Choice of Trustee
Dale Tamburro • March 7, 2025
CHOICE OF TRUSTEE
One of the most difficult and important tasks in preparing a trust for an individual is the selection of a trustee or trustees to manage the trust. Proper management of the trust can make a huge difference in the beneficiary's quality of life for years to come, if not for her entire life. Generally, there are three categories of trustees. Family/friends, Professional Trustees and Professionals serving as trustees (i.e... Attorneys and Accountants).
Here are seven issues I have asked them to consider in making their decision:
- Temperament. Personalities to avoid as Trustees include emotional, confrontational, and dogmatic. Family and friends might sound good at first but if there is a potential for conflict of interest or excessive emotions you want to weight the value of retaining family harmony.
- Cost. Many people fear using a professional trustee -- trust companies, banks, attorneys, accountants -- due to the cost. Professional trustees usually charge between 1.0 and 1.5% of assets under management, the fee decreasing as the trust funds increase. Over time, these costs can add up, but not nearly as much as the cost of bad management. To put these costs in perspective, they are often the same or less as financial advisors or mutual fund companies charge, and they do not take on any of the fiduciary responsibilities of trustees. Alternatively, many attorneys’ fees will be the same as their hourly fees for any client.
- Number. In some case, clients are comfortable simply naming their son or daughter as the sole trustee but are nervous about what that might do to their relationship with other family members. Another trustee (co-trustee) would allow them to share decision-making and responsibility (and blame, perhaps), as well as the workload. It would also provide redundancy if one of the trustees was unavailable for any reason. While it makes a lot of sense to have more than one trustee, more than three starts to get cumbersome. While any single trustee can act for the trust in terms of writing checks and directing investments, they must be carrying out the decisions made by all the trustees. Keeping everyone in the loop and making joint decisions all the time can be difficult if too many people are involved.
- Stability. Trusts can last a long time. Will the person you appoint be able to provide the necessary attention to the trust for years or decades? Will they be able to keep up with the often-tedious jobs of paying bills, filing tax returns, and preparing accounts? Since we cannot be certain of the answer to this question if when appointing an institution -- banks get bought and sold, sometimes with ill effect on their trust departments -- the trust must include a mechanism for changing trustees.
- Financial acumen. The trustee will need to manage trust investments and spending, taking into consideration the needs and interests of both current and future beneficiaries. Trying to balance their current and future needs can be difficult. They may have $1 million in trust, which seems like a lot of money (perhaps not what it used to be), but to make sure that the fund keeps growing with inflation, they need to limit their trust withdrawals to $30,000 to $40,000 a year. This may seem incongruous with so much money invested, but otherwise the buying power of the trust will diminish and ultimately the trust could fall into a "death spiral" as the beneficiary must dip into larger and larger amounts of trust principal to make ends meet.
- Organization. In addition to all of the factors mentioned above, at least one of the trustees needs to be very well organized in order to meet all of the trustee responsibilities -- making distributions, providing account statements to beneficiaries, reviewing investments, filing timely tax returns.
- Personal touch. While cost is one reason many clients avoid using professional trustees, another is fear of working with an institution rather than an individual who personally knows the beneficiaries' situations and needs. This can be especially off-putting if the institution has experienced significant turnover in personnel. We've had cases where a parent chose a local banker to serve as trustee only to have that bank bought by a statewide bank which was bought by a regional bank which, ultimately, was bought by a national bank. In the end, the children were dealing with trust officers in another state. This is another reason it's important for all trusts to have a mechanism for changing trustees.
As you can see, neither the choice of trustee nor the chosen person's decision to accept the appointment, should be taken lightly. Each client’s decision will be made based on his unique situation, including the available family members and friends, the likely longevity of the trust, the amount of assets under management, and other factors. We find that the combination of a professional trustee who can take care of the administrative side of the trustee's role and a family member who can bring the personal touch often works best. In a practical sense, the professional trustees are more often and attorney because many of the institutionalized trusteed are either cost prohibited or decline to serve because the trust assets are too small.
