The Role of a Fiduciary – Trustee, Personal Representative and Agent Under Powers of Attorney

Philip Fish, CFP<sup>®</sup> and Estate Planning Specialist with Sandy Spring Trust

Philip Fish, CFP® and Estate Planning Specialist with Sandy Spring Trust discusses the different Fiduciary roles within a client’s estate plans: Trustee of revocable and irrevocable trusts. Personal Representative within a Will. Agent within a financial and medical power of attorney. Phil discusses the role of the fiduciary, who should be selected, ways to prepare the decision maker for their future roles and many of the challenges that come with this assignment. He also discusses ways to ease the burden on the individual’s shoulders along with how the Bank can be named as a primary Fiduciary, back up to family members and support system for individuals named.

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    The Role of a Fiduciary – Trustee, Personal Representative and Agent under Powers of Attorney


    - Hello everyone. And welcome to Sandy Spring Bank's Real Life Matters Seminar Series. My name is Phil Fish, I'm a certified financial planner and an estate planning specialist with Sandy Spring Trust, the trust division of Sandy Spring Bank. I've worked for the bank for the past 21 years and have worked in the industry for over 30 years. And my role is really to be a problem solver. To answer client's questions. To help them navigate through different life stages. And I'm the host of the seminar library, which is a number of different seminars recorded on our website on different topics, revokable trust, wills, incapacity planning, investments, taxes. And today's topic is the role of the fiduciary. And a fiduciary has a couple of different connotations. On the investment side, we are fiduciary in the way we manage assets. We're governed under the strictest federal fiduciary standards, and we manage assets within those parameters. All of our staff has salary, no products, no commissions. Is a wonderful way to manage assets. On the estate planning side, fiduciary is referred to the individuals who are named within legal documents. And that's what we're gonna talk about today. This is a one-way conversation. At the end of today's program, feel free to reach out to me. My contact information is provided at the end, and there's a contact fill button on our website. And we can schedule a time to either speak over the phone, do a video conference. And at this point we are doing a select meetings in-person as well. And I'd be happy to answer your questions. I'm a salaried officer. There is no cost or obligation to speak with me. And today's discussion, we're gonna be talking about legal documents. I'm not an attorney. I was a formerly a trust officer before I took on my current role within the bank. And so for many years, I've dealt with wills and trusts and financial powers of attorney. We do have estate planning attorneys on staff. Many of them are trust offices, but they're not allowed to be your attorney. So we're always gonna work with an attorney you already know, or we can introduce you to local estate planning attorneys to help with the drafting of documents. In addition to helping clients walk through the estate planning process, we also assist clients down the line when their life changes, when they face an illness or the loss of a loved one. And sometimes the bank is named within legal documents. And we'll talk about that today. And many times we're positioned to provide support to individuals who are named within legal documents. So today is just a one-way conversation. If you have questions, feel free to reach out to me and we'll schedule a time. I'm a salaried employee. There's no cost or obligation for us to talk. And I'd be happy to answer your questions on this fairly confusing topic at times. So hopefully over the next few minutes as we go through this program, I'll be able to answer some of your questions, but I'll probably also raise quite a few as well. So hopefully, you're relaxed at your home or your office. Hopefully, you have a pad of paper or a pen pencil to make some notes. Relax. This is a one-way conversation. Obviously, it's a recording, so it's not a Zoom meeting. And so hopefully, you'll enjoy today's presentation. So the topic is the role of the fiduciary, trustee, personal representative, and agents within financial powers of attorney. On the website, there are some handouts in estate planning, flow chart, and an outline. If you don't have those in front of you, it is not a problem, I'll kinda guide you through things. And so just relax and take notes. And on behalf of Sandy Spring Bank, thank you for banking with us. We're 150 plus year old financial institution, the largest local community-based bank in our region. I'm speaking to you today from our main office and only. And upstairs is our boardroom and our executive officers. And next door is a building where many of my colleagues in the trust division work, including myself, my office is next door. So, I have an outline of around 10 items I'm gonna go through with you today. And so just follow along. We're gonna start with legal documents, because that's kinda where this all begins. Why do we need legal documents? Well, it's to basically make sure that somebody, whether