Fundamental Roles and Responsibilities Assigned in Estate and Trust Planning

By: Shannon F. Werbeck – Associate Attorney – Elville and Associates, P.C.

Choosing a successor to manage your affairs after your death and in the event that you are incapacitated is a crucial step in the estate and trust planning process. Listed below are the roles in estate and trust planning that an individual must assign in their estate plan. 

Health Care Agent 

A health care agent is named in the Advance Medical Directive. They are appointed by an individual (the principal) to make health care decisions on their behalf in the event the principal is incapacitated and unable to make these decisions on their own. The designated agent should be someone the principal trusts and who is willing and able to make difficult medical decisions on their behalf.  A back-up agent should also be named in the event the primary health care agent is unable to act. A health care agent is also referred to as a health care proxy, health care surrogate, or medical power of attorney. 

A health care agent is responsible for making decisions about the principal’s medical treatment, based on the principal’s previously expressed wishes laid out in their Advance Medical Directive or, if those wishes are not known, based on what the agent believes is in the principal’s best interest. The agent should makes these decisions based on the principal’s personality, religious beliefs, values and how the principal has handled other important medical decisions in the past. 

The role of a health care agent may include the following:

1. Making Medical Decisions: The agent makes decisions about the principal’s medical treatment, including treatment options, medication, and end-of-life care.
2. Consulting with Healthcare Providers: The agent may consult with the principal’s healthcare providers to understand the principal’s medical condition and treatment options.
3. Communicating with Family and Friends: The agent may communicate with family members and friends to keep them informed of the principal’s medical condition and to get input on medical decisions.
4. Accessing Medical Records: The agent may access the principal’s medical records to understand the principal’s medical history and treatment preferences.
5. Advocating for the Principal: The agent advocates for the principal’s medical wishes and ensures that the principal receives the best possible medical care.

Financial Agent 

A financial agent is designated in the General Durable and Maryland Statutory Power of Attorney documents which authorizes an agent to act on behalf of an individual (the principal) regarding financial matters. The agent has a fiduciary duty to act in the best interest of the principal, following their wishes and instructions as outlined in the power of attorney documents. A back-up agent should also be named in the event the primary financial agent is unable to act. The agent may be given broad or limited authority, depending on the terms of the power of attorney documents.

Some of the responsibilities and tasks that a financial agent may be authorized to perform include:

1. Managing Finances: A financial power of attorney allows the agent to manage the principal’s finances, including paying bills, managing bank accounts, investing assets, and filing tax returns.
2. Making Financial Decisions: The agent is authorized to make financial decisions on behalf of the principal, such as buying or selling assets, managing investments, and making donations to charities.
3. Accessing Financial Information: The agent can access the principal’s financial information, such as bank statements, tax returns, and investment accounts.
4. Managing Real Estate: The agent may have the authority to manage the principal’s real estate holdings, such as buying, selling, or leasing property.
5. Representing the Principal: The agent may represent the principal in legal and financial matters, such as signing contracts, negotiating deals, and communicating with financial institutions.

The agent may be given the authority to act immediately, or the principal may specify in the power of attorney documents that their power only becomes effective in the event of the principal’s incapacitation. It is important for the principal to choose an agent who is trustworthy, reliable, and capable of managing their affairs in accordance with their wishes. The agent should be someone who is familiar with the principal’s values and preferences, and who is willing and able to act in their best interest. It is also important for the principal to communicate clearly with the agent about their wishes and expectations, as outlined in the power of attorney documents, and to regularly review and update the power of attorney as needed. 

Personal Representative 

The Personal Representative is an individual or entity designated in a Last Will and Testament by an individual creating a Will (the Testator). It is important that the testator choose a responsible and trustworthy individual or entity to serve as the personal representative. The testator should also designate a back-up personal representative in the event the primary personal representative is unable or unwilling to act in their role. The responsibilities of a personal representative can vary depending on the specifics of the estate and the instructions provided in the Last Will and Testament.  Their main responsibility is to administer the decedent’s estate and to ensure that the estate administration process is carried out correctly, efficiently, and in accordance with the wishes of the decedent. 

