Can I Fire the Executor of My Will?

If you are wondering how to change the executor of a will after the fact, KAKE.com’s recent article entitled “How to Change the Executor of a Will” says that the process is pretty simple. Even so, you should work with an experienced estate planning attorney to make certain that it is completed correctly, and it’s legal.

The executor of a will is the individual you name to be responsible for carrying out the terms of your will. By designating an executor, you’re giving him or her the authority to handle certain tasks related to the distribution of your estate. Typically, you can name anyone as executor. However, minors aren’t allowed to serve as executors, and some states don’t let convicted felons do the job either.

It’s okay to name a beneficiary of your will as executor. An executor must undertake certain tasks, such as the following:

  • Getting death certificates
  • Starting the probate process
  • Making an inventory of the decedent’s assets
  • Notifying the decedent’s creditors of his or her death
  • Paying any outstanding debts and closing bank accounts; and
  • Distributing assets to the beneficiaries named in the will.

The executor can’t change the terms of the will. They can only make sure that its terms are carried out. An executor can be paid a fee for their services, which can be a percentage of the value of the estate or a reasonable hourly rate. State laws vary on this compensation approach. It would be best to contact an experienced estate planning attorney to assist you.

There are a few reasons why making a switch of executors may be necessary, such as if:

  • Your original executor dies or becomes seriously ill and can’t fulfill his or her duties
  • You named your spouse as executor but you divorce
  • The individual you originally designated as executor no longer wants the responsibility
  • Your relationship with your executor has deteriorated; and
  • You think someone else would be better equipped to execute your will.

Note that you don’t need to give a specific reason to change the executor of a will. There are two ways to do this: (i) add a codicil to an existing will; or (ii) draft a brand-new will. A codicil is a written amendment that you can use to change only the provisions of your will needing changes without having to write a new one. The codicil must be executed with the same formalities as your original will.

If you need to change more than just the executor, you might want to draft a new will, which entails the same process as the one you followed when making your original one. You should also destroy all copies of the original will to avoid confusion and potential challenges to the terms of the will after you die. It’s wise to use an experienced estate planning attorney to help you replace an existing will.

Reference: KAKE.com (Dec. 29, 2020) “How to Change the Executor of a Will”

 

Wealthy Women Face Challenges in Estate and Tax Planning

Election cycles often mean changes to estate and tax planning strategies around estate planning, charitable donations and capital gains, but that’s not the only challenges facing wealthy women now, says a recent article “For Wealthy Women, Tax and Estate Planning is Weak Link” from Think Advisor. Preparing for big changes, from presidential elections to death or divorce, is all too often a surprise, even for accomplished and financially successful women.

Statistically, women do outlive men so there needs to be a plan for the unexpected. As attitudes shift and more women build their own wealth, they are less likely to stay in unsatisfying marriages. Although the overall rate of divorce in America is declining, the number of “gray” divorces is increasing.

One essential step in planning for high net worth women is to consider what assets they will need to continue their current lifestyles and what assets would be at risk, in case of death or divorce.  Some assets are not available to singles, like the Spousal Lifetime Access Trust, an irrevocable trust available to couples but not to singles. For those considering divorce who have a SLAT agreement, speak with your estate planning attorney, as the SLAT may include a provision that terminates spousal trust rights upon divorce. Women should not assume that these or other assets will be available to them in case of a divorce.

There are also future costs associated with losing a spouse. If women do not have long-term care insurance, it should be purchased, if she still qualifies. These policies become more expensive as time goes by, so the 40s and 50s are the ideal time to invest in them. Timing and tax policy changes from a new administration make this a good time to begin planning for any changes that may come in the next year. Women with substantial net worth should be making plans for gifting and trusts now. The gift tax lifetime exemption remains at $11.7 million, but even if there is no legislative action, on January 1, 2026, this will return to $5 million.

Dramatic changes in asset valuation resulting from the pandemic may make this a good time to transfer shares to children and grandchildren, including real estate holdings and closely held family businesses.