it's you or somebody you select, can control your affairs during different stages of life. While you're healthy, you don't need these estate planning documents. You do need to prepare them while you're alive and healthy because they need to be signed by somebody who is cognizant and competent and legally able to sign documents. So we can't wait till we become sick or die to establish an estate and incapacity plan. We need to establish these documents now. So when I talk to clients that one of the first questions is what legal documents do you have in place? Some clients will have three, hopefully, a will, a financial power of attorney, and a medical advanced directive. And we'll talk about those during today's session. And some clients will have a Revocable Living Trust. And in addition to that main document, they'll also have a financial power of attorney, a medical advanced directive, and a will. So whether you have recently drafted documents, old documents that need updating or no documents at all, we can certainly talk and I can answer some questions and see if we need to go visit your attorney or introduce you to a new one. Because these documents create the foundation from everything we work on on the estate plan. You don't have legal documents in place. When you become sick, you become a ward of the state and the state gets involved, and it's very cumbersome and complicated and expensive and stressful. We're dealing with guardianships, and it's something we don't wanna go down. But if a client does not have a strong incapacity plan, many times, that's where we end up. And if you die without a will, the state that you live in will provide kind of a cookie cutter solution, it's called dying intestate. And your assets will be dispersed just maybe not in the way you want or to the people that you want. So estate planning is about control. And the fiduciaries that you name, the people you name within the documents in these roles are the people you're hiring kind of, but asking to serve to carry out your wishes. So within your documents, within the will, we have the personal representative. The old term was executor for male, executrix for female. And now in Maryland, we call it the personal representative. It's a neutral term. It could be a male female, or an institution. Sandy Spring Bank trust division can be named as a personal representative within somebody's will. And that individual's role is to take care of the affairs of the will when somebody passes away. They do not get involved during the lifetime of the client. There are other documents and other roles. And as we'll talk today, you can name the same person in all of these different roles within your legal documents, or you might be naming different people for different roles. There's no right or wrong there, but if you're naming different people for different roles, they need to coordinate, because many times those roles would kind of overlap and they'll need to be coordinated. And we'll talk more about that as we move on. So for decision-makers, the will, we have personal representative within a trust, whether it's a trust created during the lifetime of a client, a Revocable Living Trust will have trustees. Many times the trustee is the client. So if my father who's passed on, but if he were alive, and he established the George Roger Fish Revocable Living Trust, George Roger Fish himself might well be the initial trustee. He would manage his own affairs and manage the assets that are placed inside of this trust. But what the trust does is it provides a plan for my father's incapacity and my father's death. And even maybe a plan to manage affairs after my father passed away. And there will be trustees named within the document. They're sometimes called successor trustees or alternate trustees, backup trustees. So if I were named as my father's successor trustee, there would be provisions in the trust that would allow me to step in upon certain conditions. My father passing away, my father resigning as the trustee, my father being deemed incapacitated. And this gets a little tricky because how do we define incapacity? Well, the document, the trust documents is going to lay that out. And different documents, do it different ways. Some documents, state that two physicians have to sign off on my father's incapacity. Some documents state one physician needs to sign off, Some provide options. They might state my father's primary physician or his agent named in his medical documents, or maybe a trusted family member or friend could be listed as the person who could deem whether my father is no longer able to handle his affairs. This transition from my father taking care of things to somebody else is such an important part of an estate plan. It's really the incapacity plan. And we spend a lot of time talking to our clients about that, because at this point, my father's affairs might be at risk. If he's having a period of poor health, dementia, Alzheimer's, just struggling with financial mental clarity, this is a time when people will sometimes try to take advantage of my father through identity theft and scams and fraud and just being coerced. So it's a very delicate, difficult time. And we wanna make sure that whoever my father has named within the documents can step in