When you create an estate plan, you are selecting people whom you trust to perform various jobs for you and your beneficiaries. You may be selecting an agent to act as your Power of Attorney. You may select a medical decision-maker in case you become mentally incapacitated. You may have a Trust and select the Trustee who will manage the money for the beneficiaries. And you may be selecting an Executor who will handle your estate after you pass away
People often feel that being named as Executor is a big honor. Disputes have erupted within families when one child rather than another was named as Executor. Sometimes the person who was named as Executor wants the power and control that come along with the title of Executor, but ignores the responsibilities that come with it. Other times, the Executor has financial troubles of their own, starts “borrowing” funds from the estate, and just lets the estate lie around for years without paying the bills, paying the inheritance taxes or selling the property.
The Executor is a fiduciary — entrusted by law to handle “other people’s money” — and has duties to the funeral home, the tax authorities, the estate’s creditors, and ultimately, to the beneficiaries. Although an Executor is not obligated to reveal every step and every action to the beneficiaries, at some point, the beneficiaries will want to see an accounting so that they know that the amount of their distribution is correct. Reconstructing an accounting after several haphazard years of erratic management of estate assets can be a nightmare that leads to lawsuits brought by beneficiaries.
Managing an estate can be very time consuming. Dealing with third parties to obtain date-of-death values and payoff amounts for debts, tracking down missing assets, and selling real estate can turn into big chores. But the Executor has those duties and obligations.
Ideally, every Will has a list of successors written into it in case the Executor refuses to accept the appointment or decides to resign. But turning over an estate to a successor can create problems of its own, and a process must be initiated through the Surrogate or Court to be discharged as Executor.. Better to think carefully before stepping up to the plate and taking on the responsibility in the first place if you have any doubt of your ability to complete the task.
Call us for advice and assistance with estate administration, and ask about the fiduciary services we provide .. 732-382-6070
Do you have an emerging young adult in your family who is not under a guardianship? After their 18th birthday, you may want to consider having them meet with an attorney to discuss a durable power of attorney, health care proxy and a Will. People often say, “why do I need a Will?” or “isn’t estate planning for wealthy people?” The fact is that basic estate planning is designed to provide a convenient and protective structure that enables someone to take care of things for someone else. Once a child reaches 18, s/he is an adult in the eyes of the law and parents cannot be the substitute decision-makers without authority to do so.
Your young adult may be developing capabilities with respect to their own banking, understanding their health care issues or reading and understanding leases and other contracts. As a parent, you help them to grow and learn and to make decisions as they encounter new challenges. However, should there be a tragic event that causes incapacity, there are myriad decisions and transactions that have to be done, and this is where having that power of attorney and health care proxy can be really useful. I tell clients that it’s like a fire insurance policy — it may sit in the drawer for years, but you’ll be glad you have it if that dreadful event occurs.
For a young adult with special needs, an immediate and durable general power of attorney for financial and health issues can enable their chosen “agent” to step in and assist as needed. Your child may have an aptitude for certain tasks but be just mystified at others. They may do well with paperwork, but freeze up when it comes to making telephone calls to a third party such as an insurance company, a commercial vendor or a doctor’s office. They may do well with basic banking but find it difficult to understand their employer’s health plan. You need that power of attorney to be able to interact with third parties on their behalf and help cut through the red tape.
Finally, having a Will is a good idea for your child even if they have limited funds in their own name. The reason is that if your child passes away, there can be legal issues to pursue (such as lawsuits, or inheritances from some other estate that’s still open), and it is much simpler when there is a designated Executor under the Will than when family members have to first apply for Letters of Administration, get bonded, and so forth to be able to act on behalf of the estate. http://ucnj.org/government/surrogate/wills-estates-probate-2/
Careful planning can prevent a crisis. Call us about basic estate planning for young adults…. 732-38206070