Professional Trustees
For large sized trusts (commonly of $1.5 Million in non-real estate holdings), due to the complications of the trustee's role, we strongly urge clients to consider professional trustees such as trust companies, and banks. They are equipped to handle the investment, accounting and tax sides of trust operations and can do so with little risk or difficulty. They should be better equipped to fend off inappropriate requests for distributions and to deal with conflicts of interest. On the other hand, many professional trustees are ill-equipped to deal with the issues presented by beneficiaries with special needs, whether they be eligibility for public benefits or responding to sometimes frequent requests for distributions for unusual purposes. They may be more comfortable simply managing trust assets. Anyone selecting a professional trustee must ask about the prospective trustee's experience with special needs trusts and their methods for responding to these questions.
When a large institution is serving as trustee, an inexperienced trust officer may be assigned to the account. He may have little experience dealing with special needs issues. And the person assigned may change over time as employees come and go and, in the case of many banks, as the identity of the bank itself changes from one to another. This can be extremely frustrating for beneficiaries and their families.
Attorneys as Trustees
For trusts of any significant net worth you can consider using a professional trustee such as an attorney. Attorneys don’t charge as much as institutionalized trustees and will handle much smaller trusts. Attorney also may have some history with the family especially the grantors which may aid the attorney in understanding the grantor’s purpose of having the trust. Attorney’s can also serve as a co-trustee with a family member and allow for the separation of work between trustees.
Family Trustees
Choosing family members and friends as trustees also has advantages and disadvantages. The advantage is that these are people who know and care about the beneficiary and may be able to you the trust funds to provide the greatest benefit for the person with special needs. Many clients are reluctant to give up control to an unknown third party. A further perceived advantage is that family members normally don't charge for their services.
The reality, however, is that trustee fees - typically about 1 percent of trust assets per year, with a minimum for smaller trusts - is very reasonable given the services provided. The risk that a family member trustee will make mistakes or not be able to follow through on the basic trustee responsibilities of prudent investment and accounting are so great that the trustee fee can simply be seen as reasonably-priced insurance. Even the most skilled and responsible family member with the best of intentions may not be able to follow through on all the trustee details given the press of other matters in her life.
In short, to appoint a family member is both a large compliment and placing a large burden on her shoulders.
Co-Trustees
Clearly, there are problems with both family trustees and professional trustees. One solution which we have used with success in our practice is co-trustees - both a professional and family member trustee working together. This can be the best of both worlds. Everyone can rest easily knowing that the basic trust functions will be carried out by the professional trustee. But the family member trustee will be on the scene to make sure that the trust is used to best serve the beneficiary.
So, You've Been Appointed Trustee, Now What?
You have been asked to serve as trustee on the trust of a family member. This is a great honor meaning that the family member trusts your judgment and is willing to put the welfare of the beneficiary or beneficiaries in your hands. However, it is also a great responsibility. You need to go into it with your eyes wide open.
- Fiduciary Responsibility. As a trustee, you stand in a “fiduciary” role with respect to the beneficiaries of the trust, both the current beneficiaries and any “remaindermen” named to receive trust assets upon the death of those entitled to income or principal now. As a fiduciary, you will be held to a very high standard, meaning that you must pay even more attention to the trust investments and disbursements than you would for your own accounts.
- May I read the trust? The trust document is your instruction manual. It tells you what you should do with the funds or other property you will be entrusted to manage. Make sure you read it and understand it. Ask the drafting attorney any questions you may have.
