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The Wealth & Wisdom Blog

Information on Estate Planning, Estate and Trust Administration and Unique Asset Planning

On January 15, 2024, Iowa Republicans kick off the 2024 political season by voting for a Republican candidate for President.  In honor of the Iowa Caucus, in this month’s update I offer my thoughts on how to choose a candidate.  But rather than offering any opinions or endorsements for any political candidates, in this month’s update I summarize how to choose the appropriate key individuals, often referred to as “fiduciaries,” to implement your estate plan.

The Fiduciary Offices

Universal Offices. Every adult must fill three legal roles, as follows:

  • Financial Power of Attorney: Your attorney in fact has the legal authority to make financial decisions for you during your lifetime.
  • Health Care: Your health care agent has the legal authority to make health care decisions.
  • Personal Representative/Executor: Your personal representative implements your directions following death.1

Additional Appointments. In addition to these three universal fiduciary designations, your circumstances may require you to fill the following two roles:

  • Guardians: A guardian(s) would make parenting decisions if you have minor children who survive both you and your spouse.
  • Trustee: A trustee would manage any ongoing testamentary trusts established for your children or other named beneficiaries.

Attributes of an Appropriate Fiduciary

I encourage our clients to consider the following attributes when choosing a fiduciary among various candidates:

  • Duty.  Political candidates liken themselves to past leaders who had placed the interests of their constituents ahead of their own personal interests.  Likewise, a fiduciary must look to achieve your interests, and abide by your direction, even at the expense of their own personal interests. 
  • Values.  Political candidates have a legislative or executive agenda to promote.  Similarly, a fiduciary will espouse personal values in making value judgements in the course of her fiduciary duties.  You should confirm that your candidate is in alignment with the values that are most important to you and your family.  This value alignment is of particular importance for the guardianship and health care agent roles.
  • Capability.  Some political candidates are purportedly “too old” for the job.  Others might lack the experience necessary to address multi-faceted decisions.  In a fiduciary context, the importance of the age and experience factors is relative to the task to be completed.  A guardian could conceivably serve for as many as 18 years; in contrast, a personal representative’s role is often of brief duration.
  • Cabinet. One can predict a candidate’s future policy decisions based on the identity of the candidate’s advisors, both formal and informal.  Identify your candidate’s current advisors, and how those influencers would impact your fiduciary candidate’s ability to carry out her role.
  • Humility.  On a related note, a political candidate is often rewarded for hubris, perhaps even in the absence of actual knowledge or experience.  An ideal fiduciary will have some healthy dose of humility so that the fiduciary has a clear understanding of the extent of her knowledge.  A humble candidate is more likely to reach out to ask for professional assistance.
  • Diligence and Advocacy. A good political candidate might be able to advocate to improve the financial conditions of its constituents.  While your fiduciary does not need to use government funds to a “bridge to nowhere,” your fiduciary must be diligent about gathering information about your situation, being timely in decision-making and, when appropriate, advocate on your behalf.
  • Proximity.   To adequately represent their interests, a political candidate must be physically proximate to her constituency.  Similarly, it is difficult for your health care agent to advocate for your health care if you are sick in a Minnesota hospital while she is walking the sandy beaches of Mexico.
  • Number.  According to George Washington, “My observation is that whenever one person is found adequate to the discharge of a duty…it is worse executed by two persons, and scarcely done at all if three or more are employed therein.” There may be good reasons to name more than one decision-maker, but clients should be advised of the gains in efficiency earned by naming as few individuals as possible.
  • Cost.  A political candidate may offer substantial government benefits to certain of his constituents, but at a higher tax cost. A professional fiduciary may be able to competently execute the necessary tasks, but at a higher cost.  You should weigh whether the additional cost of a professional fiduciary are justified, especially if you have complex family or financial circumstances.

Our collective vote in the upcoming November election is an “irrevocable” vote for the next political term.  Once made, we cannot rescind our votes on account of a candidate’s subsequent performance in office.  With your personal fiduciary appointments, however, you can change your mind. As your life and your needs change, you can and should review the factors impacting your fiduciary designations, and update your fiduciary appointments accordingly.

1 If a client has established a revocable trust, then the administration of that trust following death would be completed by the person or entity named as successor trustee of the revocable trust. In this context, I am using the term “personal representative” more broadly to mean the fiduciary responsible for administering assets, whether in an estate or a revocable trusts.