Estate planning pitfall:
You don’t have a succession plan for your estate plan
Some of the most important estate planning decisions involve naming people to act on your behalf after you die or, in the event you become incapacitated, during your life.
You’ll want to select people you trust and who possess the skills, experience and temperament necessary to carry out your wishes. You should also choose at least one, and preferably two, successors for each of these representatives. If you don’t, and one of them dies or is otherwise unable to serve, a court will make the decision for you (usually with some input from your family).
Common estate planning documents that should include successor designations include your:
To avoid having a court make these decisions for you, review your executor, trustee, agent and proxy designations periodically to be sure you have replacements who are ready, willing and able to step in should the need arise.
- Will. Your will should designate a successor executor, especially if you’ve named your spouse as the executor, because he or she might decline the burden of administering your estate while grieving your death. Further, if you have children who are minors, the will is the place for you to designate guardians for those children.
- Trusts. Trustees often have considerable discretion to distribute funds and make decisions in accordance with your wishes, so selecting their successors is just as important as selecting the original trustees. Another option is to create a mechanism for the current trustee or beneficiaries to name successor trustees.
- Health care documents. A health care power of attorney authorizes another person to make medical decisions for you, including decisions on life-sustaining treatment, when you’re unable to make them yourself. Your spouse will probably be your first choice, but it’s critical to choose one or more successors in the event he or she is unavailable or otherwise unable to make the decision.
- Power of attorney. This document authorizes your spouse or another representative to manage your financial affairs. If he or she is unable to act, you need to have a successor ready to take over at a moment’s notice.