Last time I wrote about executors and the importance of thinking carefully about who will administer your estate when you die. I also suggested that there are other fiduciary roles that need to be considered, and promised to come back to talk about those, too.
If you have minor children, it is important to consider the possibility that both you and their other parent might die simultaneously or in close time proximity to one another, perhaps as a result of being involved in the same accident. It’s not a nice thought of course, but nonetheless giving thought to planning for this eventuality is the responsible thing to do. Who would you like to look after your children? Leaving it up to extended family to decide may not be the kindest thing. We see quite often in the process of winding up an estate that uncertainty creates stress and the possibility for conflict between loved ones who are left behind.
Apart from executors and guardians, the other fiduciary role that is often overlooked is that of trustee. In most estate planning situations, there is the possibility that a minor may become an heir – either because the testator or testatrix’s own children are still minors or perhaps because an adult child dies before their parents, leaving the grandchildren as substitute heirs. If money is left to a minor heir, this will have to be placed with the Guardian’s Fund until the heir reaches majority. While access to the money can be obtained on application, most people would prefer the discretion as to how to advance the money to be in the hands of trusted friends or family, rather than a government official. They also may want the funds to be invested more actively than the Guardian’s Fund would provide for.
A trust can be created in your will (a testamentary trust) and this only comes into existence on your death. But it can also be created (and come into existence) while you are alive (this is often referred to as an “inter vivos” trust). Which one is appropriate for you depends on your circumstances, and if you are not sure, consider making an appointment to come and see us to get some advice on the issue. Contact firstname.lastname@example.org. There is no absolute when it comes to choosing how many trustees to appoint, but three is often a good number – too few can be too unaccountable and too many can be too cumbersome.
Of course, it’s also very important to talk to the people that you hope will fulfill the fiduciary roles (executors, trustees and guardians) so that they in turn aren’t surprised one day to find their names in your will. They need to be able to do their own thinking and planning too!