quickly. So in day's program, we're gonna be talking a lot about the different roles, the different decision-makers, and some key strategies to make sure that we have a smooth transition from the client being in control of their affairs, to the person that they've designated as the decision maker stepping in for different roles. The main roles, the four main roles. Handling financial affairs during an illness of my father, handling medical decisions during an illness of my father, where he can no longer communicate with the doctor or the hospital, Settling of his estate. And then after he's died, if he's established trusts for the benefit of a family member, maybe a young beneficiary, somebody with a physical or mental incapacity, somebody struggling with an addiction, alcohol, drugs, somebody who just doesn't handle finances well. If he's established a trust for the benefit of that individual, then there would be a trustee of that trust named within them documents. So we're handling financial affairs during a period of poor health, having medical affairs during a period of poor health, settling the estate, maybe handling a trust afterwards. So the document, so the will with the personal representative, the trust with the trustee, the financial power of attorney that will handle financial affairs during the illness of my father. And they're called agents. Sometimes they're called attorney. In fact, they don't have to be an attorney, it's just a legal term. And then there are also medical advanced directives that provide medical healthcare powers of attorney. And this provides an individual the authority to represent my father, if for medical issues, if he can no longer communicate clearly to the medical staff. As long as my father can communicate his wishes, the staff are gonna listen to him. But if he's unable to, then this legal document is going to state my father's wishes. That's why it's called a medical advanced directive. He's stating his medical wishes in advance and giving direction. And part of that direction is to the hospitals and the doctors. It's okay to speak to my son, my spouse, my daughter, my nephew, my niece. And these medical agents have the legal right to represent my father's affairs. If he's having a period of poor health on medical issues, the financial powers of attorney, the Revocable Living Trust, provide legal rights for an individual to represent my father's financial affairs. If my father became sick, I cannot just walk into his bank or his financial location and say, "My father is sick. "I need to start transferring funds and paying bills." And they would say, "Well, "the account is in your father's name. "Who are you?" And so this is where these documents come into play. And there's two components that are very important. The creation of these documents through a local estate planning attorney, who's knowledgeable about the laws in the state where you reside, because they are slightly different from state to state. And then communication with your locations. Communication with your bank and your financial locations about the financial arrangements if you become sick. Making sure that the trust assets are titled properly. Making sure the financial powers of attorney are on file. Some larger institutions have their own financial powers of attorney that they would prefer you to complete because they're huge and they cover 50 states and they just wanna make it a little more manageable. So huge national firms may well state, yes, you have your lawyers version of your financial power of attorney, but for the accounts with us we'd like you to complete this kind of financial power of attorney just for a accounts with our firm. And you fill it out. And by doing this proactively, what happens is then your doctors and hospital know in advance because you shared your medical advanced directives with them, who the contact person is. They know who to call if there's an issue. And if that person shows up, they understand that person's authority. And on the financial side, because you've shared the powers of attorney, you've filled out the power of attorney forms, or you've shared the trust, entitled the assets in the name of the trust. The financial firm knows in advance who is your financial decision maker should you not be able to make decisions on your behalf. So it's about planning in advance for a time that you can not speak for yourself. And we spend a lot of time at Sandy Springs Trust helping clients prepare for a difficult time, the declining health of a loved one, the illness of a loved one. But with good preparation, we can prepare and we can protect the client and their assets, and relieve a huge burden and level of stress on family members named. So we have wills with personal representatives, trusts with trustees, financial powers of attorney with agents, and medical powers of attorney also with agents. We also have trusts created after the client has passed away. So these different fiduciary roles carry a lot of responsibility. And we'll talk about that as we move through today's program. So once you have your legal documents in place, part of that process was, who do you name within your documents? And this many times is an area where I'll spend time with clients and just talk about different options, because