The effects of COVID-19 have provided a global lesson in preparing for the unexpected. Among many other issues has been a huge backlog in most surrogate courts. Even families who had an estate plan in place, found their estate planning hampered by waiting for courts to appoint executors.

In many cases, surviving spouses (mostly women) found themselves unable to move an estate plan forward, gain access to assets, even to pay household bills. Families who have been lucky enough to escape the impact of COVID-19 so far, should take the opportunity to plan for the unexpected, including the creation of a revocable trust, so the trustee can swiftly access assets and start managing right away, rather than waiting for courts to clear.

Reference: Think Advisor (Jan. 6, 2021) “For Wealthy Women, Tax and Estate Planning is Weak Link”

 

How do I Settle an Estate if I’m Named Executor?

If you are asked to be an executor, you should learn some of the basics of the job before agreeing to the task. An executor is the individual named to distribute a decedent’s property that passes under his or her will. The executor also arranges for the payment of debts and expenses.

WMUR’s recent article entitled “Settling an estate” explains that if the executor is not willing or able to do the job, there’s usually an alternate executor named in the will. If there’s no alternate, the court will designate an executor for the estate.

Depending on the estate, it can be a consuming and stressful task to address all of the issues. Sometimes, a decedent will leave a letter of instruction which can make the process easier. This letter may address things like the decedent’s important documents, contact info, a list of creditors, login information for important web sites and final burial wishes.

One of the key documents is a will. The executor must get a hold of an original and review it. You can work with an estate planning attorney to determine the type of probating (a process that begins with getting a court to approve the validity of the will) is needed.

The executor should conduct an inventory of the decedent’s assets,some of which may need to be appraised. If the decedent had a safe deposit box, the contents must be secured. Once the probate process is finished, assets then may be sold or distributed according to the will.

Asset protection is critical and may mean changing the locks on property. The executor may be required to pay mortgages, utility bills and maintenance costs on any property. He or she must change the name of the insurance on home and auto policies. Any brokerage accounts will need to be re-titled. The final expenses also need to be paid.

The funeral home or coroner will provide death certificates that will be needed in the probate process, and for filing life insurance claims.

If the decedent was collecting benefits, such as Social Security, the agency will need to know of the decedent’s death to stop benefits. Checks received after death must be returned. The executor will file a final federal and state tax return for the decedent, if necessary. There also may be an estate and gift tax return to be filed.

There’s a lot for an executor to do. It can be made easier with the help an estate planning attorney.

Reference: WMUR (Dec. 23, 2020) “Settling an estate”

 

How to Plan for a ‘Fragile’ Beneficiary

Frequently, estate plans will include an inheritance for a minor beneficiary. If you have minor children, you should spell out exactly what you want as far as who will care for your children and how your children’s financial needs will be met.

Wealth Advisor’s recent article entitled “Handle with care: Tips on planning for the fragile beneficiary” explains that if a minor child inherits property outright, the court will usually appoint a conservator to handle the property until the minor reaches 18. Because of this some parents make use of a trust which lets the assets be available for a minor’s benefit but held under terms you set when establishing the trust. A trustee oversees this. Contact an experienced estate planning attorney to assist you in setting up an estate plan to establish a trust.

A beneficiary with a disability. In some cases, a loved one with a disability may be receiving needs-based government benefits. To make certain that an inheritance doesn’t disrupt those benefits, many parents or guardians ask an experienced estate planning or elder law attorney to create a special needs trust (SNT). This is an irrevocable discretionary trust created by the parent in many cases for the benefit of a child with special needs. When set up correctly, the special needs trust won’t be considered an available resource for the purpose of determining eligibility for needs-based government benefits.

Incentive planning. Another aspect of estate planning is to use your assets to influence your loved one’s values and future behavior. A trust with incentive or disincentive provisions may help guide the choices and actions of your family, even after you have died.

Advanced planning for successful beneficiaries. If you plan to leave assets to a beneficiary who has the potential to incur significant personal liability due to his or her profession, ask your estate planning attorney about an irrevocable discretionary lifetime trust. If an inheritance is left to such a person without any protections, it may be attached by a judgment creditor upon distribution. A successful beneficiary may also need tax planning. If the beneficiary’s inheritance is properly left in a lifetime trust with the help of an experienced estate planning attorney, it may be removed from his or her taxable estate for federal estate tax purposes.

