It seems like we spend most of the time in estate planning determining “who is getting what.” After several meetings and some number crunching, the difficult decisions get made and there’s an agreement in principle about how the family wants things to happen. Then the next question is, “Who will be implementing the plan if the parents become incapacitated or pass away?” Have you really thought about who you’ve named as administrators in your estate?
You need to list who you want as your executors, trustees, spendthrift trustees, powers of attorney, guardians, etc. For some families this is a rather “cut and dried” decision. Yet for others, I almost cringe when they start verbalizing their wide-ranging ideas. It’s as if the concern for fairness between heirs takes a whole new turn again!
Do you feel like all your children must have equal roles in your estate to be fair? Be careful! You may love them equally, but that doesn’t mean each one is equally equipped to handle the responsibility. Keep in mind that the estate roles are usually for a limited time only. It’s typically not a lifetime appointment. It’s also not required to have a job in the estate in order to be deemed a worthy heir. Nor will it necessarily bring everyone together to appear like the biggest, happiest farm family around!
Ok, so maybe if you have two children and you make them co-executors or co-trustees, then it is not that big of a deal. (Although, it still could be if they don’t get along!) However, what if you have four children, and you name each of them as executors or trustees? Yikes! Why would you do that?! Some families will say, “But we don’t want anyone to feel left out!” Let me be clear, closing the door on them coming home for Christmas is being “left out”. Not being named as an executor or trustee could turn out to be a blessing!
Why you may not want to list all children as representatives:
- It is a hassle when it comes right down to it. The legal documents say what is going to happen anyhow, so requiring that all the various legal papers be signed by four people, who may reside in four separate states, takes time, energy and money to circulate.
- Some people simply aren’t qualified or may not be interested. People have busy lives and work in many different fields of expertise. Estate administration may not be one of them. You could be doing everyone a favor by limiting it to those who happen to be best suited for the position.
- Relational conflicts could carry over to estate management. The same people that you were concerned about being upset regarding your whole distribution plan will be the same ones who question everything in the estate process. This could make everyone’s life miserable at a difficult time and slow up the proceedings.
- Some people are downright nosey! They may start counting all “their” money while mom and dad are still sitting at the table. In their minds, it may be hard to wait till the dealings done.
Think about this, we can all probably agree how inefficient political things appear to be in Washington. After all, they form committees… to form more committees! Well, naming too many people to be your executors or trustees is about the same thing but on a smaller scale.
Naming estate representatives can go wrong. I recently began working with a client whose husband had passed away. She, along with all three of her children were named as co-trustees of her husband’s trust. That maybe sounded alright at the time. Some would probably even call that “fair”. However, I would have preferred that it was limited to the one child they were very comfortable working with. When talking with the surviving spouse, it sounded like there had been some indecision between her and her husband at that time, so they just decided, “What the heck, put them all down.”
I can tell you that their decision will cause some pain for the rest of her life. They did not all get along before Dad’s death, and unfortunately it got even worse after he died. The Mom recently told me, “I did not realize what it actually meant to have all the kids listed as trustees.”
I think we all sometimes struggle with the difference between fairness and reality. Generally, people who believe that everything should be “fair” are disappointed because life itself is not always fair. Yes, every situation requires its own consideration. However, before listing too many family members as co-executors or co-trustees and thinking this will be the “melting pot” that brings the family together at your death… think again. It may become more like a “boiling pot”!