it's a very difficult decision. Now, if you're a married or you're in a significant relationship or you have kind of a partner, you may well wish for that individual to be you named, which is fine. But a couple of things to think about. One, I've been married to my wife, Lisa, for 27 years. If anything happened to either one of us, it would be very difficult for the healthy or surviving spouse to kind of move forward. So wanna make sure there's a support system for the spouse, significant other, or partner. Some individuals will name brothers or sisters, which is fine, but we need to keep an eye on age. As I get older, my oldest sister is 15 years older than me. So if I'm 75, she would be 90. So we need to make sure that the decisions that we make 10, 15 years ago might no longer be appropriate as far as who we've named in these documents. Children, sons, daughters, absolutely. We have to look at their age, their maturity, how they would handle a stressful situation. Other multiple children. How do they get along? What's the tension between the family members? So these are difficult decisions to make. Some clients will ask me, "Can I name two or more decision makers? "And they can work together." You can, but it can be difficult. It can be challenging. We would want to talk to you about that. We would want you to talk to your estate planning attorney about that. If it's two or more decision-makers and they all have to sign on every decision, it can become very cumbersome. Some financial institutions will not allow two signature required accounts. So we may run into a stumbling block. If it's an odd designation, me or my sister, then the question is, who's in control? Who's making the decisions? What if we disagree? Is a difficult decision on who to select. Once you move outside of immediate family, spouses, partners, significant others, brothers, sisters, children, and you start looking at nephews, nieces, cousins, or friends, you need to understand how much you're asking of this individual. This is a lot of work, a lot of stress. And we'll talk a little bit about that later on. But within your documents, you're going to name decisions makers. And then the next thing we need to look about is preparing them. Step one, tell them. Don't keep this a secret. Some clients feel it's best not to mention it. And I'd asked them to reconsider that thought. They need to know. They need to know what the documents are located. How do they access the documents? Well, they're located in your safe deposit box at Sandy Spring Bank and the only branch which is in this building, Box 348. "Wonderful, where is the key?" "Was taped behind a picture in the living room." "Wonderful." "Does your son, daughter, nephew, niece "know the location of the key?" Are they assignor on the contract to access the box? Because having the key isn't enough, they have to be authorized to access. If not, they have to go through court process, and it's complicated and time consuming. So you need to think ahead. Do they have a the key to your house? To get into your house. To get access to the key to get to the bank. Do they know which bank your safe deposit box is located at? Because it doesn't say that on the key. There's no directions scribbled into the key. It's just a key. And they're going to need these legal documents. Passwords to computers to accounts. We do a lot of online work these days, they're going need to be able to access that information. Where do you do your banking? Who's your lawyer? Who's your accountant? Who's your doctor? What insurance do you carry? How do you pay for this insurance? If you have long-term care insurance, how has it paid for? Is it an annual payment, which is less expensive, but then what if you forget to write the check because you're sick. So we need to be thinking ahead. A lot of life insurance goes unclaimed because the policies get lost and nobody takes the action of calling the life insurance company and saying, "My father passed away. "He had a policy with you." Because the father had informed the son or daughter about these issues. Preparation of the decision-maker is so important. Item four, we talk a lot about in other seminar sessions, which is titling of assets. It does come into play with decision-makers because we need to make sure that there's clarity between the client's estate plan and how they've titled your assets. If my father set up a trust and named me as the trustee, but his assets are not titled into the trust, then I don't have any authority over those non-trust assets. Joint assets can flow outside of the trust to the will. So they might be directed elsewhere. Beneficiary designations are locked in when my father passes away. So whatever they say will happen. All the beneficiary designations aligned with my clients, with my father's or my client's estate plan that wishes. And the the decision maker, the fiduciary is the one that's gonna have to figure this all out. But if we have a strong plan, if we have a coordinated, thoughtful estate and financial plan in place, which is what we do at Sandy Spring Trust, we can work with the clients and then we work with the decision-makers that you've named. We get to know them. And we work as a team. And we made sure everything is set up cleanly. And it takes a lot of