One of the more important decisions you will face when it comes to creating
your estate plan and deciding exactly how your money, assets and basically
any element of your estate are going to be handled rests in who you choose
as your power of attorney, trustee or executor. My law professor, Gerry
Beyer, who inspired me to become an estate planning attorney, said, “Being
an executor is like doing drugs, just say no!” Always realize the person who you pick to be your executor will
work many hours with little to no appreciation for their work. Most executors
are not paid. This person will ultimately be acting on your behalf. They
will make the decisions for the estate; they will address relevant legal,
medical and financial matters, and in the end, the proverbial buck will
stop with them. You are, therefore, in essence, choosing that person you
want as your voice when you pass or, in other words, that person who will
dictate how, when and under what circumstances the estate gets distributed
and managed. Therefore, you really want to spend some time on this decision.
This choice is compounded with the issues of a changing society. For almost
all of human existence, family lived relatively close. With modern technology,
we have been able to move farther apart but remain connected. Many of
my clients are moving in from different locations around the country.
A child may reside in California, a parent in Missouri, and a grandparent
in New Jersey. This dynamic creates problems in choosing a power of attorney
or an executor. How can your child really assist you with the paying of
your bills? It is possible, but is it practical? What about being your
medical power of attorney?
This situation can become even more complex when dealing with immigrants.
I have many clients of Asian descent whose entire family resides overseas.
Many desire their family be the guardians for their minor children upon
their death. I often explain that a U.S. citizen child will not be allowed
to leave the country if both parents have passed away. With deportation
on the rise, this situation becomes even more complex because illegal
immigrants have a lifetime ban from entering the country, but the children
cannot be deported. Under the law, judges struggle to know what to do
when a person has been deported. Does the judge send the child outside
of the country to be with her parent? Is the child placed in foster care?
On another note, leading with your heart when choosing someone to handle
your affairs may not necessarily be the best course of action. You may
love your children, and in an affirming gesture for example, you might
opt to make your oldest the executor of your estate. This is after all
the traditional route in many families. The oldest child is entrusted
with preserving the familial legacy, with looking out for their younger
siblings, and with handling the relevant financial and legal matters attached
to the parents’ wills and estates. But, the decision of naming the
person to act on your behalf as agent or even as executor needs to be
about more than just sentiment and it needs to be about more than what
is the ‘customary’ thing to do. Another problem arises when
you name co-agents. Some think they have to name all of their children
in order to be fair. If you do name co-agents, then all of the agents
either have to act together or they can act alone. If they must act together,
simple financial transactions may end up taking weeks as not only must
all agree, but they must all sign. If they can act solo, then it is possible
2 different agents pay the same bill or the bank account gets overdrawn.
There may be solid reasons to name co-agents, but fairness to the children
should not be the reason.
Compare naming an agent or executor to that of choosing your financial
advisor. Many people will spend years looking for a financial advisor,
only to be disappointed a few months later. Usually, these individuals
are professionals who spend a significant portion of their lives helping
individuals with their estates. A power of attorney will have more power
than a financial advisor. Think about that. A power of attorney has full
discretion over all of your assets, unlike a financial advisor whose discretionary
authority is usually only granted over certain investments.
Here's a prime example of how choosing an executor based simply upon
“expected” protocol can turn disastrous.
To the Oldest Go the Spoils
“Fortune knocks at every man's door once in a lifetime, but in a good
many cases the man is in a neighboring saloon and does not hear her."
– Mark Twain
Although the particular facts and circumstances vary, the result of this
story is very common in my practice. Barbara had recently lost her father
from a battle with colon cancer. Her older brother, the executor of the
estate, was entrusted with all of the assets, finances and property. After
he had received letters testamentary, there was a mandatory sixty day
waiting period for a notice to creditors before any such assets could
be distributed in accordance with the Texas Estate Code. The sixty days
came and went. My client heard nothing from her brother and any attempts
to contact him sadly went unanswered. A letter which insisted that he
send over the estate’s accounting was sent, and still nothing. Knowing
a bit about the probate process and how simple it is for an executor to
steal money, I had my suspicions that this may be the case. Although,
hoping I was wrong; tragically, however, I was not.