- The Trust’s Terms. Read the trust itself carefully, both now and when any questions arise. The trust is your road map and you must follow its directions, whether about when and how to distribute income and principal or what reports you need to make to beneficiaries. What are the grantor's goals? Unfortunately, most trusts say little or nothing about their purpose. They give the trustee considerable discretion about how to spend trust funds with little or no guidance. Often the trusts say that the trustee may distribute principal for the benefit of the surviving spouse or children for their "health, education, maintenance and support." Is this a limitation, meaning you cannot pay for a yacht? Or is it a mandate that you pay to support the surviving spouse even if he could work and it means depleting the funds before they pass to the next generation? How are you to balance the needs of current and future beneficiaries? It is important that you ask the grantor while you can. It may even be useful if she can put her intentions in the form of a letter or memorandum addressed to you.
- Investment Standards. Your investments must be prudent, meaning that you cannot place money in speculative or risky investments. In addition, your investments must take into account the interests of both current and future beneficiaries. For instance, you may have a current beneficiary who is entitled to income from the trust. He or she would be best off in most cases if you invested the trust funds to generate as much income as possible. However, this may be detrimental to the interest of later beneficiaries who would be happiest if you invested for growth. In addition to balancing the interests of the various beneficiaries, you must consider their future financial needs. Does a trust beneficiary anticipate buying a house or going to school? Will she be depending on the trust income for retirement in 15 years? All these questions need to be considered in determining an investment plan for the trust. Only then can you start considering the propriety of individual investments.
- Accounting. One of your jobs as trustee is to keep track of all income to, distributions from, and expenditures by the trust. Generally, you must give an account of this information to the beneficiaries on an annual basis, though you need to check the terms of the trust to be sure. In strict trust accounting, you must keep track of and report on principal and income separately.
- Taxes. Depending on whether the trust is revocable or irrevocable and whether it is considered a “grantor” trust for tax purposes, the trustee will have to file an annual tax return and may have to pay taxes. In many cases, the trust will act as a pass through with the income being taxed to the beneficiary. In any event, if you keep good records and turn this over to an accountant to prepare, this should not be a big problem.
- Delegation. While you cannot delegate your responsibility as trustee, you can delegate all the functions described above. You can hire financial advisors to make investments, accountants to handle taxes and bookkeeping for the trust, and lawyers to advise you on questions of interpretation. With such professional assistance, the job of trustee need not be difficult. However, you still need to communicate with those you hire and make any discretionary decisions, such as when to make distributions of principal from the trust to one or more beneficiaries.
- Distributions. Where you have discretion on whether or not to make distributions to a beneficiary you need to evaluate his current needs, his future needs, his other sources of income, and your responsibilities to other beneficiaries before making a decision. And all these considerations must be made in light of the size of the trust. Often the most important role of a trustee is the ability to say “no” and set limits on the use of the trust assets. This can be difficult when the need for current assistance is readily apparent.
- Fees. Will I be compensated? Often family members and friends serve as trustees without compensation. However, if the duties are especially demanding it is not inappropriate for them to be paid something. The question then is how much. Professionals generally charge an annual fee 1 percent of assets in the trust or on an hourly basis or some combination. So, the annual fee for a trust holding $1 million would be $10,000. Often, they charge a higher percentage of smaller trusts and a lower percentage of larger trusts. If you are doing all the work for a trust including investments, distributions, and accounting, it would not be inappropriate to charge a similar fee. However, if you are paying others to perform these functions or are acting as co-trustee with a professional trustee, charging this much may be inappropriate. A typical fee in such a case is a quarter of what the professional trustee charges, or .25 percent (often referred to by financial professionals as 25 basis points). In any case, it is important for you to read what the trust says about trustee compensation and discuss the issue with the grantor.
If after asking these questions you feel comfortable serving as trustee, then accept the role. It is an honor to be asked and you will provide a great service to the grantor and beneficiaries.
This can serve as only an introduction to your duties and responsibilities as trustee.
