When my clients and I discuss their estate planning documents and advance directives (Wills, Trusts, Durable Powers of Attorney, Living Wills & Designations of Health Care Surrogates, and Nominations of Guardians for Incapacity and for Minor Children), I explore their wishes about who will be responsible for various roles in their estate plan. The duties of each of these roles are quite different, and my clients frequently ask me to explain the differences between them.
Personal Representative
The term personal representative is Florida-speak (Floridian?) for executor, the person nominated in a last will and testament to administer the deceased’s estate. Under Florida law, a personal representative must be either a Florida resident or, if located outside Florida, a relative of the decedent. The relation to the deceased may be by blood, marriage, or adoption. None of the other roles have this restriction to relatives or Florida residents. The personal representative has the duty to manage and distribute a deceased person’s estate according to the will and state law. This includes collecting and protecting assets, paying debts and taxes, and ultimately distributing the remaining assets to the beneficiaries. Personal representatives act as fiduciaries, meaning they have a legal and ethical duty to act in the best interests of the estate and its beneficiaries, and to provide residuary beneficiaries (those who inherit the “net proceeds” of the estate) with a detailed formal accounting. Serving as a personal representative is a difficult and often thankless job, for which the personal representative is entitled to a statutory fee (starting at 3%) based on the value of the estate. The personal representative must either be an attorney themselves or be represented by an attorney.
Trustee
A trustee is the person or entity nominated in a trust agreement to control the trust. The client is usually the initial trustee, and the successor trustee nominated in the agreement takes over after the death, incapacity, or resignation of the original trustee(s). Trustees are required to manage and administer the trust according to its terms and in the best interests of the beneficiaries. Trustees are fiduciaries, meaning they are legally and ethically obligated to act in the best interests of the beneficiaries and to provide each residual beneficiary with a formal accounting at least annually. Trustees are also entitled to a reasonable fee for their efforts, but there is no statutory percentage-based trustee’s fee. Attorneys, accountants, and trust companies are generally well-suited this role, especially if the trust may require long-term administration.
Agent (under Durable Power of Attorney)
An agent is the person granted authority to act for the principal (the person signing the power of attorney) in legal and financial matters. Agents owe a fiduciary duty to the principal, meaning they must act in the principal’s best interests and with the utmost good faith, loyalty, and care. An agent has tremendous power that, under Florida law, must be immediately granted (it cannot not be “springing” upon the disability of the principal, as is the case in other states) so it is critical that the agent nominated by the durable power of attorney be either a friend or family member in whom the principal has absolute trust or a licensed fiduciary, like an attorney, accountant, or trust company. If non-fiduciaries are nominated, it is occasionally advisable to nominate more than one friend or family member and require that they each agree to every decision. While this makes the co-agents’ work more complicated, it also provides oversight, which is otherwise not a feature of a durable power of attorney. An agent can also pay themselves a reasonable fee for their services. Agents serve while the principal is alive; durable powers of attorney terminate upon the principal’s death.
Health Care Surrogate
Health care surrogates are authorized to receive all medical information regarding the principal and to make medical decisions for the principal when they are unable to do so themselves. A health care surrogate is usually a trusted friend or family member who is aware of the principal’s wishes. Since the health care surrogate may need to act quickly, this is the only role for which I sometimes suggest multiple nominees who can each act independently of the others if necessary. Health care surrogates are usually uncompensated for their work.
Guardian
There are two categories of guardians I discuss with my clients: Guardians nominated for minor children of the client and guardians nominated for the client themselves, to serve in the event of their own incapacity. As dementia afflicts more older adults, the latter type of guardianship has grown more common. This type of guardian is a person appointed by a court to make decisions for another individual (the ward) who has been judged incapacitated and unable to care for themselves or their property. This appointment is made when the court determines that an individual lacks the capacity to manage their own affairs, and either there are no less restrictive alternatives like a durable power of attorney or a nomination of health care surrogates available or there are such advance directives in place but they are not sufficient to protect the interests of the ward. A guardian of the ward’s property acts similarly to an agent under durable power of attorney and guardian of the ward’s person has duties similar to those of a health care surrogate, but both roles are under strict supervision by the court and must report in detail to the supervising judge and all interested parties (the family of the ward) at least annually. Serving as a guardian is a particularly difficult job as it requires meticulous record-keeping and compliance with stringent rules, especially with regard to the ward’s property. If a guardian wishes to be paid, they must petition the court to award them a reasonable fee based on the hours they expended serving the ward.
Contact Verras Law, P.A. today to schedule a consultation with me to discuss these matters in person.