Factors to Consider When Selecting an Executor, Trustee, or Agent Under a Power of Attorney
By: Anthony J. Enea, Esq.
The decision of who you should select as the executor of your Last Will & Testament, trustee of any trust you create, or as the agent under your Power of Attorney (POA) is a difficult task and one that involves the consideration of numerous factors.
The one factor that should always be front and center is the trustworthiness of the individual to be selected. Whether you are selecting an executor, trustee or agent, the selected person should, if possible, be someone that you know very well and someone who you find to be trustworthy and honest.
Generally, this is not a difficult choice for married couples with have children and/or adult grandchildren. It is not uncommon for couples to select their spouse as an executor, trustee (where appropriate) or agent under a POA and with their children as the alternate or successor.
I often recommend that if a child is to be selected as a successor executor, trustee or agent under POA (and you have more than one child) that it is wise to select two children (if possible) so as to create an inherent system of checks and balances and avoid the possibility of one person being vested with too much power and authority. This promotes decisions being made after a discussion with the other executor, trustee or agent, and after consensus is achieved. This is particularly important with respect to agents under a POA wherein the selected agent(s) in many instances is given great financial powers including the power to gift assets to himself, herself and/or others.
Once the trustworthiness hurdle is met, the next most important factor is the business, financial and legal acumen of the individual to be selected. As the role of executor, trustee and/or agent often involves the oversight, investment and management of stocks, bonds, cash and real estate, it is extremely helpful if the individual selected has experience managing money and assets. While it is not necessary that the individual be a financial professional or attorney, it is important that he or she have experience in managing his or her financial affairs successfully. Perhaps, a child that has filed bankruptcy or is a penniless artist sleeping on a friend’s couch may not be the appropriate choice.
While the executor, trustee and/or agent under a POA will generally retain an attorney, certified public accountant (CPA) and/or financial professionals (investment advisors) to assist and guide them, having an individual(s) who has personal knowledge and experience in financial and legal matters is invaluable. It is not unusual for a client when deciding between one child and another to be very concerned about hurting the feelings of a child by not selecting him or her, even though that child may be older than the child that would be the logical choice because of his or her knowledge and experience. If offending and/or hurting a child’s feelings is an important issue, then perhaps selecting co-executors, co-trustees and co-agents under a POA will be the solution. Selecting wisely rather than with emotion is of paramount importance.
Another important factor is the age and health of the individual selected. While it is important to select someone who is mature, financially savvy and experienced, selecting someone who is unlikely to survive your death and/or incapacity, or be unable to act due to their own ailments is not wise. Finding the appropriate balance between age, health and experience is important.
Additionally, the selection of executor(s), trustee(s) and agent(s) under a POA is a much more difficult task for individuals that do not have a spouse, children and/or adult grandchildren. For those individuals the same factors need to be considered, but, the choice in many instances will be between choosing a sibling, niece, nephew, cousins, friends, trusted legal professional, tax professional (accountant) and/or a bank or financial institution that would assume the necessary role. All too often for individuals without close family members the choice is often a difficult and arduous process of elimination.
One additional factor worthy of consideration is whether the selected executor, trustee or agent is also an individual who will be inheriting assets under your Last Will and/or Trust. Often selecting one or two of these family members who have a vested interest in the estate and/or trust is a safe bet, if they also satisfy the previously stated factors.
In conclusion, giving thoughtful consideration as to whom you are going to select is advisable. One of the first estates I ever worked on involved a multi-millionaire business man who made the mistake of selecting seven executors and trustees who unfortunately disliked each other, leading to years of litigation.