Who Is On Your Estate Planning Team
Estate planning isn’t just about what happens to your stuff when you die. It's about coordinating all aspects of your life to make sure that you are taken care of in the event you can no longer take care of yourself. Believe it or not, this is a team effort and takes the planning and coordination of many different people to successfully facilitate a seamless estate plan.
If you have read my previous post on What Is A Comprehensive Estate Plan (here) then you know that there is no one-size-fits-all estate plan. Each plan needs to be tailored to your individual needs. This holds true with who needs to be (or should be) included on your estate planning team.
Who’s On Your Team?
Your team will be made up of people who fill essential roles as well as people who fill supporting roles.
There are five essential roles. The essential roles are filled by people you trust to implement your plan when you pass away or become unable to care for yourself. The first three roles are needed by almost everyone, while the last two are optional based on your personal situation. The essential roles are your healthcare agent, financial agent, personal representative or executor, trustee, and guardian of your minor children.
The supporting roles are filled by individuals who can offer important professional advice to make sure that your plan is correctly drafted, and your family isn’t surprised when it comes time to implement your estate plan. They offer guidance that will help you make the decisions that impact your family and your finances now and in the future. These roles include your estate planning attorney, an accountant or tax attorney, and your financial advisor.
The Essential Players
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Also referred to as your healthcare power of attorney, this person will help make decisions for you related to your healthcare. Your healthcare agent will be able to access your medical records and make decisions regarding your treatment plan. Your healthcare agent does not have any say in your financial decisions.
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Your financial agent is a person who you select to help manage your financial information and your property. You can make their power very broad to cover many different things, or very narrow and give them access only to specific items. For example, this person could have the power to sell your real estate, such as your home. They could also sign contracts on your behalf. They can pay your bills, manage your electronic accounts, pick up your mail, and other similar activities. Essentially this person will work on your behalf to make sure your financial life is taken care of when you’re no longer able to do that yourself. Your financial agent does not have any say in your healthcare decisions.
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The executor or personal representative is the person responsible for making sure that the wishes you outlined in your will are fulfilled. After you have passed away, this person will identify all of your paperwork, your property, and your accounts and make sure that property is passed on according to the instructions you left in your will. If you have an estate that is over a certain amount of money or that includes real estate, then your estate will need to go through probate. You can read more about the probate process HERE (blog post about what happens to your property).
Your executor is the person who will shepherd your estate through this process. They are responsible for notifying heirs, putting a notice in the newspaper to notify creditors of your passing (so they can make a claim against your estate), and facilitating the accounting work related to your will to make sure your creditors get paid, and then they distribute the rest of your property according to your will.
This person should be extremely detail oriented and understand the value of a deadline.
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If your estate plan includes a trust then there’s a chance that a lot of your property won’t have to go through the probate process. This, however, means it will need to be managed via the trust. For some people, that trust is going to act similar to a will where all your property will be distributed to your beneficiaries after your death. For other people, the trustee will have longer ongoing requirements. This is true for trusts with larger estates or ones that include minor children. The trustee will manage those funds for longer periods of time and make sure that your property is given to your beneficiaries based on the instructions you leave in the trust..
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The guardian is who you name to take care of your minor children. This could also include the guardian of an adult, for example an adult with a disability or an elderly individual. It is important to note that just because you name a trusted person within your will doesn’t mean they will be the ones appointed to take care of your minor children. The court must approve the person you appoint. However, you want to make sure that you name specific guardians within your estate planning documents because the court will give your appointment significant weight when making a guardianship decision.
Supporting Players
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This person will help you figure out what your estate plan should look like. They create the legal documents that make sure your wishes actually come to fruition when you pass away or become incapacitated. They help advise you on identifying your beneficiaries and create the documents that allow you to achieve your estate planning goals.
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Your financial advisor takes the plan your attorney puts together and helps with actually executing it. They work with you, your attorney, and your CPA to make sure the financial part of your plan is set up to accomplish financial goals. This includes goals you hope to accomplish while alive, such as planning for retirement, as well as goals for distributing your wealth upon your death.
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Your CPA will help you identify any potential tax issues that you could have based on your estate planning decisions. Many estates are not taxable at the federal level because the estate tax right now is only applied to people who have very large estates (we’re talking $24+ million for a married couple!).
However, there may be an estate tax at the state level, depending on where you live. In Illinois, residents can expect to be taxed on any assets over $4 million. This means there will be some people who will owe estate taxes to the state government, but not the federal government.
Your CPA works in conjunction with your estate planning attorney to make sure that whatever plan your attorney comes up with isn’t going to have negative tax consequences. In some instances, decisions you make from an estate perspective could have an impact on you today. This is one of the reasons it's important to have a CPA or tax attorney on your team.
Let’s Recap
Everyone benefits from taking a comprehensive approach to estate planning. Employing a large number of advisors to assist you may seem over ambitious and unnecessary. However, when everyone is on the same page and your team works together, your wishes and plans will be executed without error and it will be significantly easier for your loved ones. When you are searching for an estate planning attorney, make sure that they are willing to work with any of your existing advisors or provide you with recommendations for potential advisors if you do not have them already.
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