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Executor

Who Should be Your Successor Trustee?

If you have a revocable living trust, you probably named yourself as trustee so you can continue to manage your own financial affairs, but eventually, someone will need to step in for you when you are no longer able to act due to incapacity or after your death.  Your successor trustee plays an important role in the effective execution of your estate plan.

The Key Takeaways:

  • Because successor trustees have a lot of responsibility, they should be chosen carefully.
  • Successor trustees can be your adult children, other relatives, a trusted friend, or a corporate or professional trustee.

Responsibilities of A Successor Trustee

At Incapacity: If you become incapacitated, your successor will step in and take full control of your trust for you – making financial decisions involving trust assets, even selling or refinancing assets, and other tasks related to your trust’s assets.  Since your trustee can only manage assets that the trust owns, it’s vitally important that you fully fund your trust.  Your successor may also be involved in paying bills and helping to ensure you get the care you need.

After Death: After you die, your successor acts similar to an executor of an estate.  The successor takes an inventory of your assets, pays your final bills, sells assets if necessary, has your final tax returns prepared, and distributes your assets according to the instructions in your trust.  Like incapacity, the successor trustee is limited to managing assets that are owned by the trust, so fully funding your trust is vitally important.

Your successor trustee typically acts without court supervision, which is why your affairs can be handled privately and efficiently – and probably one of the reasons you have a living trust in the first place.  But this also means it will be up to your successor to get things started and keep them moving along.

An Important Consideration

Your successor will be able to do anything you could with your trust assets, as long as it does not conflict with the instructions in your trust document and does not breach fiduciary duty.

It isn’t necessary for the successor trustee to know exactly what to do and when, because your attorney, CPA, and other advisors can help guide him or her, but it is important that you name someone who is responsible and conscientious.

Who Can Be Successor Trustees

Successor trustees can be your adult children, other relatives, a trusted friend or a professional or corporate trustee (bank trust department or trust company).  If you choose an individual, you should name more than one in case your first choice is unable or unwilling to act.

What You Need to Know:

Your successor trustee should be someone you know and trust, someone whose judgment you respect and who will also respect your wishes.

When choosing a successor, keep in mind the type and amount of assets in your trust and the complexity of the provisions in your trust document.  For example, if you plan to keep assets in your trust after you die for your beneficiaries, your successor would have more responsibilities for a longer period of time than if your assets will be distributed all at once.

  • Consider the qualifications of your candidates, including personalities, financial or business experience, and time available due to their own family or career demands.  Taking over as trustee for someone can take a substantial amount of time and requires a certain amount of business sense.
  • Be sure to ask the people you are considering if they would want this responsibility.  Don’t put them on the spot and just assume they want to do this.
  • Trustees should be paid for their work; your trust document should provide for fair and reasonable compensation.

Rest assured, we can help you select, educate, and advise your successor trustees.  You are not alone.  If you have any questions or concerns, please feel free to schedule an appointment with us.

How to Pick a Trustee, Executor, and Agent Under a Power of Attorney

While the term fiduciary is a legal term with a rich history, it very generally means someone who is legally obligated to act in another person’s best interests.  Trustees, executors, and agents are all examples of fiduciaries.  When you pick trustees, executors, and agents in your estate plan, you’re picking one or more people to make decisions in your and your beneficiaries’ best interests and in accordance with the instructions you leave.  Luckily, understanding the basics of what each of these terms means and what to consider when making your choices can make your estate plan work far better.

Trustee

A revocable living trust is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals.  In many revocable living trusts, you will serve as the initial trustee and will continue to manage the trust assets as you had in the past.  Your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or during your incapacity.  Like each of the following individuals involved in your estate planning, it’s best to have a trusted person or financial institution carry out this vitally important role.

It’s important to make the language in your trust as clear as possible so that your trustee knows exactly how to handle various situations that can arise is asset distribution.  Lastly, your trustee will only control the assets contained within the trust — not the rest of your estate, the reason why completely funding your living trust is crucial.

Powers of Attorney

Your power of attorney is the document in your estate plan that appoints individuals to make decisions on your behalf if you become unable to do so yourself.  There are a few different types of powers of attorney, each with their own specific provisions.  There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals.  Here are two common types to cover in your estate plan:

Financial Powers of Attorney

Financial powers of attorney grant individuals the ability to take financial actions on your behalf such as purchasing life insurance or withdrawing money from your accounts to cover your expenses.  A person who acts under the authority given in a power of attorney is generally called an agent.  Regarding financial decisions, an institution like a trust company, can also be named.  Keep in mind that trust companies will charge a fee for this service.