effort, a lot of time, but it can, and it does work. We prevent the missteps, we prevent the messes that can occur. So the titling of the assets is very important. On the financial side, on the investment side, your fiduciaries are gonna have to manage your assets, whether it's during an illness, which is a very difficult time to manage assets, 'cause we may need to raise money to pay bills. Where do we pull money from? Do we pull it out of an IRA? Do we sell a stock? Do we cash in a CD? There are tax considerations, investment considerations. Do they hold your stock positions? Or do they make adjustments? Because now they are representing you. And as a fiduciary, they are legally responsible for their actions. So if they don't take action, they could be held liable. Or if they make mistakes, they could be held liable. It's why many individuals do not wish to be a fiduciary. Because it's a lot of work, a lot of stress. And it's a risky proposition because you're held to the highest standards of law. And it's why we get hired many times by fiduciaries, by trustees and postal representatives and agents, to help them in their role. To help them make smart decisions. To kinda help them navigate through these issues of law, tax, finance, health care. Because we serve in this role. So we have the skillset and the knowledge and the staff to help clients navigate through these issues. So your decision makers are gonna have to manage these assets. Upon the estate settlement, they'll need to make decisions on what adjustments to make during the estate settlement, how are they releasing the funds? To whom and how? And if there's a trust established after the client has passed away, they're gonna have to manage these trust assets as well. Support. Your fiduciaries are gonna need help. I've been doing this for over 30 years. I speak publicly on the issue. I was a former trust officer. I've been a certified financial planner for 21 years. I would need help. If I were a trustee or fiduciary of a family member, I would need help. Because I'm not a lawyer, so I'm gonna need legal help. I'm not a CPA, I'm gonna need tax help. I don't manage assets. Even though I'm a certified financial planner and have been for over 20 years, I do not manage client's assets. I don't even manage my own assets. I don't have the skillset. Our portfolio managers are full-time dedicated salaried professional managers of assets. Not brokers, non-commissioned, they're professional fiduciary asset managers. So I would need help managing the assets. I would need help with medical issues. I don't have a medical background. And I would need help with time. I'm married. I have a career. I have a life. And this can really be a second job, especially if the decision maker is not local. So one of the reasons we get hired a lot by clients is to help position us, to be a resource, to ease the burden and stress on the shoulders of individuals who are named in documents. Sometimes the bank is named as a backup. So if that individual cannot serve or chooses not to, the bank can step in. And sometimes clients realize that maybe the bank is the better option, not always, but we get named many times to be the trustee or personal representative, or trustee of a trust after the client passes away that may continue on for 20, 30, 40 years. Sandy Spring Bank has been around since 1868. Our Trust Division has been around for well over 30 years. We're a strong well-established local bank providing these services. Incapacity planning. As we kind of round the corner towards the end of today's discussion. Incapacity planning is one of the hardest roles for the fiduciary. They're trying to take care of the loved one. It might be the spouse, so the father or the mother. And they're trying to maintain that dignity, maintain their independence but also protect them, because that's when the scams and the fraud and the identity theft, they really target people who are struggling with mental clarity. They're trying to keep them safe. And it's so hard to try and balance those two things. And it's so stressful. And if any of you on the discussion today are serving in this role or have served, on behalf of whoever you serve for, thank you. because you're doing such an important job, but it is difficult. And sometimes we get hired to help. To ease that stress a little, ease that burden. To help coordinate, pay bills, manage assets, help with the tax returns. We don't do the tax returns, but we can help get the information together to make the tax returns much easier, because yes, the fiduciary is gonna have to handle the tax returns of the individual during a period of illness. There are tax returns when someone dies. There are tax returns on trust established after someone passes away. So incapacity is an incredibly challenging time. Estate settlement is also obviously difficult. And sometimes it's not the son or the daughter we're providing support to, it's the spouse, partner, significant other, who has just lost a loved one that they may have been together with for 10, 20, 30, 40, 50 years. And now that person's no longer there. What does that person do? What decisions need to be make? And there are decisions that need to be made. Investment decisions, legal decisions, tax decisions. They also have to deal