Introduction
The same person fills three roles. 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.
Why would the same individual fulfill so many roles?
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. Below is a basic guide to a Trust-Based Estate Plan: The Who, What, and When.
Who- (Referring to a Trust-Based Estate Plan)
Trustor- the creator of the trust.
Trustee- the individual managing the trust's assets.
Successor- next in line to fulfill a specific role within your estate plan.
What and When- (Referring to a Trust-Based Estate Plan)
The Trustee is in charge of the trust's assets during your lifetime and after your passing.
The Executor is in charge of any non-trust assets after your death (covered in your pour-over will), and
The Power of Attorney is in charge of your personal assets during your lifetime if you are unable to do so yourself/incapacitated. Their authority ends when you pass. Some states differ, and this power is immediate vs springing. Click here for more information on the timing.
Asking multiple people to fulfill these roles can be a nightmare.
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.
Potential Complications for Married Couples
What if you're married/in a domestic partnership, and you want different people fulfilling the roles within your trust?
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.
You will or have received a significant inheritance.
Your spouse has addiction or spendthrift issues.
You have individual assets of moderate to significant value and have children from a previous marriage.
You have a real need for individual trusts and different individuals to fulfill these roles.
Who would be a good trustee/executor/power of attorney?
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.