Category: Executor

When and How to get Letters of Testamentary

When and How to get Letters of Testamentary

The executor manages assets until the probate process is complete. They also need proof of their authority to do so. The court-issued Letter of Testamentary provides evidence of their authority and explains a recent article from Forbes, What Is A Letter Of Testamentary?” The article details how this document works and when and how to get Letters of Testamentary.

A decedent’s last will and testament names their executor, who will manage their estate. Their duties include filing probate paperwork with the court, notifying potential heirs and creditors of the probate process and managing assets, including paying bills from the estate’s bank account. The executor is also the one to set up the estate’s bank account. When the estate is nearly completed, assets are distributed to beneficiaries.

Third parties need to know who the executor is. The executor also needs proof of their authority to carry out their job tasks. The letter is a simple document issued by the probate court and typically includes the following information:

  • The court issuing the letter.
  • The name and contact details of the executor (also referred to as a “personal representative” of the estate).
  • That the personal representative was named in the will of the decedent
  • The date the executor was granted authority to manage the decedent’s estate.

What is the difference between a Letter of Testamentary and a Letter of Administration? A letter of administration can be used during the probate process. However, it serves a different process. The court uses the letter of administration if a person dies without having named a personal representative or executor. The court appoints a person to manage the estate and probate process, and the court then creates a Letter of Administration giving this individual the authority to act.

There is no guarantee or requirement for the court to appoint a family member to serve in this role. This is another reason why having a will that names an executor is essential if the family wishes to be involved in settling the estate.

What if there is no will? Without a will, there is no executor. Someone is still needed to manage the decedent’s assets and take care of the steps in probate. A surviving family member or loved one may open a probate case after death, even when there is no will. This involves filing court documents and attending a hearing. The court will then appoint an administrator, determining who has the desire and ability to serve in the role.

What about assets held in trust? If assets have been placed in a trust, a trustee has been named and is in charge of following the trust’s directions. There is no probate court involvement, which is why so many opt to place their assets in a trust as part of their estate plan. The trust becomes the legal owner of the assets once they are placed in the trust. The trust creator often acts as the trustee during their lifetime and names a successor trustee who takes over in case of incapacity or death. That person has the authority to manage the trust assets and transfer them through the trust administration process without any involvement from the court.

However, if assets were not placed in the trust, they must go through the probate process, and an executor or personal representative will need a letter to manage them.

If you have lost a loved one, or are choosing an executor, ensure you have a complete understanding of when and how to get letters of testamentary. Work with an experienced estate planning attorney familiar with your state’s laws and the court process of probate. If you are interested in learning more about probate, please visit our previous posts.

Reference: Forbes (Jan. 17, 2024) “What Is A Letter Of Testamentary?”

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A QPRT is a unique financial tool

A QPRT is a unique financial tool

A Qualified Personal Residence Trust (QPRT) is a unique financial tool used in estate planning to reduce the potential estate tax liability by transferring a principal residence or vacation home into a trust. As an irrevocable type of trust, a QPRT allows the grantor to remain in the home for a predetermined term of years, making it a strategic choice for those looking to manage their estate tax effectively. Learn more about QPRTs.

In the realm of estate planning, QPRTs serve a dual purpose. They provide a mechanism to transfer a residence at a reduced tax cost, while ensuring that the property remains part of the family legacy. This is particularly advantageous in the context of rising real estate values and the corresponding increase in estate tax liabilities.

The structure of a Qualified Personal Residence Trust is centered around its ability to freeze the value of the residence at the time of the transfer to the trust. When a residence is transferred into a QPRT, its value for gift tax purposes is determined at that time. This is beneficial if the property appreciates in value over the trust term, since the appreciation occurs outside the grantor’s taxable estate.

Furthermore, the trust term is a critical component of a QPRT. It is during this period that the grantor retains the right to live in the home. The length of the trust term can significantly impact the tax benefits of the QPRT, making it essential to choose a term that aligns with the grantor’s estate planning objectives. American Bar Association’s insights on estate planning.

One of the primary benefits of using a QPRT in estate planning is the potential for significant estate tax savings. Transferring a residence into a QPRT removes the property from the grantor’s taxable estate, potentially leading to lower estate taxes upon the grantor’s death.