Thereafter, we filed a motion to have him removed as executor. Since he
failed to show up for the hearing, the son was relieved of his duties
and my client was then appointed executor in his stead. She took possession
of her father’s bank accounts only to discover that the entirety
of the estate, all of funds in his accounts, were gone. All told, approximately
$500,000 was missing. The brother had gambled it away and ran off with
the remainder of his family’s inheritance.
The parents in this scenario knew their son’s history; they knew
that he could not handle money and that his penchant for gambling more
often than not superseded his sense of fiscal responsibility. So why did
they choose him? Why did they leave their estate vulnerable to the types
of problems that are inevitably going to arise when entrusting large sums
of money to a person with a gambling addiction? Was it because he was
the oldest? Because he was the male heir? I thought about this question
for quite some time, and I thought about the fact that in their haste
to align with traditional expectations regarding who the power of attorney
should be, they ultimately made the Winstar Casino much wealthier.
Often when I tell this story, people want to hear that the Court could
punish this man for what he did. My client chose not to pursue her brother.
She knew all that would happen was that he might end up in jail and he
had no money to repay it. At one time, I relayed a story like this to
a probate judge of 14 years. He told me at the beginning of his career
situations like this made him angry and, as a result, he would punish
the executor. However, as years passed, he realized that these individuals
were put into a position they could not handle. He said that it almost
always begins with the executor “borrowing” the money. The
judge told me that the executor always intends to pay it back, but then
he gets too far down the road and cannot.
In this situation, the parents hold some of the blame for not taking the
time to consider the fact that their son did not possess the experience
and character to be an executor.
At the forefront of the executor question must be this issue of trust.
Who do you know that you can trust to handle the responsibility that comes
along with managing your estate. The trust required is not trust that
the person loves you, but trust in the actual ability to handle financial
affairs. You may love your son or daughter with all your heart, but does
this make them the best person for the job?
This begs the question then: What should you look for when choosing that
executor or trustee for your estate? It is not that complicated. Look
at the person, examine their history, and evaluate their current financial
situation. For instance, have they had the opportunity to handle large
sums of money in their life? This is an extremely important consideration.
If they haven’t, and you suddenly leave them to manage hundreds
of thousands of dollars, do you think that they will be qualified to carry
out the job as needed? Or are you merely setting them up to fail?
Over the years at our office, we have determined that one out of four executors
make a significant financial error that if charged with embezzlement under
the Texas Penal Code would result in a finding of guilt. A client of mine
was appointed an Executor of an estate worth well over three million dollars.
His grandmother had picked him to handle her affairs. After signing the
oath and wrapping up the estate, the Executor informed us that he notified
the other beneficiaries and sent them their money. Two years later, the
Judge over the case called me. He had found out that the money was not
distributed. My client came to my office very apologetic that he lied.
He had taken the money to pay for his medical procedures. After using
the money for medical he justified himself in purchasing a million-dollar
home, a F-350, and many other expensive items. After collecting all the
assets, we had just enough to pay the other heirs what they were due.
The Judge did not charge him with a crime but he was left with almost
nothing. His grandmother never considered the facts that he had never
handled significant assets and had a medical situation he could not afford.
Look at their income and debt. Determine if they have defaulted on any
loans in their adult life. Please remember that excluding your child as
a potential candidate doesn’t make you cold-hearted, nor does it
mean that you love your children any less; it just means that you are
watching out for your entire family as you make the best choice in terms
of the preservation of your estate. Think of it as a job search. You are
the CEO; you are consequently seeking the most qualified candidate to
handle extremely important legal and financial matters for your organization.
