We all hope to remain in great health as we progress through our older years. But as with many things in life, it’s best to plan for the worst and hope for the best.
Preparing for the “what if” ensures your assets and affairs are managed as you would like them to be, even if circumstances prevent you from personally being involved. It also takes some of the pressure and stress off your loved ones. While there are many preparations and choices to make, choosing the people who will make decisions for you should the need arise are some of the most important.
Here are two major roles you should consider filling as part of your estate planning.
Executor
You’ve likely accumulated some property, financial assets, and collective belongings over the years. As you go through the process of estate planning, your will and/or trust will document your wishes and assign what happens to each of your assets when you eventually pass. Your chosen lawyers will hold these documents until they’re required. However, you still need someone who will be personally responsible for carrying out the terms of your legal document and wrapping up your financial affairs. This person is your executor.
Naming an executor within your estate planning documents ensures your interests are distributed by the person who you most trust to carry them out smoothly and as you’ve instructed. In the case you pass without naming an executor, the courts may assign one for you.
It’s important to note that your executor doesn’t actually have any responsibilities prior to your death. Once you pass, their role becomes active and remains active until they finish administering your estate, resign, pass, or are removed by the court.
As you decide who to name as executor, consider:
- If they are readily available. Serving as executor can take considerable time, especially in the weeks and months immediately following your passing. A demanding full-time job or other ongoing personal commitments can provide a challenge in efficiently managing your estate.
- That they’ll need to pay any creditors, inventory your assets, disburse your property and assets, and file tax returns, among other responsibilities. It helps if this person has at least a base knowledge of how to manage financial matters.
- Their standing with the family and any potential beneficiaries. This can be an emotionally demanding and sometimes contentious period in time, so this person should be someone who can mediate and maintain good relationships.
Power of attorney (POA)
Unlike an executor whose role doesn’t become active until your death, a person who is your designated POA is someone you appoint to make decisions while you live, in the event you are unable to make them yourself.
You can assign a single person with POA who will make decisions over time, assign them by role (one for financial decisions and another for health decisions, etc.), or by purpose, such as selling a home. Also, you can reassign your power of attorney or revoke privilege if needed. As with any role connected to your estate or health, you should choose someone who you trust to act in your best interest and to carry out your wishes.