In addition to estate tax advantages, a QPRT also offers protection for the principal residence. This ensures that the residence can be passed down to beneficiaries, typically the grantor’s children, at a reduced tax cost. It’s a strategic way to preserve a valuable family asset for future generations, while minimizing the estate tax burden.

Creating a Qualified Personal Residence Trust involves a few key steps. The first step is to determine the value of the residence, which will be based on its fair market value at the time of the transfer. This valuation is crucial for calculating the gift tax implications of the transfer.

Choosing the right trust term for your QPRT is equally important. The term should be long enough to offer substantial tax benefits but not so long that the grantor is unlikely to outlive it. If the grantor does not outlive the trust term, the residence reverts back to the estate, negating the tax benefits. Guidance from the National Association of Estate Planners & Councils.

When using a QPRT for your primary residence, it’s important to understand the rules surrounding occupancy. During the trust term, the grantor has the right to live in the home. This right is crucial, as it allows the grantor to continue enjoying their home while reaping the trust’s benefits.

Transferring your primary residence to a QPRT can be a smart estate planning move. It allows you to reduce your taxable estate, while maintaining your lifestyle. However, it’s essential to comply with all the trust requirements to ensure that the tax benefits are realized.

A QPRT can also be used effectively for a secondary or vacation home. The same principles apply: the home is transferred into the trust, potentially reducing estate taxes while allowing continued use of the property during the trust term.

However, there are some specific considerations when using a QPRT for a vacation home. Since these properties are often not the primary residence, it’s essential to understand how the trust will affect your use of the property and any potential rental income.

Understanding the tax implications of a QPRT is crucial. For estate tax purposes, the transfer of the residence to the QPRT is treated as a gift, but the grantor’s retained interest reduces the value of the gift in the property. This can lead to significant gift tax savings.

Income tax considerations are also important. The grantor of a QPRT typically continues to pay the property taxes and can deduct these payments on their personal income tax return. This arrangement can be beneficial from an income tax perspective.

What happens at the end of the QPRT term is a critical aspect of the trust. If the grantor outlives the term, the property is transferred to the beneficiaries, typically without additional estate or gift taxes. This is the ideal scenario, since it maximizes the tax benefits of the QPRT.

If the grantor wishes to continue living in the home after the trust term expires, they can lease it from the trust beneficiaries. This arrangement allows the grantor to remain in the home, while ensuring the property remains outside their taxable estate.

At the end of the QPRT term, there may be opportunities to further estate planning objectives by transitioning the property to another trust. This could involve creating a new trust that continues to hold the property for the benefit of family members, providing ongoing estate planning advantages.

This transition is a strategic move that can ensure the continued protection of the property and further estate tax savings. However, it requires careful planning and adherence to tax laws and regulations.

In conclusion, a QPRT is a unique financial tool to minimize estate taxes while protecting your primary or secondary residence. A QPRT can be a powerful tool in your estate planning arsenal by carefully selecting the trust term and understanding the tax implications.

If you’re considering a QPRT as part of your estate plan or have questions about how this type of trust could benefit you, contact our law firm today. Our experienced estate planning attorneys are here to guide you through every step of the process, ensuring that your estate plan is tailored to your unique needs and goals. If you would like to learn more about different types of trusts, please visit our previous posts. 

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Credit Card Debt must be Paid after Death

When you consider the average credit card balance in 2023 was $6,365, chances are many Americans will leave an unpaid credit card balance if they die suddenly. Credit card debt must be paid after death. A recent article from yahoo! finance asks and answers the question, “What happens to credit card debt when you die?”

Many people think death leads to debt forgiveness. However, this isn’t the case. Some forms of debt, like federal student loans, may be discharged if the borrower dies. However, this is the exception and not the rule.

Credit card debt doesn’t evaporate when the cardholder goes away. It generally must be paid by the estate, which means the amount of debt will reduce your loved one’s inheritance. In some cases, credit card debt might mean they don’t receive an inheritance at all.

Outstanding credit card debt is paid by your estate, which means your individual assets owned at the time of death, including real estate, bank accounts, or any other valuables acquired during your life.

Upon death, your will is submitted to the court for probate, the legal process of reviewing the transfer of assets. It ensures that all debts and taxes are paid before issuing the remaining assets to your designated heirs.

