How To Choose Your Executor or Personal Representative
June 14, 2010
Serving as someone’s executor or personal representative under a Last Will and Testament can be a HUGE job, and may not be right for the faint of heart. Although nomination is commonly considered an honor, there is a lot of work involved, and an executor must have a great capacity for organization, attention to detail, the ability to meet deadlines, and more. You may be tempted to name your favorite sibling or eldest child just to keep from hurting any feelings, but your family and heirs will not be well served if you choose your executor based on emotion rather than ability.
Keeping this in mind, here are 4 things to consider when choosing your executor or personal representative:
- Your executor should be trustworthy. Your executor will be privy to all of your financial secrets: reviewing estate assets, determining your liabilities and paying off creditors, settling outstanding debts, and making distributions to heirs. Chances are you don’t want all that information spread throughout the family or community.
- Your executor should be organized. The person you choose will be in charge of a number of detailed tasks, both large and small. He or she will be making lists of assets, working with your attorney to meet court deadlines, making timely distributions for estate taxes, and more. Missing or being late for one of these many steps can draw out the entire process, costing your heirs both time and money.
- Your executor should be financially savvy. One of the responsibilities of executor is to keep the estate viable (making sure the mortgage and fees continue to be paid) during the probate process. If you have investment accounts you’ll want to ensure they won’t languish and lose their value before they can be distributed to your heirs.
- Your executor should have heart. Although probate is a can be a difficult and detailed process, it is at its core about the people you love. Your executor should have the ability to be caring and compassionate during this emotional time.
If you don’t know anybody you would trust with all of these responsibilities don’t lose faith, there are other options. For example, you can choose a bank or financial institution as your executor, or you can ask your estate planning attorney to recommend a professional fiduciary. The goal is to find someone who will serve you well and work with your attorney to ensure a smooth probate for all involved. Another approach is to create and fund a trust, where the duties after your demise would be handled by your Successor Trustee. However, many of the same concerns that apply to your Executor (if you only have a Will) also apply to your Trustee. Talk to your attorney about choices and the difference between administering a probate estate created by a Last Will and Testament, on the one hand, versus a trust estate created by a Trust, on the other. You may find the talk very helpful.
Take Action in the Face of Estate Tax Uncertainty
May 13, 2010
If you’ve been reading our blog regularly then you know that the 2010 estate tax repeal has caused no end of confusion and uncertainty; not only for those who have been dealing with probate and trust administration since the tax was first repealed, but also for those who are trying to think ahead and do the right thing for their spouses and children. Many people have come to the erroneous conclusion that they have no choice but to stand by and wait until the Washington politicians make up their minds about whether or not to restore the estate tax retroactively—but we’re here to tell you that you don’t have to wait to protect your assets and your family.
Forbes.com recently published an article entitled How to Protect Your Family From Estate Tax Uncertainty. This article suggests that there are a number of steps you can take right now to protect your heirs and your assets, even if you don’t know what changes lawmakers may enact tomorrow or 2 months from now. Their suggestions include everything from working with your estate planning attorney on contingency plans to account for anomalies such as no estate tax or minimum exemptions, to common sense action items such as taking the time now to track your cost basis for assets (to help your executor and heirs determine the change in value for tax purposes.) The Forbes article also suggests that some people may want to plan to save by giving—taking advantage of the gift tax exemption amounts. For more on a special technique involving the use of “Disclaimers” in the current estate tax climate, see Attorney Osofsky’s recently published article.
There are always steps you can take to ensure that your estate plan is up to date, our firm can be your compass and your guide; we can help your family prepare for whatever the future may have in store.
Defining Probate
April 23, 2010
Probate: [from the Middle-English probat, from Latin probatum…] a : the action or process of proving before a competent judicial authority that a document offered for official recognition and registration as the last will and testament of a deceased person is genuine. b : the judicial determination of the validity of a will.
This Merriam-Webster definition of probate doesn’t make it sound so bad. Quite simply, it is the process by which the court determines the legal property of a person who has died, and decides to whom those assets will be distributed. It sounds like it should be simple… but somehow probate is hardly ever simple. Even in the best of circumstances there are procedures that must be followed to the letter, and the actual process (depending on the size of the estate and the laws of the state in which the property is being probated) can take anywhere from 6 months to a few years!