Those of us who set up "Revocable Living Trusts" do so with at least one of these objectives in mind: 1. To avoid probate court supervision of your property in the event of your disability. 2. To avoid probate court supervision of your property at the time of your death and during the settlement of your estate. 3. To avoid probate court supervision of property which you wish to be managed in trust funds after your death. If your objective in establishing a Revocable Living Trust is solely to avoid probate court supervision of the trust(s) you establish for your family, and these trusts are not intended to come into existence until after your death, then there is no need to transfer title to your property into trust name while you are alive. You may continue to own all of your property in your own name, unless for tax or other reasons we have suggested that rearrangement of title be made as between yourself, your spouse, your children or other forms of trusts. Likewise, if your objective in establishing a Revocable Living Trust is to avoid probate court supervision of your property in the event of your disability, you need only give an appropriate "Durable Power of Attorney" to a family member, trusted friend or advisor. This Power of Attorney should authorize your attorney-in-fact to transfer your property to your Revocable Living Trust after you become disabled or incapacitated. No property need be placed in trust name prior to that time. Despite this, I often recommend funding the trust yourself, while you are alive because successor trustees often have better luck with financial institutions then being empowered under a Durable Power of Attorney. If your objective is to avoid probate of your property at the time of your death and the settlement of your estate, you will be successful only if and to the extent that your property is transferred into the name of the Trustee of your Revocable Living Trust before your death. This Memorandum is intended as a general guide for you to use in making the title transfers that are necessary if you wish to avoid probate of your estate by use of a Revocable Living Trust. Please keep clearly in mind that your Revocable Living Trust can still be an effective form of "Will" for you even if you do not place your property in the trust while you are alive, but you will not have the extra advantages of avoiding probate. Transferring property to a Revocable Living Trust while you are alive is best thought of as a means of avoiding the cost of probate after your death by doing the work yourself while you are still alive. You will not need legal help for most of the transfers, if you are willing to put in the time and effort. To the extent you do not wish to make this effort, we are perfectly willing to take care of these matters for you, but of course we will have to charge for our services at our usual hourly rates for attorneys and paralegals. I. Transferring Title to Property - The First and the Most Important Step It is unfortunate but true that there is no uniformity among the various banks, brokers and other institutions as to how title to property is properly transferred to a Revocable Living Trust. Until the time comes when there is such uniformity, each institution you deal with is apt to have its own requirements, assuming it is familiar at all with the concept of a "Revocable Living Trust." You will save yourself a great deal of time and trouble if the very first step in your program for transferring assets is to CALL THE INSTITUTION INVOLVED AND FIND OUT WHAT IT REQUIRES. When you call, you should say: " I would like to transfer my (description of property) into my Revocable Living Trust. Would you please tell me what I have to do and send me the necessary paperwork. " The institution may be perfectly familiar with this process, and have a quick answer for you. If so, follow its requirements to the letter. Do not attempt to argue with the institution as to whether its requirements are "right," you will most likely be dealing with someone at a relatively low level who has no decision-making capability and can only follow the instructions of his or her superiors. If the person you are calling doesn't seem to know what you are talking about, ask the person to refer you to someone else who might help you. If you still can't get any satisfaction, your best hope is to call us and ask for assistance. II. Completing the Papers Necessary to Transfer Title As we mentioned, each institution will have its own requirements for transferring title. You are likely to be dealing with banks, brokerage firms, insurance companies, companies in which you own stock or bonds, and so on. Some of their requirements may include: A. Identification of the Trust We normally recommend that you use a fairly formal legal title for your Revocable Living Trust, which includes the name of the Trustee or Trustees followed by the word "Trustee," the name of the trust (usually your own name) and the date on which the trust was signed. It might look something like this: "John L. Jones, Trustee of the John L. Jones Revocable Trust under trust dated May 14, 2024." Almost any