If you have a will, you likely have an executor—the person you named responsible for carrying out your wishes. They are responsible for settling any outstanding debts of the estate. If there’s no will, the court will appoint an administrator or a personal representative to manage the assets.

In most cases, your heirs won’t have to pay off your credit card debt with their own funds. However, you may be surprised to learn there are exceptions:

  • Married people living in community property states. In a community property state, the deceased spouse is responsible for repaying credit card debt incurred by their spouse. In 2023, those states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
  • Credit cards with joint owners. If you had a joint credit card shared with a partner or relative, the surviving joint owner is responsible for the full outstanding balance. Only joint users are responsible for repaying credit card debt. If your partner was an authorized user and not an owner, they aren’t legally responsible for the debt.

Debt collectors may try to collect from family members, even though the family members are not responsible for paying credit card debts. The debt collector may not state or imply that the family member is personally responsible for the debt, unless they are the spouse in a community property state or a joint account owner.

If a debt collector claims you personally owe money, request a debt validation letter showing your legal responsibility for the debt. Otherwise, you have no legal obligation to pay for it yourself.

When someone dies, their estate is responsible for paying debts, including credit card debt. However, debt is repaid in a certain order. In general, unsecured debt like credit card balances are the lowest priority and paid last.

Some accounts are exempt from debt payment:

  • Money in a 401(k) or IRA with a designated beneficiary goes directly to the beneficiary and is exempt from any debt repayment.
  • Life insurance death benefits go directly to the named beneficiary and go directly to the beneficiaries.

If a loved one has died and they had credit cards, stop using any of their cards, even if you are an authorized user or joint owner. Review the deceased’s credit report to learn what accounts are open in their name and the balance on each account. Notify credit card issuers and alert credit bureaus—Equifax, Experian, and TransUnion. You may need to submit a written notification, a copy of the death certificate and proof of your being an authorized person to act on behalf of the estate.

The bottom line is this: credit card debt must be paid at your death. Talk with an estate planning attorney to find out how your state’s laws treat the outstanding debt of a deceased person, as these laws vary by state. If you would like to learn more about managing debt as an executor of an estate, please visit our previous posts. 

Reference: yahoo! finance (Nov. 9, 2023) “What happens to credit card debt when you die?”

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How Does an Inheritance Trust Work?

How Does an Inheritance Trust Work?

How does an inheritance trust work? Don’t let the term “inheritance trust” intimidate you. It’s basically a way to safeguard assets, while managing their distribution efficiently. Trusts are also used to provide potential tax benefits, which can add significantly to a family’s financial security, according to a recent article from yahoo! finance, “How to Keep Money in the Family With an Inheritance Trust.” An estate planning attorney can guide you in establishing an inheritance trust, securing assets and protecting your family’s financial health. An inheritance or a family or testamentary trust is a legal arrangement to manage and protect assets for the benefit of heirs or beneficiaries after the grantor’s passing. Its key function is to ensure an efficient and controlled distribution of assets. These can be financial, real estate, or personal property of value.

Many types of trusts offer different levels of control, tax benefits and asset protection. For instance, a revocable trust lets the person who set up the trust or the trustee maintain control over the assets while living and make changes as they want to the terms of the trust.

In an irrevocable trust, the terms can’t be changed easily, which offers greater protection against creditors or legal disputes.

There’s also something called a “Generation Skipping Trust,” designed to transfer wealth directly to outright beneficiaries, typically grandchildren, to avoid repeated estate taxes on a family’s assets.

The inheritance trust provides a strong shield of protection for assets. By placing assets in a trust, they are safeguarded from creditors, lawsuits and even certain tax liabilities. This layer of protection ensures that assets go directly to beneficiaries without the risk of erosion by unexpected challenges.

Another reason for a trust—control of the distribution of assets. You establish the specific conditions and timelines for when and how assets are to be passed on to heirs. You may want to wait until they have reached a certain age, protect against reckless spending, or have the trust used solely for the long-term care of a loved one.

Inheritance trusts are also used to minimize estate taxes. Working with an experienced estate planning attorney, you can plan for assets within the trust to potentially reduce the tax burden on your estate, allowing heirs to inherit more of the family’s earned wealth.

