Many people – even lawyers – have trouble understanding some of the vocabulary of trusts and estates law. The basic documents are these three:
- Will (sometimes called one’s “Last Will and Testament),
- Power of Attorney, and
- Advanced Health Care Directive.
A more complicated estate plan may include a Trust as well. Each of these documents has a “fiduciary” that the signer names: in the Will, you can nominate a Personal Representative (formerly known as an “Executor” or “Executrix”); in the Power of Attorney and Advanced Health Care Directive, you can name the “agent;” and in a Trust, you can appoint a Trustee. Very often, the person(s) named for each role in each document is actually the same. The fact that the agent under Power of Attorney (which only remains in effect during the signer’s lifetime) and Personal Representative named in a will is often the same person, people often get confused as to the proper term at any given time (and it can get even more confusing if the same person is named as a Trustee of a Trust).
The way I sort it out in my head is to think about what document contains what role. It is also helpful to think about what time period applies. For a Power of Attorney, the agent named in that document only has authority during the lifetime of the “principal” – the person who signed the document appointing the agent. For a Will, the Personal Representative nominated in the document only gains his or her authority upon being appointed by a Probate Court to administer the estate of someone who has died. For a Trust, the Trustee’s role starts once both the Trust Agreement has been signed by both the “Settlor” (the person establishing the Trust) and the Trustee. (To complicate things further, sometimes a Trust is “testamentary” – that is, established in a Will. The role of Trustee of a testamentary Trust only starts after the testator – the person who signed the Will – has died, and it is likely that the Trustee of a testamentary Trust would not have much to do until several months after the testator’s death, so that the probate estate can be administered.) (Complicating matters even further, if the person who died had minor children, the Probate Court may need to appoint a “Guardian” for them and a “Conservator” or “Custodian” to handle their inheritance. Many Wills include testamentary Trusts for the benefit of minor children; in which case, the need for a Conservator is less likely, as the Trustee of the Trust would likely be able to cover this role.)
Let’s review. In a Power of Attorney, you can name an “agent” who can help you with your finances during your lifetime. In a Will, you nominate a Personal Representative of your estate. In a Trust document, you name someone to serve as a Trustee. If you want further clarification of these roles, just let any of the attorneys at Levey, Wagley, Putman & Eccher, PA, know. We would be happy to help.