Michigan Estate Planning Blog

What Is Probate?

WTOP’s recent article entitled “Everything You Need to Know About Probate” explains that probate is the court-supervised proceeding, in which the assets of the decedent are distributed to his or her heirs. This involves validating the decedent’s will, distributing assets and ensuring that the debts of the estate are paid.
Probate is how assets formally pass from one person who passed away to their heirs or beneficiaries. Probate can be long and complex or pretty efficient. Each state has its own probate code, and some have a small estate probate process for estates that are under a certain threshold. The administration of the estate involves the executor or personal representative, beneficiaries, creditors and a probate judge.
The probate process is required by state law to manage the decedent’s assets and property that aren’t transferred by contract law, state titling law, or trust law. As a result, any assets or property awarded in a last will or assets owned by an individual who dies without a will may require probate.
Property that passes through probate includes assets and property awarded to heirs through a will, such as household goods, automobiles and personal property owned at death but not awarded in the will and not otherwise transferred.
If a person dies intestate or without a valid will, the disposition of their probate property will be controlled by the laws of intestacy of the state where the decedent resided at death. Probate property is all property that was held individually and that does not have a beneficiary designation.
Each state has its own probate process. However, the first step in probate generally is to produce a will. A probate attorney can determine if all of the heirs will consent to have it probated. If there’s not going to be any objection, the attorney can prepare the probate documents and have the waivers signed by the distributees. Once they sign and notarize the consent, the attorney can take the will with the probate documents and have it filed.
After a will is deemed valid, the executor of the estate and the attorney will file certain documentation with the court. This might include the will, a certified copy of the death certificate, a list of names and addresses of the decedent’s heirs and any known creditors. Creditors will be paid first, then the remaining assets are distributed to the heirs. After any required tax returns are filed, the executor will ask the court to close the estate.
Reference: WTOP (Aug. 31, 20211) “Everything You Need to Know About Probate”

Should I Ask Mom and Pop about Their Finances?

 

Adult children should know about their parents’ finances in case of any emergency. They should also know critical information in case of death. NASDAQ’s recent article entitled “9 Questions to Ask Aging Parents About Their Finances” acknowledges that speaking to aging parents about their finances isn’t easy. However, to start this process, the article gives us nine important topics you may want to discuss with your parents:
Do You Have a Financial Plan (and is it enough)? See if your parents have a financial plan. Some parents will have a solid financial plan that will let them to live comfortably into their 80s or 90s. On the other hand, you may discover they’re living on a fixed budget and money is tight. If you see that you’ll need to help them financially now or in the future, start planning ASAP. Any decision to provide them with financial support will likely have an effect on your own financial plan.
Do You Have an Accessible List of All Your Accounts? Ask your parents to draft a list of their financial assets and those named as beneficiaries of those accounts and keep it in a safe place. They should also put together important contacts, such as clergy, CPA, estate planning attorney, physician, etc.
Where’s Your Will, and Who’s the Executor? See where your parents keep their wills and estate documents. Some estate planning attorneys retain an original copy. If your parents don’t have a will, encourage them to see an estate attorney. An item that’s not commonly listed in the will, that you may want to ask about, is if your parents have prepaid for a burial plot or memorial arrangements.
Do You Have Life Insurance Policies that I Should Know About? See if your parents have any active life insurance policies. Get the details of the policies and the policy numbers. If your parents are still working, they may also have life insurance through an employer.
Are There Any Special Bequests to Family and Friends? Family heirlooms and special personal property may be a part of your parents’ estate plan. A sibling may have claimed your dad’s coin collection. Knowing your parents’ intentions and wishes for their keepsakes will make things much easier when they pass. Moreover, having conversations about family heirlooms now can help prevent any hard feelings later. Some people make up a list for their personal bequests and reference it in their wills.
Who Have You Named as Your Financial Power of Attorney? This document lets your parents name a primary and secondary person to make financial decisions on their behalf, if they become incapacitated. If you’re the one named as the person to make financial decisions, find out where all of your parents’ financial assets are held. You should also get information about their Medicare policy, any pensions and their Social Security benefits. It even helps to know their utility companies in case you need to pay these bills and must prove power of attorney.