Would you pick the person who walks into your office with a resume hand
scrawled on a sheet of paper, who comes in knowing virtually nothing about
your business, but who says
I am a very nice and friendly person, that’s why you should pick me. Or do you choose the candidate who comes in with an impressive portfolio,
is well-versed on the nuances of your company, has questions prepared
and possesses a resume that exhibits his/her repeated successes when it
comes to your business sector?
Color Chart Considerations
“Once you show someone your true colors it is impossible to paint
- Matshona Dhliwayo
You may be wondering what exactly does color have to do with who you choose
as your power of attorney, executor or trustee. Used frequently by corporate
America, the color personality test often helps businesses gain a more
comprehensive picture of character traits which in turn allows them to
better facilitate working relationships, environmental interactions and
the client-employee dynamic. It’s simply a way to gauge people in
order to understand how they work, who they are and what types of characteristics
they are apt to display in a given situation. Transfer this to the estate
planning world and you have a very helpful way of looking at potential
When reviewing these types of decisions with clients, I always like to
refer them to the color personality test. This is by no means an all-inclusive
measure of a person’s character, but it is a means of more effectively
understanding their tendencies and thus, what they may be apt to do if
given control of your estate.
Red Personality: The Leader of the Pack
Red personalities tend to be more aggressive than other colors. Their modus
operandi is generally aligned with getting things done, taking charge
of a given situation and persevering despite emotional conflict or sentimental
ties. For the red personality, it’s all about energy, drive and
getting down to business. Now, does this make a typically red person a
good fit in terms of an executor role? In my experience, this really depends.
With the reds, it can usually go one of two ways. If that person is a red
personality and an incredibly honest and forthright person, this combination
may produce an executor who can well handle the matters of your estate.
However, on the flip side of that coin, if the red person in question
tends toward dishonesty, this could spell disaster, cause massive amounts
of fighting amongst your heirs, and ultimately leave your estate in shambles.
Always remember that one of the primary reasons to do posterity planning
is so your children get along after you are gone.
Blue Personality: The Nice Guy/Gal
Simply put, blues are people pleasers. They thrive on being “nice”
and having people perceive them as such. However, contrarily, they don’t
necessarily like interacting with others. That’s not to say they
dislike people in general; that’s just to say that the ultra-introverted
personality of the blue person tends to compel them to keep to themselves.
They are also incredibly focused when it comes to things like paperwork,
bookkeeping and administrative duties.
If you happen to have a blue in mind for executor, trustee and/or agent
for your financial power of attorney, I say go for it. They generally
are very competent when it comes to estate related responsibilities and
as they do try to stay on people’s good sides, the process often
results in a highly amicable outcome. However, be aware of a blue with
depression problems. Also, you do not want to put too much burden upon
a person who is a constant people pleaser. Finally, a blue must have enough
willpower so as not to be persuaded to act unethically in order to please
Green Personality: Ready to Manage
With green personalities, you often get a bit of an enigma. Very much introverts,
the greens aren’t as focused on pleasing others, but, instead, more
so on getting the task at hand done. Feelings and emotions are generally
pushed aside, as the green guy or girl forges ahead and tends to business.
As far as the green person’s aptitude when it comes to your estate
planning needs—they usually are a great choice. Their focus is on
the details, the practicalities and the responsibilities associated with
the estate and its beneficiaries and not so much on placating people or
tiptoeing around feelings.
Yellow Personality: Life of the Party
Here you have the quintessential extrovert of the group, (s)he who loves
to get people together, to have fun, to celebrate life. This, of course,
is in no way a bad trait. However, when it comes to your estate, yellow
may not be the smartest choice. Because they are “live in the now”
type people, their ability to focus on work and get the requisite tasks
done isn’t always the best.
Naming a yellow as your trustee, executor or agent for the financial power
of attorney is usually not be the smartest move. Perhaps, it’s best
to leave them to cheer up those left behind and to be the flag bearers
for celebrating your life and legacy.
 Gerry W. Beyer joined the faculty of the Texas Tech University School
of Law in June 2005 as the first holder of the Governor Preston E. Smith