Dear Jonathan: My parents just updated their estate plan and told me that they named me in their wills, their trust and their financial and health care durable powers of attorney to act for them when they can no longer act for themselves. I am more than happy to help them, but I would like to know what my responsibilities are when acting in these various roles. When I asked them if they could explain what my duties would be they were not sure how to respond. Can you help?
Jonathan: Based on the information you provided in your question, your parents have named you to act in the following fiduciary roles:
When acting as your parents’ patient advocate under their health care durable powers of attorney, you will be responsible for making their health care decisions once they are no longer able to make those decisions for themselves.
When acting as your parents’ personal representative/executor, agent and trustee, although those roles are not identical, they are similar in one regard – you are responsible, in your role as fiduciary, for managing assets and paying bills:
- In terms of your parents’ wills, you will only need to act as the personal representative of their estate if a probate estate needs to be opened at either of their deaths. In this event, you would work with the probate attorney to, among other things, account for and manage the assets being probated, paying legitimate claims, as well as any taxes owed by the estate, and upon the completion of probate distributing the probate assets to the beneficiaries named in the will.
- When you are acting as an agent under either of your parents’ financial durable powers of attorney, you are responsible for managing their assets, paying their bills, having their tax returns prepared and paying any taxes due, and basically doing whatever they could do for themselves when it comes to their assets and financial matters.
- When you are acting as the trustee of their trust, you are responsible for managing and administering the trust assets pursuant to the terms of the trust, including making distributions to the trust beneficiaries.
Each of these fiduciary roles include other duties and responsibilities and it is important for you to have a clear understanding of what those duties and responsibilities include before you begin to act in any of those roles. You might suggest that you and your parents meet with their estate planning attorney for the purpose of having that attorney explain to you the duties and responsibilities of each fiduciary role. This would also give you the opportunity to have your questions and/or concerns addressed so that you have a comfort level as to what will be required of you when it comes time to act.
In addition to meeting with your parents’ estate planning attorney, I encourage you to:
- Familiarize yourself with the estate planning documents your parents prepared.
- Ask your parents whether they have any specific instructions or guidelines they would like you to follow (within the parameters of what you are permitted to do as a fiduciary under those various instruments), once you begin acting in any of those fiduciary roles.
Finally, you should determine if your parents named backup fiduciaries who are willing to act in the event you cannot act for some reason. If you determine that they have not named backups, you should encourage them to do so to avoid the potential problem of having no one in place to act if for some reason you cannot act when the time comes.