Do You Have a Living Will? They should each have an advance health care directive or living will and health care power of attorney. These documents designate who has authority to make medical decisions on their behalf, if they became incapacitated or terminally ill. This also includes your parents’ preferences for life-sustaining treatment, including a “Do Not Resuscitate” clause, as well as their preferences on organ donation.
Have You Had Trouble Balancing Your Checkbook Lately or Forgotten to Pay Bills? Have a discussion about key financial decisions with your parents while they are in good health. This will let you make a plan, if they show signs of memory loss. The signs of memory loss include forgetting appointments, making occasional errors while managing household finances, or getting confused about the day of the week.
Do You Have a Long-Term Care Policy? To claim benefits of long-term care insurance, a person typically needs to be unable to perform two out of six common “activities of daily living” (bathing, dressing, toileting, eating, transferring and continence) or have a severe cognitive disorder. If your parents have a policy, access it and review its core benefits, in case you need to help them file a claim.
Discussing your parents’ financial and estate plans isn’t fun, but it will help give both you and your parents some peace of mind to know that they will be provided for, and things will be taken care of in their absence.
Reference: NASDAQ (Aug. 27, 2021) “9 Questions to Ask Aging Parents About Their Finances”

How Do I Write a Will?

 

You should get the basic estate planning documents in order and revisit them regularly. Everyone should have a will, but it's only one of several significant estate planning documents in a comprehensive plan.
US News’ recent article entitled “10 Steps to Writing a Will” says that many of a typical household's assets, such as retirement accounts, can be transferred outside of a will by naming beneficiaries. Documents, like financial and medical powers of attorney, can also be more powerful in determining the outcome of an estate.
Find an Experienced Estate Planning Attorney. Most situations will require an estate planning attorney, especially when you have a large estate, a blended family, or other complex situations.
Select Beneficiaries. A common mistake people make when planning their estate is failing to name or update beneficiaries on key accounts that work with the plans outlined in their wills. The beneficiary listed on bank accounts, life insurance and other financial accounts will have control over the will.
Choose the Executor. The executor of your will has the task of carrying out your wishes detailed in the will.
Choose a Guardian for Your Minor Children. If you have minor children, you must designate a guardian in your will. That way you can name the person you want to care for your children, in the event you die while they are yet minors.
Be Specific About Who Gets What. One of the most time-consuming aspects of creating a will may be deciding which assets to include and determining who will receive what. Consider the types of assets being allocated to heirs to help with decision-making and management.
Be Clear About Who Gets What. Think practically about how your property will be distributed. A big reason children stop speaking after a parent's death is because there’s boilerplate language directing tangible assets, such as artwork, collectibles, or jewelry, to be divided equally among children.
Attach a Letter. You can attach an explanatory letter to your will. This letter may provide additional detail about certain wishes. This is also called a “Letter of Last Instruction.”
Sign the Will Properly. If you fail to execute your will properly, it may result in the document being deemed invalid. An experienced estate planning attorney will know precisely what is required as far as witnesses and notarization.
Find a Place for Your Will. Inform a person you trust about the location of your will as well as any other important legal papers and passwords to financial institutions. In addition, it’s wise to store the original copy somewhere secure, such as in a fireproof safe.
Review and Update Your Will. A will should be updated every few years.
Reference: US News (May 31, 2021) “10 Steps to Writing a Will”

Where Do You Score on Estate Planning Checklist?

 

Make sure that you review your estate plan at least once every few years to be certain that all the information is accurate and updated. It’s even more necessary if you experienced a significant change, such as marriage, divorce, children, a move, or a new child or grandchild. If laws have changed, or if your wishes have changed and you need to make substantial changes to the documents, you should visit an experienced estate planning attorney.
Kiplinger’s recent article “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?” gives us a few things to keep in mind when updating your estate plan:
Moving to Another State. Note that if you’ve recently moved to a new state, the estate laws vary in different states. Therefore, it’s wise to review your estate plan to make sure it complies with local laws and regulations.
Changes in Probate or Tax Laws. Review your estate plan with an experienced estate planning attorney to see if it’s been impacted by changes to any state or federal laws.
Powers of Attorney. A power of attorney is a document in which you authorize an agent to act on your behalf to make business, personal, legal, or financial decisions, if you become incapacitated. It must be accurate and up to date. You should also review and update your health care power of attorney. Make your wishes clear about do-not-resuscitate (DNR) provisions and tell your health care providers about your decisions. It is also important to affirm any clearly expressed wishes as to your end-of-life treatment options.
A Will. Review the details of your will, including your executor, the allocation of your estate and the potential estate tax burden. If you have minor children, you should also designate guardians for them.
Trusts. If you have a revocable living trust, look at the trustee and successor appointments. You should also check your estate and inheritance tax burden with an estate planning attorney. If you have an irrevocable trust, confirm that the trustee properly carries out the trustee duties like administration, management and annual tax returns.
Gifting Opportunities. The laws concerning gifts can change over time, so you should review any gifts and update them accordingly. You may also want to change specific gifts or recipients.
Regularly updating your estate plan can help you to avoid simple estate planning mistakes. You can also ensure that your estate plan is entirely up to date and in compliance with any state and federal laws.
Reference: Kiplinger (July 28, 2021) “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?”

