Estate Planning Basics: Asset Disposition and Choosing Fiduciaries

Estate planning can be boiled down to two main topics: (1) asset disposition, and (2) naming (or nominating) fiduciaries.  For most of our clients, the asset disposition part—how you want your assets to pass on death—is simple.  Selecting who will be the fiduciaries—those with responsibilities and decision making upon your death and also during life if you lose capacity—can be more complicated. 

Asset Disposition

While there is no “right” answer and each situation is unique, most estate plans for married couples provide for the assets of the predeceasing spouse to pass outright or in trust for the surviving spouse, and upon the surviving spouse’s death, all assets to pass outright or in trust for the couple’s children.  For those with no surviving spouse or no children, assets may pass to favorite charities, close friends, and employees, or to nieces and nephews.

Several factors go into the decision of having assets pass outright to a beneficiary or in an irrevocable trust for that beneficiary’s benefit created and governed under your revocable trust.  An irrevocable trust offers benefits, such as asset protection from the beneficiary’s creditors, asset management by a trustee for a beneficiary not equipped to administer the trust (e.g., due to immaturity, lack of experience or desire, or a disability), and estate tax benefits.  Further, a minor beneficiary generally cannot inherit assets, so establishing a trust for the minor avoids having to go to court to have a custodian appointed for those assets.

Fiduciaries    

Fiduciaries are individuals or banks (known as “corporate trustees”) tasked with important duties of managing a person’s affairs typically during a period of one’s incapacity or administering trusts and estates for the benefit of the beneficiaries.  Below is a list of common fiduciaries in estate planning:

1. Personal Representative (also known in some jurisdictions as an executor). A Personal Representative’s role is to collect or marshal a decedent’s assets, pay off any debts, and distribute the remaining assets to the decedent’s beneficiaries in accordance with his or her estate plan.  A Personal Representative must also handle probate court pleadings and file any required tax returns.
2. Trustee. A Trustee’s job is to manage trust assets and make distributions to the trust beneficiaries in accordance with the terms of the trust agreement.
3. Agent under a Durable Power of Attorney. An Agent under a Durable Power of Attorney has broad powers to manage and control the Principal’s personal and financial affairs.  Having an Agent can avoid the court appointment of a guardian in the event of the Principal’s incapacity. 
4. Health Care Surrogate. A Health Care Surrogate under a Designation of Health Care Surrogate (also known as a Medical Power of Attorney) will make medical decisions for the Principal in the event he or she cannot do so (g., give consent for your medical treatment and administering medications). 
5. Guardians for Minor Children. A Guardian may be designated to take custody of a minor child where both parents are deceased or incapacitated.

Estate Planning Documents

A comprehensive estate plan should accomplish the above objectives of providing for your asset disposition and designating fiduciaries.  To that end, a typical estate plan consists of the following documents:

1. Pour-Over Will
2. Revocable Trust
3. Durable Power of Attorney
4. Designation of Health Care Surrogate
5. Living Will

Chris Weeg prepares estate plans for clients throughout the State of Florida. You can reach Mr. Weeg or the estate planning department’s attorneys at Comiter, Singer, Baseman & Braun, LLP at (561) 626-2101.