(Hint, the same person may not fit each role.)
Loving someone and trusting someone are two different acts. Often a client will be concerned with being “fair” or hurting an adult child’s feelings when choosing a fiduciary (i.e. person who is required to act for the benefit of another person and/or exercise a high standard of care in managing another’s money or property). Just because you love each of your children, one child may be better equipped to act on your behalf. Perhaps your spouse, your sibling, or your friend is best equipped to act as your fiduciary. Your estate plan should be specific to you and meet your needs. In estate planning, there are three basic legal documents that you are likely to be presented with: Financial Power of Attorney, Health Care Directive, and Last Will and Testament. For each legal document, you must name a fiduciary. So how do you choose?
Financial Power of Attorney
In Georgia, your financial power of attorney is called your “agent.” The Power of Attorney document is valid while you are living. Via a Power of Attorney, you may authorize your agent to make decisions concerning your real property, personal property, financial accounts, operation of an entity or business, claims and litigation, payment of bills, receipt of government benefits, taxes, and/or retirement plans. There are additional areas you may choose to allow your agent to act on your behalf, and you can include specific instructions in your Power of Attorney as to when and under what conditions the agent may act. You will also have the option to name
successor agents in your Power of Attorney.
Your agent should be a person who has their own finances in order. You may really love your son, but if he is constantly coming to you for money, she is likely not the best choice to manage your assets when you are unable to do so for yourself. Your agent should be proactive, taking the initiative to make sure your accounts are up to date and decisions are timely made. Your agent should be detail-oriented, keeping accurate records when acting on your behalf. (Keeping accurate records equally benefits your agent in his/her capacity as a fiduciary.) Ideally, your agent should be local; however, if the assets your agent will be managing on your behalf are accessible via technology or a bank branch in their area, this may not be necessary. Finally, your agent needs to be available and willing to act on your behalf. Have a conversation with the person you are considering to be your agent; being designated as your financial agent/power of attorney should not be a surprise.
Georgia Advance Directive for Health Care
The Georgia Advance Directive for Health Care is a legal document that allows you to choose a healthcare agent, voice your treatment preferences, and nominate someone to be appointed as your guardian, if/when necessary. The Georgia Advance Directive for Health Care is valid while you are living. In addition to your healthcare agent, you may list back-up healthcare agents. Your healthcare agent will act on your behalf when you are unable to communicate your health care decisions yourself or when you choose to have your healthcare agent speak on your behalf. Examples of when a healthcare agent may act on your behalf are: when you are unconscious, when you are undergoing surgery and/or under anesthesia, or when you are suffering from cognitive impairment, such as Alzheimer’s disease. If you do not have a valid health care directive in place and you are unable to speak on your own behalf, your loved one most likely will have to petition the Court to be appointed as your legal guardian should you need a healthcare agent. To have a guardian appointed by the Court takes time and effort, which may be impractical in an emergency situation. Therefore, it is imperative that an adult have a health care directive in the State of Georgia.
Your healthcare agent does not have to be the same person as your financial power of attorney. There are some different qualities to look for when choosing a healthcare agent vs. choosing a financial power of attorney.
Your healthcare agent should be able to make the tough choices and follow your treatment preferences. It is very difficult to take someone off life support, and if you have ever been put in that position with a loved one you understand the weight of such a decision. One of the reasons I chose estate planning as an area of my legal practice is because I’ve been in the room on three occasions, including once at Children’s Healthcare of Atlanta (Egleston), when life support decisions needed to be made. Some people are unable to make end-of-life decisions, so consider who in your life will be able to follow your treatment preferences and communicate your end-of-life wishes.
Life support choices are not the only choices your healthcare agent may need to make for you. As people live longer, we are seeing more assisted living decisions being made by adult children for their aging parents. Your healthcare agent will have the power to admit you and/or discharge you from a hospital, skilled nursing facility, hospice, or other health care family or service. Your healthcare agent should be your advocate. Your healthcare agent should be assertive. You want to choose someone who will speak up on your behalf and ask questions of doctors and other medical professionals when necessary. Ideally, you would also choose someone who can frequently check in with you, accompany you to doctor appointments, and assist with organizing medications and personal items, if necessary. Also, because the decisions will likely involve the healthcare and insurance industries, your healthcare agent should have an equal amount of patience and persistence. And congratulations if you have married someone or raised a child who holds every quality I just listed. Finally, have a conversation with the person you are electing as your healthcare agent, so they are prepared to act if needed.
Last Will and Testament
I sometimes tell my clients that when it comes to my Last Will and Testament I’m not that concerned with upsetting anyone because I’ll be dead. However, in reality, choosing your Executor or Executrix is an important decision that warrants some consideration. Many of the qualities that were previously identified for a financial power of attorney are the same qualities you want to look for when naming an Executor. It is also helpful to name an Executor who personally knows and/or will know how to get in touch with the beneficiaries named in your Will. It is also likely, if you are a Georgia resident at the time of your death, the Executor will have to interact with the Probate Court in your county of residence. Even if you have a Last Will and Testament, there are conditions under which your Executor may still need to probate the Will. (If you would like advice on avoiding probate, please mention that when scheduling your estate planning appointment with The McGarity Group.) Within your Will, there may be a condition under which a Trust is set up (i.e. testamentary trust), usually for a minor beneficiary. The Executor of the Will and the Trustee for a testamentary trust do not have to be the same person. In some situations, I recommend having the parent of the minor appointed as the Trustee for the testamentary trust established for that minor. In other situations, I recommend not having a minor’s parent involved with the testamentary trust and to look for someone more equipped to manage and invest funds on behalf of the minor. A Trustee’s fiduciary obligation is typically for a longer period of time and encompasses more than an Executor’s duty.
For each of the fiduciaries identified in this article, a level of trust is required. You are entrusting these individuals to act on your behalf and carry out your wishes. In a few instances, I’ve had a fiduciary decline their appointment, which is why I recommend listing a first and second successor fiduciary. Also, you can choose to have Co-Executors, CoAgents, and Co-Trustees; however, there are pros and cons to requiring two individuals to act in accord when carrying out your wishes and making decisions on your behalf. When choosing your fiduciaries, it is not a reflection of who you love the most. It should be a reflection of who you deem is best equipped to fill that fiduciary role, and who you think is willing to take on such a responsibility.
If you are interested in having an attorney draft or review your Last Will and Testament, Power of Attorney, and/or Health Care Directive, The McGarity Group has two estate planning attorneys available to assist you with your estate planning needs. Please contact us at 770-932-8477 and ask to set up an estate planning appointment with Katherine Wheat or Anne Marie Braham.