What are Biggest Mistakes in Estate Planning?

 

Bankrate’s recent article entitled “Estate planning checklist: 3 key steps to making a successful plan” talks about five things to watch out for with an estate plan. Therefore, as you’re making your estate plan, carefully consider everything, and that means it may take some time to complete your plan. Let’s look at five things to watch out for in that process:
1. Plan your estate now. Of course, it’s not just the old and infirm who need an estate plan. Everyone needs a last will so that their last wishes are respected, knowing that the unexpected can happen at any time.
2. Say who will take care of your minor children. While last wills may typically focus on what happens to your financial assets, you’ll also want to specify what happens to any minor children on your passing, namely who takes care of them. If you have underage children, you must state who would be a guardian for that child and where that child will live. Without a last will, a judge will decide who will take care of your children. That could be a family member or a state-appointed guardian.
3. Ask executors if they’re willing and able to take on the task. An executor carries out the instructions in your last will. This may be a complicated and time-consuming task. It involves distributing money in accordance with the stipulations of the document and ensuring that the estate is moved properly through the legal system. Make sure you designate an executor who’s up to the task. That means you’ll need to speak with them and make certain that he or she is willing and able to act.
4. Consider if you want to leave it all to your children. Many young families simply give all their assets to their children when they die. However, if the parents pass away when the children are young, and they don’t establish a trust, they have access to all of the money when they reach the age of majority. This could be a great sum of money for a young adult to inherit with no rules on how to use it.
5. Keep your estate plan up to date. You should review your estate plan regularly, at least every five years to be sure that everything is still how you intend it and that tax laws haven’t changed in the interim. Your plan could be vastly out of date, depending on changes since you first drafted it.
Estate planning can be a process where you demonstrate to your friends and family how much you care about them and how you’ve remembered them with certain assets or property.
TI’s a way to ensure that your loved ones don’t have months of work trying to handle your estate.
Reference: Bankrate (July 23, 2021) “Estate planning checklist: 3 key steps to making a successful plan”

No Kids? What Happens to My Estate?

Just because you don’t have children or heirs doesn’t mean you should not write a will. If you decide to have children later on, a will can help protect their financial future. However, even if you die with no children, a will can help you ensure that your assets will go to the people, institutions, or organizations of your own choosing. As a result, estate planning is necessary for everyone.
Claremont Portside’s recent article entitled “What Happens to Your Estate If You Die With No Children” says that your estate will go to your spouse or common-law partner, unless stated otherwise in your will. If you don’t have any children or a spouse or common-law partner, your estate will go to your living parents. Typically, your estate will be divided equally between them. If you don’t have children, a spouse, or living parents, your estate will go to your siblings. If there are any deceased siblings, their share will go to their children.
The best way to make certain your estate goes to the right people, and that your loved ones can divide your assets as easily as possible, is to write a will. Ask an experienced estate planning attorney to help you. As part of this process, you must name an executor. This is a person you appoint who will have the responsibility of administering your estate after you die.
It’s not uncommon for people to appoint one of their children as the executor of their will. But if you don’t have children, you can appoint another family member or a friend. Select someone who’s trustworthy, responsible, impartial and has the mental and emotional resources to take on this responsibility while mourning your death.
You should also be sure to update your will after every major event in your life, like a marriage, the death of one of your intended beneficiaries and divorce. In addition, specifically designating beneficiaries and indicating what they will receive from your estate will help prevent any disputes or contests after your death. If you have no children, you might leave a part (or your entire) estate to friends, and you can also name charities and other organizations as beneficiaries.
It’s important to name who should receive items of sentimental value, such as family heirlooms, and it’s a good idea to discuss this with your loved ones, in case there are any disputes in the future.
Even without children, estate planning can be complicated, so plan your estate well in advance. That way, when something happens to you, your assets will pass to the right people and your last wishes will be carried out. Ask an experienced estate planning attorney for assistance in creating a comprehensive estate plan.
Reference: Claremont Portside “What Happens to Your Estate If You Die with No Children”