variation on this name is appropriate, particularly if your Revocable Living Trust itself includes a statement that the trust may be known by a simpler name, such as "The John L. Jones Revocable Trust." However, do not insist on using this name if the institution prefers its own method. Be sure, however, the name chosen at least contains the name of the trust, the Trustee's name, the word "Trustee," and the date of the trust, such as "John Jones, Trustee u/d/t3 dated 5/14/24." B. Tax Identification Number Most institutions will request the trust's taxpayer identification number. If you are a Trustee or a co-Trustee, the tax identification number will be your Social Security number. If you are not a Trustee or a co-Trustee, you will need a taxpayer identification number. You should ask the Law Office of Dale J. Tamburro to obtain a taxpayer identification number for your trust or your accountant. C. Signature Authority If there is more than one Trustee, as, for example, where you and your spouse are co Trustees, you may be asked to designate who has power to sign documents on behalf of the trust. It is most likely your trust contains a power to delegate signing authority, in which case, if you wish, you may choose between having either Trustee sign on behalf of the trust or having both Trustees sign. D. Copy of Trust Agreement Occasionally, an institution may request a copy of the Revocable Living Trust Agreement for its files. In general, it is recommended that you provide the institution with a photocopy of the Agreement rather than with an original. If you do not feel comfortable with furnishing the institution with the entire Trust Agreement, ask the institution whether it will accept the first and last pages of the Agreement, which should be sufficient to identify the parties to the Agreement and the date it was signed. III. Transferring Title - Some of the Requirements for Common Types of Property A. Brokerage Accounts; Bank Custody Accounts You probably will find that brokerage firms and banks, in particular, and often other organizations, will ask to have another set of contracts of agreements signed by the Trustees of your Revocable Living Trust. Presumably they will be the same contracts or agreements you signed previously in your individual capacity. B. Registered Stocks and Bonds If you own stocks or bonds in your personal name (i.e., they are not registered in the name of your bank or brokerage firm), they need to be transferred into the names of the Trustees of your Revocable Living Trust. Your broker may ask you to endorse the back of the stock or bond certificate, or to supply what is known as a stock or bond "power" authorizing the transfer agent for the company involved to make the transfer on its books. Occasionally, you may be asked to provide a formal Letter of Instruction requesting the transfer which must be signed by you and guaranteed by an authorized official. C. Unregistered (Bearer) Bonds To transfer bonds which are not registered in your name (i.e., bearer bonds) to your Revocable Living Trust, we suggest that you open a safe deposit box in the trust's name and place the bonds in the safe deposit box inside an envelope which is marked with the trust's name. D. Real Estate You will need the help of an attorney to change title to real estate. The Law Office of Dale J. Tamburro, P.C. would be glad to help, or you can contact the attorney who handled the original closing for you. There is a fair amount to do in transferring title to real estate, but in most cases the charges for residential real estate should not exceed several hundred dollars if you can supply copies of the existing deed and the most recent tax bill for the property. You will be asked to sign new deeds transferring title from yourself to a simple "nominee" trust (the beneficiary of which is your Revocable Living Trust), and those deeds will then be recorded in Registry of Deeds where the property is located. There will be an additional small filing fee by the Registry for recording these deeds. If there is any indebtedness on the property, it may be advisable to obtain the written consent of the lending institution prior to completing the transfer. E. Partnerships Many people have invested in real estate, oil and gas, or other partnerships. Some of those partnerships are publicly traded; others are private. Some partnership agreements require that the consent of other partners be obtained before transferring the property to a Revocable Living Trust; others don't. It is important for you to contact the Managing Partner of the partnership (or the financial advisor or brokerage firm which introduced you to the partnership) and ask for their particular requirements. F. Bank Accounts To transfer a bank account to a Revocable Living Trust, call your bank officer for instructions. Usually all that will be required is to open a new account and have the Trustees sign a new signature card. It is generally not advisable to transfer a checking account into the name of a Revocable Living Trust unless the account consistently contains a large balance. It should also be noted that transferring a