Health Care Powers of Attorney

Health care powers of attorney cover a wide range of specific actions that can be taken regarding an individual’s medical needs such as making decisions about the types of care you receive or who will be providing the care.

Executor

Your executor is the person who will see your assets through probate, if necessary, and carry out your wishes based on your last will and testament.  Depending on your preferences, this may be the same person or institution as your trustee.  You might also see this position designated as personal representative, but it means the same thing.

Some individuals chose to go with a paid executor.  This is usually someone who doesn’t stand to gain anything from your will, and is often the best choice if your estate is large and will be divided among many beneficiaries.  Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on your family or friends.

Being an executor can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job.  They will probably need to hire a CPA to help sort out your taxes and a lawyer to assist in the process.  Of course, if there’s a dispute, attorneys, appraisers, mediators, or other professionals will undoubtedly need to be involved.  Choosing a spouse or someone else intimately involved in your life can be convenient because they may already be familiar with your assets and have an easier time making sure your wishes are carried out.  However, because of the time involved and the nature of some assets, they may not be up to the task at the time.

Get in touch with us today

Let us help you make the process of picking your trustee, powers of attorney, and executor as smooth and headache-free as possible.  Once you have these choices in place, you’ll be able to rest easy knowing that your estate plan is in good hands no matter what life brings.  Call or contact us to make an appointment today.

One Call You Must Make After You Buy a Home (That You’ve Probably Forgotten)

During the home buying process, you worked with a lot of individuals: your realtor, the seller’s realtor, the title company, the loan officer, and the home inspector.  Now that you have finalized the purchase of your house, there is one more expert you need to call: your estate planning attorney.

Aligning Your Ownership with Existing Estate Planning

First, your attorney can help you review the new documents associated with your home purchase in conjunction with your existing estate plan to ensure that everything aligns and works towards your overall estate planning objectives.  If your existing estate plans include a trust that owns all of your assets, it is crucial that your new home is titled in the name of the trust and not in your name individually (or jointly if married).

General Review/Update of Your Estate Plan

Since you have engaged in a new life-changing event, now is the perfect time to review your existing plan.  This is a great opportunity to make sure that the individuals you have appointed in the crucial roles of guardian, executor, agent, or trustee are still able to carry out those duties when the need arises.  With the passage of time, these individuals may have moved away, died, or otherwise undergone a life change themselves that makes them a less than a desirable candidate to act on your behalf.

While you are reviewing your estate plans, it is also important that you review the dispositive language.  Do you still want to have your assets divided the same way?  Have the needs of your beneficiaries changed over the years?  To ensure that you are protecting and providing for your beneficiaries, you need to make sure that the provisions are set up for the best-individualized protection.

Lastly, if the purchase of your new home is in a different state, you will definitely want to visit an estate planning attorney.  By changing states, the documents you previously have prepared may not adequately protect you and your family.  Each state has unique laws regarding trusts and estates, you will need to make sure that any documents you are currently relying on are enforceable in your new state.  Unenforceable or not-optimized documents can be just as bad as having no estate planning documents at all.

Give us a call.

Buying a new home is a great new adventure.  Give us a call so we can make sure that you are embarking on this new chapter in your life fully protected.

Contact us today.  We’re here to help.

The Biggest Threats to Successful Estate Planning

Poor estate planning is a recipe for disaster.  Look no further than Dickens’ Bleak House — or a telenovela — to witness the tragedy and melodrama inadequate estate planning can cause.  While having your estate planning documents prepared is the first hurdle to overcoming these types of disasters, there are several threats that lurk around the corner that might derail your wishes.

Family Conflict

According to a TF Wealth survey of over 100 estate planning professionals, family conflict is the number one risk to a peaceful inheritance.  If children are treated differently under the estate plan, there is often an assumption that a mistake was made in drafting the documents or that someone has exerted undue influence on the parent.  While this may not be the case, without any guidance from you, family members can begin to think the worst of each other.

Sloppy or No Estate Planning

If you have not done any estate planning or if what you have done is ineffective, your estate will be subject to your state’s intestate laws.  These laws predetermine who will inherit your assets and in what proportion.  While these statutory schemes might work for some people, they will have adverse consequences for those who have been married multiple times, have children from prior relationships, or children who need additional asset protection.  If you haven’t done any estate planning, you’re simply leaving your inheritance and your legacy in the hands of the government.

