As an attorney, a large part of my job is working with clients to ensure that they understand their options and the plan we work with them to create. Over the next several weeks, our blogs will focus on providing general information about different trusts and entities used in estate planning. In anticipation of the next several blogs, today’s focus is on some of the other documents and estate planning terms, including terms that describe people named to act in estate plans.
Amendment v. Codicil
What is the difference between an Amendment and a Codicil? Both make formal, legal changes to estate planning documents, but an Amendment is a change to a Trust while a Codicil is a change to a Will. If you are living, have capacity, and have a valid Will, you can make a codicil. An Amendment however, requires you to have the authority in your trust document to amend, modify, alter, or terminate the agreement (or a portion of the agreement), and the trust document will state how you must execute the amendment. Usually, the power to amend the trust resides with the creator, and notice must be given to the Trustees and/or beneficiaries. Certain types of trusts cannot be amended, and sometimes a trust can only be amended by a Trust Protector or other specific person (and then only in limited ways).
Trustee v. Executor
A Trustee is the person who manages and is in charge of the trust (what distributions are made, how are the trust funds invested, what happens in certain events, etc.). An Executor is the person appointed in a Will that the probate court will appoint to be legally in charge of the estate. A Trustee generally has no, or little, oversight of their role since the document isn’t public, doesn’t go through the court process, and requires no order for the Trustee to act. An Executor only has authority to act once the probate court opens a case in the probate court and appoints the Executor named in the Will. Unless a Will has specific language, an Executor will be required to make a formal accounting to the court and post a bond in order to serve. The Georgia code specifies what a Trustee and what an Executor are allowed to be compensated (unless with Will or Trust states differently). Your Trustee and Executor can be the same person if you have a Trust and a Will, but they do not have to be.
Power of Attorney (Attorney-in-fact) v. Healthcare Agent
The person you appoint as a power of attorney (also known as an attorney-in-fact) is the person who can manage your finances. This person can have the power the day you sign the documents (usually immediate when a spouse is named), or can become effective only upon your incapacity (referred to as a “springing” power). Your healthcare agent cannot manage your finances or sign any contracts that obligate you financially, but they are allowed access to your medical information and they can make medical decisions on your behalf. A healthcare agent will be told information about your condition and treatment options (without violating HIPPA) and they have the final say when it comes to end of life care. Your power of attorney only manages assets in your name. If there is a joint owner, or if the assets are legally owed by a trust you created, your power of attorney will not have access to them (the joint owner would, or the Trustee of the trust). You can name the same person to serve as your Executor, Power of Attorney, and Healthcare Agent; or you can name different people in each role. At the end of the day, the person you appoint to serve in each role should be the person you would want acting if you were unable to.
These are just a few estate planning terms, there are far more estate planning terms that should be understood as you work on your estate plan. If you are ready to discuss your estate planning needs, call us at 678.781.9230 to schedule an appointment.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney-client relationship between you and Grissom Law, LLC.