with their own life, now that they've lost that soulmate, that person that is so important to them. Many times, Sandy Spring Trust is positioned to provide support to the spouse, partner, or significant other, or to the son or daughter. After the loss of a loved one, make sure the client's wishes are honored. If we've been involved with the client earlier, which is the best way to do things, then we have a really good understanding of where the assets are located, the estate plan, the account titling, the beneficiary designations. And in those situations, these estate settlements can be so much easier than if we were brought in late, or if the client did not have a proactive plan. And then finally, trust established after someone passes away. And I do discussions on our website on protective trust. And so we can talk a little more about that in those sessions, but trusts are established for many reasons. You have a young beneficiary. You have a beneficiary who doesn't handle finances well, and might have an addiction to alcohol, drugs, gambling, who might be in a marriage that you're concerned about. You wanna protect the assets that they receive through an inheritance from a potential divorce. I know it's an unpleasant consideration, but many of our clients want to create lineal control. They want the assets to be there when they pass away for the son or daughter and the grandchildren, and not go sideways through an unfortunate divorce. And there were ways to establish protective trusts in that way. We do a lot of trust for individuals with special needs. You have a physical or a mental incapacity. And that's an area where it's so important to have a strong plan in place. And the trustee's role is critical because they're gonna be managing the assets that are set aside for the benefit of this loved one who needs a lot of help and support. So as you can see through our discussion today, the role of this fiduciary is broad. Personal representatives and wills, trustees and trust, agents and powers of attorney. You have to kind of hopefully be engaged while the client is healthy. Hopefully have some conversations, get to know whether assets are located, get to meet with maybe some of their advisors, their attorney, their accountant, their financial advisor, their banker, their physician, be aware of kind of how things are set up, be aware of passwords and secret hiding places. If there's gold coins kind of in the dry wall, in the living room, good to know, so we don't sell the house with a large quantity of gold bullion sitting inside of a wall for the new owners to discover five years later, when they do a renovation. We have to share knowledge with the people that you've named in your documents. They do need help. And Sandy Springs Trust can, and will be a support mechanism for individuals named in legal documents. Sandy Spring Trust can also be named as a trustee and a personal representative within clients' legal documents. If you have questions on the role of the fiduciary, whether it's, you're trying to figure out who the name, trying to set up a support system, or maybe you're serving as a fiduciary and you might need some help, please reach out to me and we will talk for an hour or so. And if I can help indirectly, I will, try and point you in the right direction. If Sandy Springs trust can help directly, we'll talk about the bank services and how we get paid, and see if it's a good fit. And if it is, we will certainly be able to assist. It's been a difficult couple of years as we go through these, COVID. And just there's so much pressure on people's shoulders. So much stress in people's lives. And when somebody gets sick and somebody gets passes away, it's just can be overwhelming. Hopefully, you've enjoyed today's session. If you bank with Sandy Spring Bank, thank you, with the largest local community-based bank because of your choice to do business with us. And we appreciate that. And if you don't bank with us, we hope you might consider Sandy Spring Bank to be your partner. We're a full service bank, and you can reach out to any of our staff, and we'd be happy to help in any way that we can. Thank you for joining us on our discussion today. Feel free to look around our seminar library on other topics. I'm also the host of a professional discussion series, where I interview local professionals in the areas of law tax, finance, and healthcare on a wide range of topics. And you're welcome to go over to that side of the website and take a look at some of those conversations as well. Thank you for joining us today. I hope you're safe. And for those who'd like more information, I look forward to speaking to you in person. On behalf of Sandy Spring Bank, take care and have a wonderful day.

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    This material is provided solely for educational purposes by Sandy Spring Trust, a division of Sandy Spring Bank, and is not intended to constitute tax, legal or accounting advice, or a recommendation for any investment strategy or transaction. You should consult your own tax, legal, accounting or financial advisors regarding your specific situation and needs. Our staff will work closely with your advisors to coordinate your overall plan. 

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