Should I Discuss Estate Planning with My Children?

US News & World Report’s recent article entitled “Discuss Your Estate Plan With Your Children” says that staying up-to-date with your estate plan and sharing your plans with your children could make a big impact on your legacy and what you’ll pay in estate taxes. Let’s look at why you should consider talking to your children about estate planning.
People frequently create an estate plan and name their child as the trustee or executor. However, they fail to discuss the role and what’s involved with them. Ask your kids if they’re comfortable acting as the executor, trustee, or power of attorney. Review what each of the roles involves and explain the responsibilities. The estate documents state some critical responsibilities but don’t provide all the details. Having your children involved in the process and getting their buy-in will be a big benefit in the future.
Share information about valuables stored in a fireproof safe or add their name to the safety deposit box. Tell them about your accounts at financial institutions and the titling of the various accounts, so that these accounts aren’t forgotten, and bills get paid when you’re not around.
Parents can get children involved with a meeting with their estate planning attorney to review the estate plan and pertinent duties of each child. If they have questions, an experienced estate planning attorney can answer them in the context of the overall estate plan.
If children are minors, invite the successor trustee to also be part of the meeting.
Explain what you own, what type of accounts you have and how they’re treated from a tax perspective.
Discussing your estate plan with your children provides a valuable opportunity to connect with your loved ones, even after you are gone. An individual’s attitudes about money says much about his or her values.
Sharing with your children what your money means to you, and why you are speaking with them about it, will help guide them in honoring your memory.
There are many personal reasons to discuss your estate plans with your children. While it’s a simple step, it’s not easy to have this conversation. However, the pandemic emphasized the need to not procrastinate when it comes to estate planning. It’s also provided an opportunity to discuss these estate plans with your children.
Reference: US News & World Report (Feb. 17, 2021) “Discuss Your Estate Plan With Your Children”

Should I Add that to My Will?

In general, a last will and testament is an easy and straightforward way to state who gets what when you die and designate a guardian for your minor children, if you (and your spouse) die unexpectedly.

MSN’s recent article entitled “Things you should never put in your will” explains that you can be specific about who receives what. However, attaching strings or conditions may not work because there’s no one to legally enforce the terms. If you have specific details about how a person should use their inheritance, whether they are a spendthrift or someone with special needs, a trust may be a better option because you’ll have more control, even from beyond the grave.

Keeping some assets out of your will can actually benefit your future heirs because they’ll get their inheritance faster. When you pass on, your will must be “proven” and validated in a probate court prior to distribution of your property. This process takes some time and effort, if there are issues—including something in your will that doesn’t need to be there. For example, property in a trust and payable-on-death accounts are two types of assets that can be distributed to your beneficiaries without a will.

Don’t put anything in a will that you don’t own outright. If you jointly own assets with someone, they will likely become the new owner. For example, this applies to a property acquired by married couples in community property states.

Property in a revocable living trust. This is a separate entity that you can use to distribute your assets which avoids probate. When you title property into the trust, it is subject to the trust’s rules.  Because a trust operates independently, you must avoid inconsistencies and not include anything in your will that the trust addresses.

Assets with named beneficiaries. Some financial accounts are payable-on-death or transferable-on-death. They are distributed or paid out directly to the named beneficiaries. That makes putting them in a will unnecessary (and potentially troublesome, if you’re inconsistent). However, you can add information about these assets in your letter of instruction (see below). As far as bank accounts, brokerage or investment accounts, retirement accounts and pension plans and life insurance policies, assign a beneficiary rather than putting these assets in your will.