Trusts provide privacy. Unlike wills, trusts don’t become public documents. Trusts bypass the probate process, which can become a protracted and expensive public court proceeding. By placing assets in trust, the transfer of wealth is prompt and confidential.

For blended families or those with complex dynamics, inheritance trusts can help prevent disputes and ensure that assets are distributed according to your specific directions. For instance, if you want to leave assets to your children but protect them from their spouses in case of divorce, a trust can be created to address this issue. You might also wish your wealth to be distributed directly to grandchildren, not a son or daughter-in-law.

Start by working with an experienced estate planning attorney to create a comprehensive estate plan. He or she will help you understand how a inheritance trust works. This includes drafting a will, establishing trusts and assigning beneficiaries. Communicate with heirs, so they understand your intentions and expectations. Regularly review and update your plan every three to five years to be sure that it remains current and aligned with your goals. If you would like to learn more about various types of trusts, please visit our previous posts.

Reference: yahoo! finance (Oct. 3, 2023) “How to Keep Money in the Family With an Inheritance Trust”

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Strategies to minimize Taxes on Trusts

Strategies to minimize Taxes on Trusts

Dealing with trusts and the tax implications for those who create them, and their beneficiaries can seem confusing. Nevertheless, with the help of an experienced estate planning attorney, those issues can be managed, according to a recent article, “5 Taxes You Might Owe If You Have a Trust,” from Yahoo! Finance. There are strategies to minimize taxes on trusts.

Trusts are legal entities used for various estate planning and financial purposes. There are three key roles: the grantor, or the person establishing the trust; the trustee, who manages the trust assets; and the beneficiary, the person or persons who receive assets from the trust.

Trusts work by transferring ownership of assets from the grantor to the trust. By separating the legal ownership, specific instructions in the trust documents can be created regarding using and distributing the assets. The trustee’s job is to manage and administer the trust according to the grantor’s wishes, as written in the trust document.

Trusts offer control, privacy, and tax benefits, so they are widely used in estate planning.

There are two primary types of trusts: revocable and irrevocable. Revocable trusts are adjustable trusts that allow the grantor to make changes or even cancel during their lifetime. They avoid the probate process, which can be time-consuming and expensive, especially if assets are owned in different states. However, the revocable trust doesn’t offer as many tax benefits as the irrevocable trust.

Think of irrevocable trusts as a “locked box.” Once assets are placed in the trust, the trust can’t be changed or ended without the beneficiary’s consent. In some states, irrevocable trusts can be “decanted” or moved into another irrevocable trust, requiring the help of an experienced estate planning attorney. However, irrevocable trusts are not treated as part of the grantor’s taxable estate, making them an ideal strategy for reducing tax liabilities and shielding assets from creditors.

Trust distributions are the assets or income passed from the trust to beneficiaries. They can be in the form of cash, stocks, real estate, or other assets. For instance, if a trust owns a rental property, the monthly rental property generated by the property could be distributed to the trust’s beneficiaries.

Do beneficiaries pay taxes on distributions from the principal of the trust? Not generally. If you receive a distribution from the trust principal, it is not usually considered taxable. However, the trust itself may owe taxes on any income it generates, including interest, dividends, or rental income. The trust typically pays these before distributions are made to beneficiaries.

It gets a little complicated when beneficiaries receive distributions of trust income. In many cases, the income is taxable to the beneficiaries at their own individual tax rates. This can create a sizable tax wallop if you are in your peak earnings years.

There are strategies to minimize taxes on your trust. One approach is to structure trust distribution with a Charitable Remainder Trust, where income goes to a charity for a set number of years, and the remaining assets are then distributed to beneficiaries. An estate planning attorney will be a valuable resource, so grantors can achieve their goals and beneficiaries aren’t subject to overly burdensome taxes. If you would like to learn more about tax planning, please visit our previous posts. 

Reference: Yahoo! Finance (Sep. 27, 2023) “5 Taxes You Might Owe If You Have a Trust”

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Where Should You Store Your Will?

Where Should You Store Your Will?

When you fail to plan for your demise, your heirs may end up fighting. With Aretha Franklin, three of her sons were battling in court over handwritten wills. The Queen of Soul, who died in 2018, had a few wills: one was dated and signed in 2010, which was found in a locked cabinet. Another, signed in 2014, was discovered in a spiral notebook under the cushions of a couch in her suburban Detroit home. This begs the question: Where should you store your will and other estate planning documents?

