Why You Should “Staff” Your Estate Plan Like A Business

By: Susan Goodkind Wideman, J.D.

If you are a business professional, you understand the challenging process of hiring the best employees to build your team and support your goals.

The process starts with recognizing where help is needed and identifying what needs to be done. That’s followed by a search for the most qualified person. Candidates are reviewed for their skills, training, experience, and availability. If the position involves working with others, communication skills will be considered. If managing money and record keeping are involved, attention to detail and fiscal responsibility are relevant criteria. The process continues until the optimal individual is hired.

With my experience as an Elder Law & Estate Planning attorney, I suggest using a similar approach to “staffing” an effective estate plan.

Like a business, there can be several essential roles in most estate plans; Agent Under Durable Power of Attorney, Health Care Agent, Personal Representative, and Successor Trustee are the most common. Each of these has unique duties and responsibilities as defined in the estate plan documents and the state laws on Probate and Trust matters.

Applying a business perspective to estate planning, these roles should be filled with individuals whose skills most closely match the job descriptions. In my experience, however, the reality was that clients frequently used age, gender, and proximity to the principal as the only criteria when naming their trustees. They routinely designated their loved ones and friends as substitute decisions-makers, despite them being unsuitable for those roles.

While many of those designations may have been successful, I didn’t always hear about them. (People don’t call their lawyers to report they have no problems.) What I did hear about were the designations that didn’t work out. Situations like the daughter appointed as Health Care Agent who challenged her dying mother’s wishes to decline life support. Or, the nephew, acting as power of attorney, who drained his uncle’s bank account on the way to his funeral. I saw children serving as Trustees who ignored the Trust distribution terms and enriched themselves disproportionately. One of the saddest cases was the special needs child who lived with his parents until they died. The parents wanted this son to have their home and sufficient money for a caregiver. A greedy sibling, serving as Trustee, took advantage of poorly drafted legal documents, sold the house, and put his brother in a group home with strangers and no money. There were also cases where beneficiaries with special needs trusts lost their public assistance because their fiduciaries failed to do the required record-keeping and reporting to the government. Many of these cases ended up in Court. They were all difficult to resolve, long and drawn out, expensive, and a source of discord and estrangement among family members…all because the wrong person was designated for a fiduciary role.

Want to avoid your own estate plan fiasco? Here are my guidelines for “staffing” your estate plan like a business:

  1. Hire an estate planning attorney and get your estate plan done/updated now. People think they have more time, but accidents, pandemics, etc., show us how quickly life can change. Your estate plan warrants the same attention you give to your business or career if you want to achieve your goals.
  2. Know the “job descriptions” for each trustee/fiduciary role before you decide who should fill that position. Just because a child is the oldest does not mean they are the most responsible.
  3. Discuss these fiduciary roles with your family or friends before you designate them. Surprising someone with this type of responsibility may not go over very well.
  4. Designate backups. Consider that your first-choice fiduciary may not be ready, willing, or able to serve when you need them. Name suitable alternates in your documents for each role.
  5. Hire a professional trustee if they are the most qualified for the job. There are many circumstances when a professional is your best choice as your substitute decision maker because of their neutrality, experience, skills, availability, and resources. Here are a few worth noting:

    -Your family members don’t get along and you want a neutral third party who will administer your Trust without prejudice or bias
    -You want confidentiality. A professional trustee will assure that only the beneficiaries included in your plan know its contents
    -Your estate plan involves the management and transfer of large investments, businesses and/or real property
    -Settlement of your estate will require complex tax return preparation and reporting
    -You have a beneficiary with a special needs trust, and you want to be sure their personal needs will be taken care of and their government benefits won’t be at risk.

Susan Goodkind Wideman has practiced Elder Law & Estate Planning in Michigan’s Upper Peninsula for more than 20 years.  

Credit Union Trust is a limited purpose bank established by Michigan credit unions, with a mission to provide reasonable, reliable, and accessible Trust and fiduciary services.