Jointly owned property. Property you jointly own with someone else will almost always directly pass to the co-owner when you die, so do not put it in your will. A common arrangement is joint tenancy with rights of survivorship.

Other things you may not want to put in a will. Businesses can be given away in a will, but it’s not the best plan. Wills must be probated in court and that can create a rough transition after you die. Instead, work with an experienced estate planning attorney on a succession plan for your business and discuss any estate tax issues you may have as a business owner.

Adding your funeral instructions in your will isn’t optimal. This is because the family may not be able to read the will before making arrangements. Instead, leave a letter of instruction with any personal wishes and desires.

Reference: MSN (Dec. 8, 2020) “Things you should never put in your will”

What Do I Need to Know about Creating a Will?

A simple or basic will allows you to specifically say the way in which you want your assets to be distributed among your beneficiaries after your death. This can be a good starting point for creating a comprehensive estate plan because you may need more than just a basic will.
KAKE’s recent article entitled “What Is a Simple Will and How Do You Make One?” explains that a last will and testament is a legal document that states what you want to happen to your property and “worldly goods” when you die. A simple will can be used to designate an executor for the will and a legal guardian for minor children and specify who (or which organizations) should inherit your assets when you die.
A will must be approved in the probate process when you pass away. After the probate court reviews the will to make sure it’s valid, your executor will take care of the collection and distribution of assets listed in the will. Your executor would also be responsible for paying any debts owed by your estate.
Whether you need a basic will or something more complex, usually depends on a few factors, including your age, the size of your estate and if you have children (and their ages).
Having a will in place can be a good starting point for estate planning. However, deciding if it should be simple or complex can depend on a number of factors, such as:
The size of your estate
The amount of estate tax you expect to owe
The type of assets and property you own
Whether you own a business
The number of beneficiaries you want to name
Whether the beneficiaries are individuals or organizations (like charities)
Any significant life changes you anticipate, like marriages, divorces, or having more children; and
Whether any of your children or beneficiaries have special needs.
With these situations, you may need a more detailed will to plan how you want your assets to be distributed. In any event, work with an experienced estate planning attorney. With life or financial changes, you may need to create a more complex will or consider a trust. It is smart to speak with an estate planning attorney, who can help you determine which components to include in your plan and help you keep it updated.
Reference: KAKE (Nov. 23, 2020) “What Is a Simple Will and How Do You Make One?”

Out Of Sight, Out Of Mind Estate Expenses

To choose someone as an executor of your estate is a big decision. At the same time, it is just as momentous for your executor to accept the appointment and do the work. Regardless, it is important to consider the responsibilities that come with this important appointment. An executor has lot of big and little tasks to master. In addition, there are oftentimes hidden costs to settling an estate, too. A recent article in Daily Finance titled “The Hidden Costs of Settling an Estate” provides an overview of many of these hidden costs. When it comes to costs associated with estate administration, many are foreseeable by the executor. For example, these include court fees to open the probate, publication costs to give notice to creditors, as well as legal and accounting fees. On the other hand, hidden costs have to do with everything around the edges. One common hidden cost concerns disposition of tangible personal property. The executor is duty bound to deliver each item safely to its named beneficiary. What happens when the named beneficiary is in Anchorage, but the fine china or gold bullion and executor are all in Miami? Ensuring safe delivery is neither easy nor cheap, but less so than from Paris, Texas to Paris, France. To make matters worse, getting something from Paris to Paris might take a translated legal document or three, with proper apostilles and the works, simply to appease the court. Yes, hidden costs can mount up as fast as the questions triggering them. Is property scattered in each of these locations? Are the beneficiaries scattered, as well? Are the beneficiaries all adults? Are the (potentially priceless) items in need of cleaning? Are they in need of appraisal? Does the estate already have an itemization of assets, or will the executor have to do some digging or even walk around the house with a clipboard and pen? The point is this: when it comes to administering an estate, there are many details to mind and each has a terrible tendency to become the executor’s problem. It is hard to plan for everything, but that does not mean you cannot try. When planning your own estate, do not forget to pay heed to the details.