The Herald-Ledger’s recent article, “Aretha Franklin’s will was in her couch. Here’s where to keep yours,” says that a jury recently decided the couch-kept will is valid. However, Aretha didn’t clarify her final wishes. Her handwritten wills had notations that were hard to decipher, and she didn’t properly store the will she may have wanted to be executed upon her death.

The Herald-Ledger’s article gives some options for storing your will. First, don’t store your will in the couch.

You should keep your will where it is secure but easily located. Here are some options:

  • Safe-deposit box: The downside is that the box might be initially inaccessible when you die. If your will is in the box, that’s an issue. The executor may need a copy of the will to access the box. If so, and a court order is required, it could take some time before the executor can get the will from the safe deposit box. If you do this, include your executor or the person designated to handle your estate on the safe deposit box contract.
  • At home: Keep a copy of your will in a fireproof and waterproof safe, but make sure there’s a duplicate key, or you give the combination code to your executor or some other trusted person.
  • With an attorney: You could have a spare set of original documents and leave one with your attorney. But be sure your family knows the attorney’s name with the will.
  • Local court: Check with the local probate court about storing your will and tell someone that you’ve placed your will in the care of the court. For instance, in Maryland, you can keep your original last will and testament with an office called the Register of Wills. The will can then be released only to you or to a person you authorize in writing to retrieve it.
  • Electronic storage: You could store it online to keep your will safe. However, most states don’t yet recognize electronic wills. As a result, you’ll need to have the originally signed copy of your will even if you store a digital copy.

Speak with an estate planning attorney about where you should store your will. He or she may suggest an option you and your family had not considered. All options to store your will have pros and cons. Whatever you do, tell the person designated to handle your estate where to find your will. If you would like to learn more about storing and handling your estate planning documents, please visit our previous posts. 

Reference: The Herald-Ledger (July 19, 2023) “Aretha Franklin’s will was in her couch. Here’s where to keep yours.”

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'Pour-Over' Will is vital to a Revocable Trust

‘Pour-Over’ Will is vital to a Revocable Trust

A revocable living trust gives a married couple or individual the power to direct what should happen after they die to assets and possessions placed within a Revocable Trust. The trust also indicates who should be in charge of carrying out these instructions without the involvement of a probate court judge, explains a recent article, “How does a Pour-Over Will work?” from Coeur d’Alene/Post Falls Press. A ‘Pour-Over’ Will is vital to a Revocable Trust.

A Last Will and Testament, referred to as a “will,” is the traditional document that leaves instructions about what you want to happen to your assets when you die and includes the name of your executor, the person you want to carry out your wishes. If you have a will, do you still need a trust? Probably.

A Revocable Living Trust will only concern the specific assets and possessions you’ve placed into the trust. This is known as “funding the trust.” When the trust is first established, your estate planning attorney will help you with the steps needed to ensure that assets are retitled so they are owned not by you but by the trust.

As time passes, if you acquire new assets or possessions, you might forget to have them placed in the trust. This is a common oversight and can have major implications for the success of your overall estate plan.

If you die and there are assets outside of the trust, they will likely need to go through the court-controlled probate process. You were trying to avoid this in the first place by establishing a trust.

If you don’t have a will, these assets will be distributed according to state law instead of your wishes.

There is a solution—the Pour-Over Will.

A Pour-Over Will is a little different than a traditional will. It includes specific instructions to place any assets not placed inside your trust into the trust as soon as possible. This type of will still has to go through probate, but probate will only apply to assets left out of the trust and can typically be probated less formally.

A ‘Pour-Over’ Will is vital to a Revocable Trust. While the goal in using a Revocable Trust is to avoid probate completely, the Pour-Over Will is an important “just in case” document to have if you have Trusts.

Parents of minor children have yet another reason to have a Pour-Over Will, even when there is a Revocable Living Trust. A will is used to name the person or people you want to serve as guardians for your minor children, if both parents are deceased. Leaving this decision to be made by the court rather than by you is something to be avoided at all costs. If you would like to learn more about revocable living trusts, please visit our previous posts. 

Reference: Coeur d’Alene/Post Falls Press (Sep. 10, 2023) “How does a Pour-Over Will work?”

