A common challenge clients face when setting up their estate plan is who to choose for the roles of guardian, executor, and trustee. Often clients choose the same person for each role, but there are different considerations for each. Some practitioners advise clients to nominate different people in these roles for checks and balances, but, in the end, clients should choose the people in their lives they trust most to effectively handle the tasks required of each role. Below are some factors to consider when choosing guardians, executors, and trustees.
Guardians
Often people initially consider setting up an estate plan because they have minor children and want to plan for what would happen if they pass away before their children are 18. When thinking of who to appoint guardian, the best person will be someone that’s trusted to do what’s best for your children. Before nominating a parent, consider whether that parent is likely to be capable or raising the child into his or her teens (i.e., can grandma or grandpa keep up at 85 when the youngest child is 14?). Once appointed by the Probate and Family Court, the guardian has full discretion on how to raise the children. Therefore, its best to choose a guardian that aligns with how you would like to raise your children. While the guardian does not have to reside in the US, if the guardian lives abroad, it can make sense to also appoint a temporary emergency guardian to look after the children while the ultimate guardian makes their way to the US.
Executors
Executors, or personal representatives, are responsible for distributing personal belongings and filing a final estate tax return. Ideally, the person in this role is someone that can reliably fill out paperwork. If setting up a revocable trust as well, the executor does not have to do much heavy lifting to close the estate. If you are not setting up revocable trusts and there is real estate involved, the executor will need to handle sale of that real estate and distributing assets to beneficiaries.
Trustees
When setting up trusts, trustees have a larger role than executors. Trustees are responsible for managing money long term for beneficiaries and distributing assets according to the trust terms. When selecting someone for this role, it makes sense to choose someone trustworthy who is good at managing money, or if not, is competent enough to hire someone to help manage trust assets. Sometimes it also makes sense to hire a professional to act as trustee. This can make sense when the pool of people to act as trustee is small or if there is some sort of power dynamic between a possible trustee and a beneficiary. This approach does come at a cost, however, as trustees are entitled to take reasonable compensation for their role, often around 1% of trust assets per year. If there is a trusted family member or friend available to act competently in this role, it is often best to appoint them as trustee.