Reference: Daily Finance (February 23, 2014) “The Hidden Costs of Settling an Estate”

For more information, see www.jerryreiflawyer.com

 

Whitney Houston’s Estate and an Inheritance Dispute

The intention of giving an inheritance to your kids or loved ones is to help their future, not to hinder them. Unfortunately a large inheritance can sometimes hurt more than help, depending on how the distribution is set up. This is a common issue with the wealthy and successful celebrities, as is the case with Whitney Houston’s Estate. The inheritance left by Whitney Houston is chronicled by CNBC in an article titled “When $20 Million Is Too Much to Leave the Kids.” Without delving too much into the case, the passing of Whitney Houston has set her 19-year-old daughter, Bobbi Kristina Brown, up to receive a staggering $20 million. Recently, Houston’s mother and manager, who are the executors of the Houston estate, have filed a petition to restrict the inheritance payments on the basis that these were simply too large. According to the petition, such inheritance payments would make Bobbi too easy a target for predators, or worse, enable Bobbi to devolve into a bad lifestyle. Taking the petition at face value, this consequence would not have been Whitney’s intention. Regardless of Whitney’s intention, the article recommends an excellent alternative that she could have employed to protect the inheritance from Bobbi and Bobbi from the inheritance. This alternative is called a “discretionary trust.” Using this type of trust would have allowed for instructions on how the funds were to be managed and released. The article also provides some practical pointers, like teaching your children financial responsibility at an early age and reviewing (and revising) your estate plan from time to time.

For more information see www.jerryreiflawyer.com

Reference: CNBC (October 19, 2012) “When $20 Million Is Too Much to Leave the Kids”

 

ESTATE PLANNING / CO-HABITATION

The number of opposite-sex couples living together jumped 13% this year to 7.5 million. In fact, researchers estimate that half of all married couples now live together before they get married. Why? Some blame the sluggish job market, but others suggest that couples who choose to live together frequently do so to avoid what they consider “legal hassles,” especially those associated with a potential break-up. However, the truth is that for unmarried couples who break-up, the fall-out can be worse than a messy divorce. USA Today suggests that unmarried couples face a number of thorny legal challenges, to include buying a home, obtaining health care, and estate planning. Estate planning is particularly imperative for unmarried couples because if you die without a will, your estate will be divided according to state law, which usually does not recognize a domestic partner. Family members you have not spoken to in decades could inherit everything you own. Additionally, while a surviving spouse can inherit an unlimited amount of assets estate tax-free, this protection does not extend to domestic partners. There are ways to protect your estate and your partner, but you’ll need qualified legal counsel to pull it off.

 

EXECUTORS… BEWARE!

Choosing an executor can be a difficult task, and in no small part this is because it means finding someone you trust to do as you would do. Oftentimes it is gesture of trust and respect made to a friend or family member. Neither the estate planner nor the would-be executor ought to forget, however, that serving as executor can be a fairly difficult role to play. The Wall street Journal recently offered some practical insights and advice on the topic, noting that to be named executor is both “an honor… and a pain.” Simply put, the executor administers a decedent’s Last Will and Testament through probate, navigating the many twists and turns of that court process. Administration involves accounting for assets, paying bills, and distributing assets in accordance with the terms of the Last Will. The process typically takes time, too. It can mean up to several years for larger estates, and during that time the executor must keep up with the associated laws, tax code changes, and financial investments, or else intelligently delegate such responsibilities to professionals. It means that a “non-professional” can do the job, but perhaps not an amateur; you have to know your abilities and have confidence. To top it off, the compensation for being an executor is often meager, given the heavy workload, and is regulated by state laws. The biggest problem an executor will face, by and large, is a shifting relationship with the family. Money can make people antsy or even belligerent, even if the terms are clear in the Last Will, and that’s something an executor might have to bear. This is especially true of family members turned executors who may face soured relationships at family functions. Accordingly, that can make for some awkward moments around the Thanksgiving table. Practically speaking, to serve as an executor you must anticipate the challenges ahead of time, prepare for them, and remain organized. Indeed, organization is essential throughout the probate process, to include separating yourself into the two roles: executor and family member/friend. While planning your estate and settling on an executor, consider alerting your would-be executor your decision ahead of time. Doing so will allow them to prepare for the role, and perhaps even get directions from you personally. For more advice and anecdotes you can read the original article here, but to get a better idea of the challenges it is best to consult with your estate planning attorney for advice and counsel.

Reference: The Wall Street Journal (September 19, 2011) “Estate Executors: An Honor… and a Pain”

EXECUTORS… BEWARE!

