Wills, Executors, and Personal Fiduciaries

In the two years I’ve been writing this blog, I’ve found that POGOs are very concerned about not unduly burdening adult children at the end. In Estate Planning: Do It For Your Kids and Why Not To Name Your Child As Executor, you’ll find lots of suggestions for steps you can take now to ensure a smooth disposition of your worldly goods when you’re gone.

 Estate Planning: Do It For Your Kids


  One of the most grown-up things you can do for your grown-up children is  to make a plan for your estate. You are modeling responsible adult behavior, you are providing a clear statement of your intentions at what will be a time of turmoil in their lives, and you are saving them money in settlement costs.
By and large Americans acknowledge that wills are a good idea, yet polls show that a whopping 64% percent of us will die without leaving one. Moreover, 72% of the wills that do exist are so out-of-date they no longer reflect current circumstances or wishes. Even more surprising, wealthy individuals are no more likely to have wills than the rest of the population.
The number one reason Americans say they don’t have a will is, “I just haven’t gotten around to it.” No wonder—who wants to think about death, especially your own? However, the consequences for you and your offspring are severe should you die without a will. Bear in mind that if you don’t have a plan, your state of residence has one for you. In some states your spouse will get everything, but in other states your children get half, and there are lots of variations in between. Moreover, in many states if you don’t leave a living trust:

  • Your estate goes to probate, which takes longer (7 months minimum in California) and is more expensive than if you had left the proper docs.

  • There is less likelihood your assets will be divided the way you want.

  • All the good you hoped to do by leaving money to the local hospital or your favorite niece will not happen.

According to Chris Jones, JD, who was a practicing wills and estate planning attorney for 45 years, “You have to write your will when you have the mental capacity to do so. Do it when you’re young and healthy and then update it every few years. You don’t need to be a multi-millionaire to leave a will; there are lots of reasons beside money to make your wishes known.”
If your children have children, Chris says it’s imperative for them to make out their wills, too. “It is especially critical for young parents to name guardians and set up trusts for minor beneficiaries,” he says. “If they don’t name a guardian, they’re leaving it up to the courts to name one for them. Even if your grown children don’t have two nickels to rub together, leaving a plan for custody is reason enough to make out a will.”
In a future post we’ll discuss who should get what, but the takeaway from this introductory article about wills is, “Just do it!”

 Why Not To Name Your Child As Executor


  In the past people automatically named an adult child, close friend or financial institution as executor of their estate. But today there’s another option: the private professional fiduciary. A relatively new phenomenon, the professional fiduciary takes the burden off loved ones at a difficult time and, frankly, does a better job of it.
Not for the faint-hearted—or the amateur—settling an estate often entails a myriad of tasks: identifying and collecting all of the estate’s assets, depositing those funds into the estate bank account; settling all debts; preparing and filing a final tax return; having real estate appraised and readied for sale; seeing that all other possessions are identified and valuated—the list goes on and on. Moreover, if a living trust has not been set up, the will must be probated through the courts. Needless to say, the job of executor can be overwhelming.
It can also take a long time. The executor might have to deal with the IRS, DMV, County agencies, and various financial institutions, some of which are more cooperative than others. I personally remember going back and forth with the IRS for months over a disputed $1.99 item in my mother’s estate! The professional fiduciary has the know-how and contacts in the community to make the process go more quickly. If an heir can only get to these matters at nights and on weekends and/or lives out of town, things can drag on even longer. According to Courtney DeSoto, principal at Channel Islands Fiduciary Group, “Beneficiaries can be very unrealistic. They think they will get their distribution in six months, but one to two years is the more likely time frame.”
Even more onerous than dealing with logistics is dealing with squabbling heirs. The private professional fiduciary acts as an impartial liaison, whose experience in these matters enables her to come up workable solutions that are fair to everyone. Without such a referee in a position of authority, one sibling might pressure another to sell a beloved vacation home, resentments among first and second families might surface, and even families that once got along famously might suddenly stop speaking to one another. Although an inheritance represents found money, the literature suggests that families can go to war over the most inconsequential things.
Even if they know all that, adult children are often offended and suspicious when they learn that their parents have named a private professional fiduciary in their wills, not knowing, among other things, that fiduciaries are paid out of the estate. To address their concerns you might want to call a getting-to-know-you meeting. Here, the fiduciary can explain how she provides a great deal of safety and security for the assets. In California, for example, the Professional Fiduciaries Bureau ensures that professional fiduciaries have undergone a criminal background check and are insured, bonded, and up-to-date on the latest rules and regulations regarding trusts and estates. Moreover, they must have passed a licensing exam and continue to take education courses in their field.
The private professional fiduciary is not the children’s adversary. To the contrary, “My responsibility is to the beneficiaries,” says Courtney DeSoto. “I want to do what is best for them. While I can’t always make everyone happy, I can at least make them comfortable with the process. Using a licensed, neutral third-party provides that the matter is handled with the highest legal and ethical standards. Communications and transparency are a must. I’ve found that when everything is explained to the children, they’re actually relieved that the estate is in a professional’s hands so they don’t have to deal with it.”

 Courtney DeSoto can be reached at Courtney@cifiduciarygroup.com.

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