 

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Add your Pet to your Estate Plan

Add your Pet to your Estate Plan

Pets are like family. In fact, some are even cared for better than family. You want to do what you can to ensure our pet is happy and healthy after you are gone. There are a few ways you can add your pet to your estate plan. The first rule is that you can’t leave money to your pet. Unfortunately, the law says that animals are property, and one piece of property can’t own another. Yahoo’s recent article, “3 Ways to Ensure Your Pet Is Cared For After You Die,” explains that a pet trust is a trust that provides money and care for your pets when you can no longer do so.  People usually create a pet trust as part of their estate planning. However, in some cases, it can be helpful if you’re incapacitated or unable to care for your pet.

Like all trusts, a pet trust is a legal entity that owns property, money and other assets. You fund the trust by contributing assets to it during your lifetime and leaving assets to the trust in your will. Your pet is the beneficiary of this trust. Once the trust is activated, a trustee will use its funds to pay for your pet’s food, housing and other care. In most cases, this means someone has taken possession of your pet, and the trust reimburses their costs.

If you want to ensure that your pet is well cared for after you die, most experienced estate planning attorneys consider a pet trust better than a will. Pet trusts are more specific than leaving your pet and some money to an heir. A trustee must be sure this money really is spent on your pet’s well-being. They can also find a new home for your pet, if your heir changes their mind and chooses not to inherit the animal.

A pet trust does two main things. First, it provides the resources to care for your pets and other animals once you no longer can. Second, it provides the instructions to make sure those pets are cared for the right way.

Funding a pet trust can be an issue for some, and if you leave too little money in the trust, it will run out during your pet’s lifetime. If that happens, the trust will wind up, and state law will govern what happens to your pet. If you leave too much money, your family may challenge the trust. While that’s pretty rare, courts will reduce excessive funds left to a pet trust.

Don’t just assume that someone will assume the role of trustee. And don’t assume that someone will want to take possession of your pet. Ask the people you intend to name for those positions. If someone you trust wants to take your pet after you die, you can name them as both caretaker and trustee. Otherwise, you may want to name a professional trustee, such as a lawyer or banker, to oversee the trust. If you do name a professional trustee, make sure to contribute enough money to cover their costs, as they will bill the trust for their time.

If your pet has any specific needs, detail these in the trust. However, be careful not to get too specific, or people may disregard your instructions, creating issues. Speak with your estate planning attorney about the best ways for you to add your pet to your estate plan. If you would like to read more about pet planning, please visit our previous posts. 

Reference:  Yahoo (Aug. 21, 2022) “3 Ways to Ensure Your Pet Is Cared For After You Die”

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Carefully Consider naming Contingent Beneficiaries

Carefully Consider naming Contingent Beneficiaries

If you’ve been married or in a longstanding relationship, it’s almost certain your initial beneficiary will be your spouse or partner. If you have children, it’s likely an easy decision to make them contingent or successor beneficiaries to your estate. More often than not, children inherit equally, explains the article “PLANNING AHEAD: The problems we have naming contingent beneficiaries” from The Mercury. Carefully consider naming contingent beneficiaries when designing your estate plan.

To avoid conflict, parents often decide to name children equally, even if they’d prefer a greater share to go to one child over another, usually because of a greater need. This is, of course, a matter of individual preference.

However, as you move down the line in naming a successor or contingent beneficiaries, you may encounter some unexpected stumbling blocks.

If there is a beneficiary who is disabled, whether a child, grandchild or more distant relative, or even a spouse, you have to determine if naming them is a good idea. If the disabled individual is receiving Medicaid or other government assistance, an inheritance could cause this person to become ineligible for local, state, or federal government benefits. An estate planning attorney with knowledge of special needs planning will help you understand how to help your loved one without risking their benefits.

A Supplemental Needs Trust may be in order, or a Special Needs Trust. If the person’s only benefit is Social Security Disability—different from Supplemental Security Income or some others—they may be free to inherit without a trust and will not impact benefits. Social Security Disability recipients cannot work in “substantial gainful employment.”