Certificate of Deposit to a Revocable Living Trust prior to its maturity may result in a forfeiture of interest. G. Motor Vehicles and Boats Generally, we advise against transferring title to motor vehicles and boats to Revocable Living Trusts, partly because of the time and difficulties involved in dealing with the Department of Motor Vehicles, and partly because of the reasonably quick changeover or properties as one buys and sells them. However, in the case of an antique car of considerable value, or a very substantial boat, it might be worth the effort. Again, you will need to call the Department of Motor Vehicles or other appropriate state or federal agency to find out the transfer requirements. They all differ, and you should be prepared for conflicting advice. H. Contents of Your Home There is a difference of opinion among attorneys as to whether it is practical to transfer the contents of your home (furniture, furnishings and the like) into your Revocable Living Trust. Obviously, the contents of your home are ever changing. It is uncertain whether a transfer of the contents you now own will be effective with respect to furniture and furnishings you acquire later. Some of our clients who are extremely concerned about entirely avoiding probate at all costs have taken the step of assigning their "tangible personal property" to their Revocable Living Trust, following the format shown on Exhibit A to this memorandum. The Law Office of Dale J. Tamburro, P.C. feel it is appropriate to sign such an assignment, so long as you recognize that it can lead to disputes later on as to who owns the property, what types of property are included on the assignment, when ownership is to be determined and similar issues. To minimize such disputes, if you own valuable tangible personal property such as artwork which you wish to transfer to your Revocable Living Trust, we suggest you sign a separate assignment form fully describing the property. I. Insurance Policies on Your Life As a broad general rule, there are greater tax advantages to placing insurance policies in a separate form of trust known as an Irrevocable Life Insurance Trust rather than in a Revocable Living Trust. However, even if you elect not to place the insurance policies in an Irrevocable Life Insurance Trust, the insurance proceeds will still not pass through probate as long as they are payable to a named beneficiary. Therefore, it is only advisable to name your Revocable Living Trust as the beneficiary of your life insurance if you wish to add the proceeds to trusts established for your family under your Revocable Living Trust which will continue after your death. It would be very rare to name your Revocable Living Trust as owner of the policies, as this arrangement lacks the often considerable tax advantages of an irrevocable insurance trust. If you do decide to designate your Revocable Living Trust as beneficiary of your life insurance, contact the insurance company and request a change of beneficiary form for the policy. On the form, identify the Revocable Living Trust as beneficiary of the policy in the manner described above. J. Pension Plans and IRAs In some cases, it may be desirable to designate a Revocable Living Trust as beneficiary of an IRA or pension plan, particularly if you would like the proceeds to be added to trusts established for family members under your Revocable Living Trust which will continue after your death. Since it may not always be beneficial from an income tax standpoint to make such a designation, particularly if there is a surviving spouse, it is important to consult the Law Office of Dale J. Tamburro, P.C. prior to doing so. If you decide to designate your Revocable Living Trust as beneficiary, you should obtain beneficiary designation forms from the plan administrator or bank, and the Revocable Living Trust should be correctly identified as the new beneficiary on these forms. For some pension plans, a married person must obtain the written consent of his or her spouse in order to designate a Revocable Living Trust as the primary beneficiary of the plan. IV. Other Details to Consider In addition to transferring title to your property into the name of the Trustee of your Revocable Living Trust, you should consider some or all of the following: A. Transferring Insurance Coverage If you transfer some types of property to your Revocable Living Trust, such as your home, household furniture and furnishings, or your automobile, there may be insurance policies associated with this property. Most of us own homeowner's or automobile policies, for example. You should call your insurance agent and ask whether your policies should be rewritten so that they show the legal owner to be the Trustee of the Revocable Living Trust. B. Requesting Confirmation of Transfers Within a few weeks of transferring property to your Revocable Living Trust, you should contact the appropriate institution and request written confirmation that the transfers have been properly completed. Where appropriate, you should request the new documents of title (i.e., newly issued stock or bond certificates, deeds, etc.) and forward