Choosing an executor can be a difficult task, and in no small part this is because it means finding someone you trust to do as you would do. Oftentimes it is gesture of trust and respect made to a friend or family member. Neither the estate planner nor the would-be executor ought to forget, however, that serving as executor can be a fairly difficult role to play. The Wall street Journal recently offered some practical insights and advice on the topic, noting that to be named executor is both “an honor… and a pain.” Simply put, the executor administers a decedent’s Last Will and Testament through probate, navigating the many twists and turns of that court process. Administration involves accounting for assets, paying bills, and distributing assets in accordance with the terms of the Last Will. The process typically takes time, too. It can mean up to several years for larger estates, and during that time the executor must keep up with the associated laws, tax code changes, and financial investments, or else intelligently delegate such responsibilities to professionals. It means that a “non-professional” can do the job, but perhaps not an amateur; you have to know your abilities and have confidence. To top it off, the compensation for being an executor is often meager, given the heavy workload, and is regulated by state laws. The biggest problem an executor will face, by and large, is a shifting relationship with the family. Money can make people antsy or even belligerent, even if the terms are clear in the Last Will, and that’s something an executor might have to bear. This is especially true of family members turned executors who may face soured relationships at family functions. Accordingly, that can make for some awkward moments around the Thanksgiving table. Practically speaking, to serve as an executor you must anticipate the challenges ahead of time, prepare for them, and remain organized. Indeed, organization is essential throughout the probate process, to include separating yourself into the two roles: executor and family member/friend. While planning your estate and settling on an executor, consider alerting your would-be executor your decision ahead of time. Doing so will allow them to prepare for the role, and perhaps even get directions from you personally. For more advice and anecdotes you can read the original article here, but to get a better idea of the challenges it is best to consult with your estate planning attorney for advice and counsel.

Reference: The Wall Street Journal (September 19, 2011) “Estate Executors: An Honor… and a Pain”

ESTATE PLANNING / EXECUTORS

There are a number of decisions to be reached when planning for your estate and not least among them is the choice of executor. A poor choice of an executor, or a disconnection between executor, estate, and beneficiaries can hobble even the best laid of estate plans. Indeed, Reuters offers one unfortunate beneficiary’s troubles in a recent article on the topic and offers some solid suggestions to consider. The beneficiary was Stephanie Stephens, who, in the end, was surprised to find that the estate she received had shrunk by $129,000, something she angrily blames on the executor. Apparently, the estate had incurred a $104,000 loss when the executor failed to pull the assets from the flames of the 2008 financial meltdown and, insult to injury, that executor was then entitled to a fee of another $25,000. Needless to say, she wasn’t happy. Whether or not the executor was to blame may be debatable (since it was the beginning of the recession, after all) but there are other wrinkles to the story. For example, Stephanie hadn’t met the executor of the estate until after her relative passed away and so only knew him as a somewhat disinterested party. Further, she was surprised by the executor’s fees even and even felt them to be excessive. In this case, the beneficiary was, at best surprised (and at worst, victimized) by a situation she did not understand. Her case offers an example of a kind of disconnect that can all-too-easily arise between executor, estate, and beneficiary. Reuter’s offers three general principles to bear in mind: Know the estate. Choosing the right executor has a lot to do with the nature of your estate. Is it complex or simple? Are there a lot of moving parts and assets that may be at risk? A family member can likely carry out a simple estate but a professional might be necessary for those more difficult ones. Know the person. Just because someone is a “good person,” this does not mean they should be doing business for you. You need to know that they are well-intentioned and interested in carrying out the tasks, but above and beyond that you must also know that they have the proper skills and business mindset to carry out your plans and take care of your assets in your absence. Let your family know - communicate. It’s a difficult conversation to have but it’s important to relate your plans directly so that your family knows your decisions. Further, you’ll want to be sure they are aware of the cost of the executor so it isn’t the surprise it was in Stephanie’s case (in fact, you yourself may want to be sure you are aware of the costs, too). You can learn more about Probate and Estate Administration on the Probate Practice Center on our website. While you’re there, be sure to sign up for our free monthly e-newsletter to stay informed about issues affecting you, your family and your estate. Reference: Reuters (June 16, 2011) “Help! Our executor cost us $129,000”