In order to ensure that your wishes are being carried out and safe from the ever present dangers, it is important that you know what a successful estate plan looks like.

No (or Little) Family Conflict

The goal here is for there to be no surprises.  If you are choosing to treat children or other family members differently, be open and honest about it.  It may be helpful to have a conversation about your wishes prior to your death so that those individuals understand why you have made those decisions.  Even if you choose to not have such a conversation, it’s important to discuss your plan and reasons with your attorney, so that the plan can be drafted to carry out your wishes.

Eliminate (or Minimize) Costs and Taxes

Watching inheritance get whittled away by taxes and fees will only lead to frustration and hard feelings.  When preparing your estate plan, your intent is to benefit your loved ones, not the government.  Working with a qualified estate planning attorney can help ensure that your assets are being handled in such a way that the administrative costs of your passing and any income or estate tax are minimized or avoided.

A Chosen Representative

It is possible that, later in life, you may not be able to handle all of your affairs yourself and may require some assistance from a loved one, whether it be with your finances or healthcare.  Look for someone you trust who understands you and your desires.  Don’t necessarily rely on someone just because they are the most convenient.  And, don’t rely on hope that everyone will know who you want to be in charge.  You must ensure that you’ve granted proper authority using a power of attorney, a trust, and a will.

Ensure that Everyone Gets What You Want

Your assets may be, or may in some way, represent your legacy.  Do some real soul-searching about how and what you want to share this with your family and friends.  To ensure that your legacy is passed on in a meaningful way, consider including an explanation as to why someone is receiving a particular inheritance.  If you have wishes as to how they use a gift of money, he or she may appreciate hearing the hopes and dreams you have for them and their future even though you are no longer with them.

Documents Are Up-to-Date

Life can change quickly.  It is important that you review your estate planning documents with each life change (i.e. birth or death of a family member, purchase or sale of a major asset, change in health, etc.).  It is also important that we stay in touch.  Contact us when these major life changes occur and we will contact you when there are changes in the law.  This will help ensure that your documents stay effective and your wishes are carried out.

So do the groundwork that a little planning requires.  And leave the melodrama for entertainment.  Call or contact us today.  We’re here to help.

Four Steps to Stop Mail Addressed to a Deceased Person

One of the first things you should do as a newly appointed executor of a deceased person’s probate estate or successor trustee of a deceased trustmaker’s trust is to ask the post office to forward the deceased person’s mail to your address.  Unfortunately, along with important pieces of mail – statements, bills, and refunds – many not-so-important pieces – catalogs, solicitations, and plain old junk mail – will end up in your mailbox.

On the other hand, you may have purchased a home from a deceased person’s estate or trust and have received some of their mail at your new address.

What can you do to stop the post office from delivering mail addressed to a deceased person?  Follow these four steps:

  1. If you are the executor of an estate that has been through probate court and the estate is officially closed, hand-deliver or send a copy of the probate order closing the estate and dismissing you as the executor to the deceased person’s local post office, and request that all mail service be stopped immediately.  If you don’t take this step and find that some mail continues to trickle through two or more years after the death, this is because the U.S. post office only honors forwarding orders for one year.  The only way to completely stop delivery is to request that all mail service be discontinued.
  2. To stop mail received as the result of commercial marketing lists (in other words, junk mail), log on to the Deceased Do Not Contact Registration page (https://www.ims-dm.com/cgi/ddnc.php) of the DMAchoice.org website and enter the deceased person’s information.  According to the website, “DMAchoice™ is an online tool developed by the Direct Marketing Association to help you manage your mail.  This site is part of a larger program designed to respond to consumers’ concerns over the amount of mail they receive, and it is the evolution of the DMA’s Mail Preference Service created in 1971.” After registering the deceased person on the website, the organization claims that the amount of mail received as the result of commercial marketing lists should decrease within three months.
  3. For magazines and other subscriptions and mail that is technically not “junk” mail (for example, solicitations from charities to which the deceased person made donations while they were living), contact the organization directly to inform them of the death.  Note that most publishers will issue a refund for any unused subscription.
  4. If you shared the mailing address with the deceased person or if you are the new owner of the deceased person’s home, write “Deceased, Return to Sender” on any mail addressed to the deceased person and leave it in your mailbox for pick up.

Remember it is a federal offense to open and read someone else’s mail, so if you’re not a legal representative of the deceased person, don’t open their mail!

Call or contact us today, we are here to help.