them to the Trustees of your Revocable Living Trust. C. Contact This memorandum is intended to provide general guidance with respect to transferring assets to your Revocable Living Trust. If you should encounter any difficulties or questions during the transfer process, you should consult the Law Office of Dale J. Tamburro, P.C. to ensure that the transfers have been properly made so that your objective in avoiding probate court supervision of your property may be accomplished. EXHIBIT A ASSIGNMENT OF TANGIBLE PERSONAL PROPERTY STATE OF ) ) ss: COUNTY OF ) I, John L. Jones, individually, hereby assign any interest I may have in all of my tangible personal property to myself as Trustee (or any Successors in Trust) of the John L. Jones Revocable Trust under Agreement dated May 14, 2011. John L. Jones, Individually ___________________________________________ John L. Jones, Trustee ___________________________________________ Witness ___________________________________________ Address___________________________________________ Witness ___________________________________________ Address___________________________________________ STATE OF ) ) ss: COUNTY OF ) The foregoing instrument was hereby acknowledged before me this day of , 2011, by John L. Jones, Notary Public: My commission expires:
Whether you are married with children or a single adult, you should have an Estate Plan to protect your assets, loved ones and personal care in the future. What legal documents do you need to have an appropriate Estate Plan? Everyone is different and estate planning is unique to everyone, so it is difficult to generalize. However, most of us need the first four of the fundamental legal documents referred to below. More and more of us need a Trust of some kind but the specifics of why you need a trust and what kind of trust requires more discussion: Durable Power of Attorney Health Care Proxy A Will HIPAA Release Living Trust Credit Shelter Trust Version if you are married and have a net worth in excess of $2,000,000 combined. Joint Marital Revocable Trust if net worth is less than $2,000,000 Individual Revocable Trust if not married. ( Primarily for Long-term Care Protection you would consider an Income Only Irrevocable Trust ) ( Another trust called an Irrevocable Life Insurance Trust(ILIT) is used solely so the death benefits are not included in your Estate for Estate Tax Purposes ) A Durable Power of Attorney The Durable Power of Attorney is a written document which allows you (the Principal) to designate someone you trust (the Attorney-in-Fact) to make Personal, Business and Financial decisions for you in the event of illness or incapacity. The Durable Power of Attorney allows you to name someone who could take over your personal finances, pay your bills, sign a deed or bill of sale, sign you in or out of a hospital or rehabilitation hospital, make gifts, deal with the IRS, deal with your insurance company or stockbroker, purchase an annuity or engage in Medicaid or long-term care planning on your behalf. A well-drafted Durable Power of Attorney will enable your Attorney-In-Fact to do anything you could as if you were personally present. A Durable Power of Attorney can be broadly defined, or it can be very specific. It depends upon what one wants or needs. A Durable Power of Attorney does not necessarily take effect at the time of signing. A Power of Attorney can "spring" into effect only upon the principal's incapacity or disability whether sudden (an accident or a stroke) or gradual (Alzheimer's disease or mental weakness/illness). A Durable Power of Attorney should be signed while one is in good health. It is preferable to have discussed the Durable Power of Attorney beforehand and make sure the Attorney-In-Fact named in the document agrees to serve and understands what he or she is expected to do. A Durable Power of Attorney needs to be witnessed and be signed in the presence of a Notary Public. A Durable Power of Attorney has its drawbacks. If it is too old a bank or investment company may not accept it. If it does not reference the particular use that you need it for, its intent may also fail. Even if you have a Durable Power of Attorney, you should have it reviewed every three years to see if it is still sufficient. Health Care Proxy A Health Care Proxy is a relatively straightforward legal document that one signs designating another person to make any and all care decision for him/her in the event of illness or incapacity. The person who is appointed is called a health care agent. The agent is authorized to act only if the attending physician determines in writing that you lack the capacity to make or communicate health care decisions. The decision-making authority includes the authority to make decisions about life sustaining treatment. Again, similar to the Durable Power of Attorney a properly drafted Health Care Proxy will have sufficient detail to cover most if not all consequences. A general announcement naming someone to make all medical decisions for you is not sufficient. A Will A Will is a document which, among other things, directs how your property will be disposed of after