How Choosing the Wrong Agent or Trustee Can Destroy a Good Estate Plan

From The Jon Sanchez Show · 00:30:03

Show by Sanchez Gaunt Capital Mgmt

You created the trust. You signed the powers of attorney. You completed the health care directive. But did you put the wrong person in charge? Today on The Jon Sanchez Show, I'm bringing you the estate planning topic I had to bump from Wednesday: the wrong person in the right document, and how choosing the wrong agent or trustee can destroy an otherwise excellent estate plan.People spend an enormous amount of time deciding who gets the house, the bank account and the investment account, but many spend less than five minutes on the most consequential decision of all: who will be in charge. Being the oldest child is not a qualification. Naming two children as co-trustees so nobody gets offended can turn every major decision into a negotiation, and once their spouses chime in, you may have four people who have to agree. The person you love the most may not be the person best qualified to manage your money.I walk through each role. Your financial agent acts for you while you're alive (paying bills, managing bank accounts, handling property, filing tax returns), but powers of attorney stop at death, and that agent doesn't automatically become the person who administers everything afterward. Your health care agent speaks with your physicians, authorizes or refuses treatment, selects care facilities and makes end-of-life decisions, often under huge pressure from family, because no form can cover every scenario. The best financial agent may not be the best health care agent, and it's very common to name two different people. Your successor trustee takes control of the trust property and is a fiduciary: they protect the property, manage investments, pay expenses, keep records, communicate with beneficiaries, make distributions, file tax returns, treat beneficiaries impartially, and have the ability to say no. Some families with significant wealth name a trust company instead so their kids aren't put in that position. I also explain the personal representative (executor), who administers assets passing through probate under a will, and the difference between a successor and a co-trustee or co-agent.Then my fiduciary scorecard for choosing these people: integrity, judgment, organization, financial competence, emotional neutrality, communication, availability, location, the ability to say no, and willingness. Never surprise anyone with the job. Plus the poor reasons people pick someone: "he's my oldest," "she'll be offended," "he makes the most money," "she lives closest," and "they'll figure it all out after I'm gone."Markets: October's Producer Price Index rose 0.3% for the month, a bit better than the 0.4% expected, but it was up 6.5% from a year ago, the highest since November 2022, and core PPI was up 5% year over year. The Dow gained 50 points to 52,347, the Nasdaq fell 230 points, or 0.91%, to 25,136, and the S&P 500 lost 31 points, or 0.40%, to 7,561. Nvidia finished down $3.34, or 2%, at $162.85, and this time its weakness pulled other chip stocks down with it: AMD lost $51, or 8.8%, Broadcom gave up 4.8%, and Intel, Micron and Applied Materials also fell. Oil rose 33 cents to $88.46, and the 10-year Treasury yield rose another 5 basis points, up 29 basis points for the week. Year to date, the Dow is up 8.8%, the S&P 500 10.5%, the Nasdaq 8.2% and the Russell 2000 12.4%.Estate Planning, moved from Wednesday to Friday this week.

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