a portion of your property determined under the state “elective share” statute. This statute uses a formula to calculate the size of the surviving spouse’s elective share, which includes amounts stemming from your jointly held and trust property, life insurance and other non-probate assets. Because this formula is very complicated, it is usually necessary to refer this matter to an attorney with extensive experience in this area of law. Also, if your will was made before the marriage and the will does not either provide for your spouse or show your intention not to provide for your spouse, then generally your spouse would receive the same share of your estate as if you had died without a will, unless provision for the spouse was made or waived in a marital agreement. Encore does not allow for the intentional disinheritance of a spouse. These plans will be disqualified and you will not be able to complete them.

This question is referring to a natural-born adopted child known to you.

Encore DOES NOT allow for the intentional disinheritance of a naturally born or adopted child. We do this to protect all parties involved from litigation. You may have this done elsewhere however it is important to nate that the chances of litigation after your passing skyrocket if you have disinherited a child. Therefor these plans will be disqualified from using Encore's services.

One solution is to make them the beneficiary of a specific account upon your passing. This allows you to provide for the child but prevents them from interfering in the administration of your estate and inconveniencing your other beneficiaries.

This question is referring to a natural-born adopted child known to you.

No. This is not necessary and can actually cause considerable added expense to the estate. Beneficiaries have certain automatic legal rights in the estate administration process. A bequest of even $1 will give a disgruntled child the opportunity to insert himself into the process, create roadblocks, cause delays, and prevent your other beneficiaries from receiving their distributions promptly.

Encore DOES NOT allow for the intentional disinheritance of a naturally born or adopted child. These plans will be disqualified, and you will not be able to complete them.

One solution is to make them the beneficiary of a specific account upon your passing. This allows you to provide for the child but prevents them from interfering in the administration of your estate and inconveniencing your other beneficiaries.

A revocable trust avoids probate by effecting the transfer of assets during your lifetime to the trustee. This avoids the need to use the probate process to make the transfer after your death. The trustee has immediate authority to manage the trust assets at your death; appointment by the court is not necessary.

The “funding” of a revocable trust is critical to successfully avoid probate. Those persons who do not fully fund their trusts often need both a probate administration for the non-trust assets as well as a trust administration to completely distribute the assets. Because the revocable trust may not completely avoid probate, a simple “pour over” will is needed to transfer any probate assets to the trust after death.

The account statement, stock certificate, title or deed will make some reference to the trust or to you as trustee. You might also elect to fund your trust by naming the trust as a beneficiary of life insurance or other similar arrangements. Your financial advisor may assist you with the transfer of assets to your trust.

If your trust will own real estate, then it is important to complete any required deed transfers after considering the impact of existing mortgages, title issues, and homestead restrictions when the deed is prepared. (Note- this does not mean you will lose your homestead exemption. You may have to reapply or provide additional information regarding the trust after its execution.)