The administration process that the personal representative is responsible for consists of: 

1. Opening an estate with the Register of Wills Office
2. Identifying and gathering all of the descendants’ assets, including real estate, bank accounts, investment accounts, personal property, and any other assets.
3. Filing of an inventory outlining what assets are part of the probate estate and allowing for time for claims from any possible creditors who the decedent may have owned money.
4. Filing of an accounting to display to the Register of Wills what is taking place inside of the estate. 
5. Paying any outstanding debts and taxes owed by the estate, including filing any necessary tax returns.
6. Distributing the assets of the estate to the beneficiaries named in the Last Will and Testament.
7. Closing the estate and filing any final reports or tax returns required by Maryland law.

Guardian 

If there are minor children involved, you will want to designate an individual to be appointment guardian, or co-guardians, of your minor children in the event of your death. You should name back-up Guardians in the event the named Guardian is unable or unwilling to take on this responsibility. Naming a guardian for your children in a Last Will and Testament is an important step in ensuring that your children are taken care of in case the worst happens. A guardian is someone who will take legal responsibility for your children and make decisions about their care, upbringing, and education.

The following are important factors to take into account when designating a guardian for your children in your Last Will and Testament: 

1. Choose someone you trust. It is important to choose a guardian who you trust to provide a safe and stable home for your children, and who share your same values and beliefs. 
2. Consider the guardian’s ability to provide for your children. The guardian should be able to provide financially for your children and should have the time and resources to care for them properly.
3. Speak to the potential guardian. A guardian assumes a great deal of responsibility. Before naming an individual as a guardian in your Last Will and Testament, it is important to discuss with them whether they are willing and able to take on the responsibility.
4. Name alternate guardians. It is a good idea to name alternate guardians in case your first choice is unable to take on the responsibility.
5. Review and update your will regularly. Your choice of guardian may change over time as your circumstances and relationships evolve, so it is important to review and update your will regularly to ensure that your wishes are accurately reflected.

If you fail to designate a guardian for your minor children, the court may decide who will be responsible for raising and taking care of them. By naming a guardian in your Last Will and Testament, you can provide peace of mind and security for your children in the event of your death. 

Trustee  

You will choose a trustee, or co-trustees, to oversee your assets if you establish a Revocable Living Trust. A trustee is responsible for managing the assets held in trust in accordance with the terms of the trust agreement and the wishes of the person who created the trust (the grantor). It is important to name successor trustees in the event the named trustee is unable or unwilling to act. The role of the trustee is an important one, as they are responsible for managing assets that are intended to provide financial security and support for the beneficiaries of the trust. It is important to choose a trustee who is responsible, trustworthy, and knowledgeable about financial matters and the legal requirements of managing a trust.

The trustee is typically responsible for a range of duties, including:

1. Managing the assets held in the trust, including investing, and distributing them as appropriate.
2. Keeping accurate records of all financial transactions and activities related to the trust.
3. Communicating regularly with the beneficiaries of the trust and providing them with updates on the status of the trust.
4. Resolving any disputes or legal issues that may arise related to the trust.
5. Ensuring that the trust is administered in accordance with Maryland law and the terms of the trust agreement.

Designating an individual for each of these fundamental roles is very important when creating your estate and trust plan. This is the core group of individuals who will help ensure you are cared for in the event you are incapacitated as well as continue your legacy after your death. Although selecting the correct person for each critical position may be challenging, the attorneys at Elville and Associates are dedicated to counseling you towards choosing the right individual for each role in case the worst happens.

Shannon F. Werbeck is an Associate Attorney with Elville and Associates and an integral member of the firm’s busy Estate Planning Department. She educates and counsels clients through the entire estate planning process – beginning with the initial consultation, followed by the design and implementation of their plans, as well as the necessary maintenance and updating of their planning as changes occur in the laws and their lives.  Shannon may be reached at shannon@elvilleassociates.com, or by phone at 443-393-7696 x148.