your death. It is also used to name a Guardian for your minor children in the event of a simultaneous death. The Will also allows you to choose the person or persons who you want to manage your Estate. If you do not have a Will, your property will be distributed according to the Statutory Laws of the Commonwealth, which may or may not be in accord with your wishes. Additionally, virtually anyone, including your creditors, could petition the Probate Court for permission to administer your estate if you have not appointed an Executor through a Will. The use of a Will is part of the Probate Process it DOES NOT AVOID PROBATE. HIPAA Release A signed HIPAA release form must be obtained from a patient before their protected health information can be shared with other individuals or organizations, except in the case of routine disclosures for treatment, payment or healthcare operations permitted by the HIPAA Privacy Rule. A HIPAA Release would allow your spouse, children or whomever is named in it to converse with your doctors about your condition. It does not allow them to make any health decisions, those are left to the person named as your Health Care Proxy. A Living Trust (revocable) A Living Trust is a document by which a person legally transfers ownership of certain property to another party to be held and managed for his or her benefit or for the benefit of others. The person who establishes The Trust is the Donor. A Living Trust, so called, is a trust that is established and takes effect while one is alive as opposed to a Testamentary Trust which is established in a will and only comes into being upon death. A Living Trust is often times revocable - meaning - the person who created it can revoke it. It also can be amended from time to time as situations and circumstances change. By placing property in a Trust, a Trustee is legally responsible for management of the Trust property. A Trust serves to avoid Probate upon the death of the Donor, as the Trust Assets are not in one person's name at the time of death. Unlike a Will, a Living Trust need not be filed with the Registry of Probate. One similarity of a Will and Trust is that the Trust can provide to whom the Trust assets will go upon the death of the one who created the trust (the Donor). One of the differences between a Will and the Trust is that the Will takes effect when you die. The Living Trust, on the other hand, can be established while you are alive, and the Trustee will hold your assets and manage them during your lifetime. The Executor of your Will can only distribute your assets to your heirs at the time of death. The Trustee can manage the Trust in both instances - while you are alive and following your death. A Living Trust provides needed flexibility to deal with changes over the years. It provides, as does a Will, a means to provide protection for handicapped, disabled, or mentally challenged family members or loved ones. It can protect a financially irresponsible beneficiary. It allows one to make specific arrangements for children or grandchildren from a prior marriage. A Trust can also be used to avoid or reduce estate taxes. EXAMPLES: I am asked for generalities: I don’t like generalities because each person, each couple are unique in my mind and the difference between being a document drafter and someone who provides an estate plan is understanding the individuality of your clients. However, examples sometimes help make things easier to understand. Anyone over the age of 18 should have a Health Care Proxy. Anyone one who is married should have a Health Care Proxy and Last Will and Testament. Anyone who owns a house or has a retirement account should have a Durable Power of Attorney. It is that simple. A single person or a widow or widower who have never had a trust will not need a credit shelter trust. They may or may not need a revocable trust or an irrevocable trust or both. This is what having an hour discussion is all about. But…. If you want to have complete unfettered control of what is held in trust, you do NOT want an irrevocable trust, you want a revocable trust. If you want to protect the assets of the trust from creditors or to qualify for MassHealth/Medicaid you do NOT want a revocable trust, you want an irrevocable trust. If you want to control some assets and protect other assets you might want one of each kind of trust. Both kinds of trusts will aid you in the management of the assets if you were disabled and to avoid the probate process if you have passed away. Again, be careful to not assume what I just described is for you. What you might hear in a seminar or a class, whether with me or another speaker is not designed to define what you need. It is a guide. It is essential that have a one on one with an estate planning attorney to create a plan that is distinctive for you. For more information on drawing up a Will, Durable Power of Attorney, Health Care Proxy, or Living Trust, contact your local attorney. For more information on The Law Offices of Dale J Tamburro, please visit our web site at www.tamburrolaw.com, email us at Dale@Tamburrolaw.com or call us directly at 617.489.5919.