Another issue in naming successor and contingent beneficiaries is the choice of a trustee or manager to handle funds if a beneficiary cannot receive benefits directly. A grandparent will sometimes be reluctant to name a son-in-law or a daughter-in-law as trustees for minors if their daughter or son predeceases and the inheritance is intended for a minor or disabled grandchildren. The grandparents may be concerned about how the funds will be used or how well or poorly the person has handled financial matters in the past.

The same concern may be at issue for a child. A trust can be structured with specific parameters for a grandchild regarding the use of funds. If a supplemental needs trust is established, the trustee must understand clearly what they can and cannot do.

What happens if you’ve run out of beneficiaries? For those with small families or who live into their 90s, many family members and friends have passed before them. These seniors may be more vulnerable to scams or new “friends” whose genuine interest is in their assets. In these cases, an estate plan prepared by an experienced estate planning attorney will need to consider this when mapping out the distribution of their estate, however large or small, to follow their wishes. Carefully consider naming contingent beneficiaries when designing your estate plan. If you would like to learn more about beneficiaries, please visit our previous posts.

Reference: The Mercury (Aug. 28, 2023) “PLANNING AHEAD: The problems we have naming contingent beneficiaries”

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Choosing an Executor can be a Difficult Decision

Choosing an Executor can be a Difficult Decision

Choosing an executor can be a difficult decision. Planning for death-related events isn’t as much fun as planning a weekend getaway. Therefore, you’d be forgiven for procrastinating. However, that doesn’t mean you can put off naming an executor forever, says a recent article from AARP, “7 Things to Know About Appointing an Executor.”

Your executor needs to possess the stamina, patience, and persistence to complete the tasks of this role. If they don’t, having your estate administered may become difficult or impossible. Serving as an executor can be harder than people think. Problems begin when someone names a family member just because they are family—which is not the best reason.

It’s best to name someone rather than no one, advises the article. You can always change the executor if they decide they don’t want the responsibility or die before you. If you don’t name anyone, the court will decide for you, It may not be someone you know or the last person you want to handle your estate.

Things can get even more complicated if you don’t leave clear instructions, including where to find your important documents, the keys to your home and car and usernames and passwords to various digital assets. Instead of making everything harder for the ones you love, it’s best to make it easier.

There are seven main tasks for the executor to complete. The first is planning the funeral. You can make that easier by expressing your wishes to your executor and leaving the information in documents. Don’t add it to your will—the executor may not see the will until long after you’ve been buried or cremated.

The executor must obtain a death certificate, find the will and retain an estate planning attorney. The death certificate is issued by your county of residence and is signed by the physician who verified your death. If you’ve had a valid will prepared, your property will be distributed according to the terms of the will. Assets in trusts or accounts with beneficiary designations will go directly to your heirs. Everyone should review their beneficiary designations regularly and update as needed. The beneficiary designations surpass any wishes in the will.

Notify the probate court. Your executor or attorney will need to petition the probate court in the area where you live. They’ll complete a form to obtain a Letter of Administration or Letters Testamentary. These are used to prove that they are the court-approved executor.

Inform all interested parties. Deaths must be reported to employers, Social Security, friends, and family members. Anyone who might have an “interest” in the estate needs to be notified. In some jurisdictions, this requires publishing a death notice in the local paper several times shortly after the person has passed. Banks and other financial institutions also need to be notified.

Pay all debts and file taxes. If applicable, the executor must settle all obligations with creditors and file income, inheritance, or estate taxes.

Create an inventory of assets and plan for distribution. This includes probate and non-probate assets. This includes assets that are jointly owned or held in trust. Next, the executor determines what is sold, kept, donated, or discarded.

Distribute assets among beneficiaries. This occurs only after any estate liabilities, including taxes and paying creditors, are settled.

Complete the final accounting and all required forms. Your executor must dissolve existing accounts and ensure that the court has everything needed to settle your estate.

Your will helps your loved ones navigate the process of settling your estate. Include clear instructions in a letter of intent, so they know what accounts they must deal with. Above all, make sure that the person you name to serve as executor can handle the tasks and the family dynamics accompanying grief.

Choosing an executor can be a difficult decision to make. Consult with your estate planning attorney. He or she will have the experience and expertise to help you make an important decision. If you would like to learn more about the role of the executor, please visit our previous posts. 

Reference: AARP (Aug. 8, 2023) “7 Things to Know About Appointing an Executor”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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