A good will can go a long way toward keeping the probate process on the short and easy end of the spectrum; but even with a will, much of your probate experience will depend on elements outside your realm of control. There are certain steps that must be followed to complete the probate process, including:
- the appointment of an executor or personal representative
- verification of the will
- taking an inventory of assets belonging to the deceased (which can be very difficult if good records have not been kept)
- giving notice to creditors
- paying valid claims against the estate
- preparing and paying taxes
- notifying beneficiaries (not all of whom will be easy to find)
- and eventually distributing the assets to the beneficiaries or heirs
If just reading the above takes your breath away, imagine having to actually go through all of those steps—and possibly more! The good news is that you don’t have to go through it alone, our office can help you navigate the tangled probate maze from beginning to end—from filing the first court documents to protecting your eventual inheritance—ensuring that your probate experience goes as quickly and smoothly as possible.
The Receiving End of Estate Planning
March 29, 2010
We publish a lot on this blog about preparing your estate plan: writing a will, setting up a trust, choosing beneficiaries and nominating guardians; but there is another side to estate planning, a fun side… the receiving end.
You may assume that the receiving end of estate planning is the fun and easy part, but that is not always the case. Coming into an inheritance presents its own questions and challenges; financial, logistical, and personal.
Financial
Receiving an inheritance always means you have to think about taxes. Estate taxes, income taxes, property taxes… The estate tax this year is not as clear as it has been in the past, and you will probably want to have an attorney or accountant help you with it. Whether or not you have help, you will absolutely want to keep paperwork on everything. This includes paperwork from any transfers of inherited property received by you, as well as any and all of the original paperwork you can find for the acquisition of the inherited assets.
Logistical
There is a lot more to an inheritance than simply getting money and spending it. Are you the nominated guardian of young children, holding those assets in trust for their benefit? Or perhaps you are the beneficiary of a trust, and your receipt of the assets is subject to the terms of that trust. Do you have to use the money for school? Do you need the approval of a trustee before you can spend it? Hopefully you are working with a trustee you know and trust, but if you and the trustee disagree you may need mediation or even your own attorney to assist with resolution of any dispute.
Personal
Inherited assets are often very personal and fraught with emotion. Should you really sell the house grandma lived in for decades and use the money to take a cruise? (If so, wait until after taxes, if any, are determined before you buy the tickets.) Would your parents have wanted you to use the money to pay for a wedding, or save it for your own retirement? Do you want to take the summer home that’s been in your family for generations and own it jointly with your new spouse, or keep the property on your side of the family?
Whatever you choose to do with your inheritance, it’s likely you’ll need some guidance from a knowledgeable and trustworthy professional. Your estate planning or elder law attorney can help. His or her knowledge of the probate system, estate taxes, and how to protect your newly inherited assets can be very valuable to you at the receiving end of your loved one’s estate plan.
Celebrity Gossip Can Save Your Estate!
December 25, 2009
- Did you know that Jimi Hendrix’s estate took twenty years to finalize because he didn’t have a will?
- Have you heard about Heath Ledger’s two year old daughter who got nothing when he died because Ledger neglected to update his will after she was born?
- Can you imagine how difficult it would be to sit down and try to talk about your estate plan with twelve of your children from nine different mothers? That’s what Ray Charles (brave man) did.
We make no secret on our blog of how important we think it is to talk about estate planning to friends and family; we also admit that we know how difficult a subject it is to broach, and we’ve tried in the past to offer advice on how to make the discussion a little easier. Now we can recommend a book that can help you not only come to a better understanding of the ins and outs of estate planning, but also provide fun and interesting topics to serve as conversation starters with your family over the holidays.
The book, Trial and Heirs, by Andrew and Danielle Mayoras, “uses real celebrity stories to help you avoid estate ‘errors’ as you plan for your ‘heirs’… and gives you a front row seat in the courtroom while the authors replay the scenarios and point out what went wrong, the winners and losers, and what you can learn from it.”
Probate, estate planning, and trusts may seem like something for the rich and famous—something removed from the lives of the average Joe; but the truth is that there is nothing more universal than death and the process of dealing with the aftermath. Rich or poor, famous or unknown… we all have to plan for the inevitable.
The Shortest Will: It May Hold the Record, But It Won’t Hold Water
December 12, 2009
Have you ever wondered just how little you could get away with in your last will and testament? Aletta Stager of Brooklyn, NY holds the distinction of having executed one of the shortest wills on record—a mere 2 lines long!
“Nov. 29, 1895. I give to my cousin, Nettie M. Cowan, all money that I have in the Bowery Savings Bank.
Aletta Stager, 131 Berkeley Place, Brooklyn, N.Y.”
Of course, things have changed in the probate and estate planning world in the one hundred plus years since Ms. Stager executed her will. A glaring omission from the two lines above is the nomination of an executor. If you don’t nominate an executor in your will the court may choose one for you. Also, even if you have only one person in mind as your beneficiary, you’ll want to include secondary beneficiaries, who can include charities and non-profits if you don’t have any family or friends to whom you’d like to leave your estate.
Even back in 1895 Aletta Stager’s property ended up going to the state of New York when no heirs—including the named beneficiary—could be found. Perhaps if Ms. Stager had included a couple more lines in her will her estate could have gone to benefit her favorite charity instead of being swallowed up by the state.
Test Your Knowledge: An Estate Planning Quiz
December 2, 2009
How much do you know about estate plans? And how do you know when you need one?
Many people have a vague feeling that they should execute some kind of estate plan eventually, but think (hope) that they really don’t need one right now. On our blog we spend a lot of time telling people that they do need an estate plan, and they probably need one right now—or yesterday!—and we hope we do a good job of explaining why you need one. But maybe it’s time for you to decide when the time is right. This quiz will help you determine just when (and if) you need to do some estate planning.
1. Do you own a house?
Owning your own home means you have at least one significant asset, which affects your need for planning in a number of ways: First, a piece of property cannot be split between people, it will have to be sold (which can take months or longer) and the proceeds divided among your heirs—often at a loss, especially if the house was undervalued to sell quickly. Second, many people who feel they have “small estates and won’t have to worry about Probate or the estate tax” are surprised when they find that the value of their home does indeed push their estate over the line. Third, if you are married, you may need to make provisions for your spouse if you would like them to be able to continue to live in your home, especially if it is partly your own separate property acquired before marriage.
2. Do you have minor children?
If you have minor children and have not made provisions for them in case of your death or incapacity the court will make decisions about their futures. If there are no suitable family members who are willing to step forward and would be suitable guardians, your children might be placed in the care of foster parents or become wards of the state. That is not a chance you want to take.
3. Do you want your heirs to have to wait months (or years) before receiving an inheritance, diminished by the cost of probate?
Probate is sometimes a long and expensive process. Without a plan in place your assets may have to be probated before they can be distributed. Not only does this often take a long time, but the probate fees (which can be considerable) are taken out of your estate—leaving less for your heirs.
4. Do you know how you want to spend your final moments?
Most people don’t die quickly and quietly at the ripe old age of 98. Most people fall victim to accidents, illness or dementia—unable to make their own health care decisions. Without a healthcare directive or living will that specifically outlines your wishes and instructions for your health care and nominates an agent to carry out those wishes, you could end up in a Terri Schiavo situation—costing your loved ones both financially and emotionally.
(NOTE: There is much that goes into your estate plan decision-making; this is only a partial quiz, and not a planning tool. We suggest meeting with your attorney for an in depth interview to determine what kind of planning will be best for you and your family.)
Do Life Insurance or Retirement Benefits Have to Go Through Probate?
October 3, 2009
We may acquire many assets over the course of our lives now—bank accounts, stocks, real property, life insurance, retirement, and more—it’s almost impossible to know what has to go through probate and what doesn’t.
The answer to the question in the title, above, is “no”; life insurance and retirement benefits do not have to go through probate if the account has a named beneficiary. Benefits from life insurance accounts can be paid directly to the named beneficiary, and money from IRAs, Keoghs, and 401(k) accounts transfer automatically to the named beneficiaries of those accounts as well. The persons named as beneficiary, however, will most likely want to consult with a financial advisor before drawing these benefits, as there may be tax ways of handling these accounts which minimize tax to the beneficiary.
Yet another type of account that is not subject to probate is a “pay on death” (or POD) account, the money from which can pass directly to the named beneficiary upon the death of the owner.
Probate laws vary from state to state, so contact our office—or your own local attorney who specializes in probate—for more information.
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