Although estate planning may be thought of as a way to transfer your assets to your family in a tax-efficient manner, it is also a way in which you can motivate, and at times protect, your loved ones.

Reference: Wealth Advisor (Dec. 22, 2020) “Handle with care: Tips on planning for the fragile beneficiary”

 

Can an Executor be Replaced?

The executor of a last will and testament is the person responsible for carrying out the instructions in a will. Giving a person this role is giving them the authority to handle many tasks concerning an estate, as explained in the article “How to Change the Executor of a Will” from KAKE.com. The person you name can be anyone you wish, from a spouse to a trusted family member, an adult child or even an estate planning attorney. Minor children may not serve as executors and some states do not permit convicted felons from serving as executors.

What does the executor do?

A beneficiary, a person who receives an inheritance from the estate, is permitted to serve as an executor, but the executor who is a beneficiary may not witness the will if they have a direct interest in it. The executor usually is in charge of:

  • Getting death certificates
  • Creating an inventory of the decedent’s assets, unless one exists already
  • Contacting an attorney to begin the probate process
  • Notifying financial institutions, including banks and investment firms of the person’s death
  • Obtaining a tax ID number for the estate and opening an estate account
  • Distributing assets to the persons named in the will.

The executor may not change the terms of the will, only carry out the instructions. They may collect a fee for their services, usually a percentage of the estate’s value. Regardless, whether they collect their fee is an individual decision.

Can you change the name of the executor on your estate?

There are many reasons why you might wish to change the person you originally named as executor to your estate. This is an important task, and if there have been changes in your life, then your estate plan and will should reflect those changes. Some of the reasons for changing your executor:

  • If the original executor dies, or becomes seriously ill and cannot fulfill their duties
  • If your spouse was the executor, but is now your ex-spouse
  • The person originally named as executor does not want the responsibility
  • Your original executor now lives many miles away.

There are two different ways to change the executor of your will. It is recommended that you discuss which of these two ways are better for your unique situation. Simple solutions often turn into estate planning nightmares.

How is a Codicil Used to Change the Executor?

A codicil is an amendment to a will that changes the terms, without changing the entire will. You specify the changes you want to make to your will, the name of the person who you now want to serve as executor from now on and the date the change needs to take effect. Estate laws are different in every state, so check with your estate planning attorney on the best way to do this. In some states, you’ll need at least two witnesses to be present when you sign and date the codicil. Remember that beneficiaries may not witness the codicil. Be careful to keep your will and the codicil in a safe place.

Why Change the Entire Will to Change Only the Executor’s Name?

The reasons for your changing your executor’s name may have occurred in combination with other changes in your life that warrant a review of your entire estate plan. This should be done every three or four years, or every time there are big life changes or big changes to tax laws. If you don’t review your estate plan, you can miss out on new opportunities to protect more of your estate for your family.

What If I Don’t Name an Executor?

Not having an executor is similar to not having a will. If you do not have either, the court will assign an executor to be in charge of distributing your estate, according to the laws of your state. You may not like how the law distributes your assets, but you will have given up any control. It’s much better for all concerned for you to have a will and make certain to have an executor.

Reference: KAKE.com (Dec. 29, 2020) “How to Change the Executor of a Will”

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. Contact an experienced estate planning attorney to discuss.

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”

 

Estate Planning Is Best When Personalized

Just as a custom-tailored suit fits better than one off the rack, a custom-tailored estate plan works better for families. Making sure assets pass to the right person is more likely to occur when documents are created just for you, advises the article “Tailoring estate to specific needs leads to better plans” from the Cleveland Jewish News.

The most obvious example is a family with a special needs member. Generic estate planning documents typically will not suit that family’s estate planning. This is why you need an experienced estate planning attorney to assist you.

Every state has its own laws about distributing property and money owned by a person at their death, in cases where people don’t have a will. Relying on state law instead of a will is a risky move that can lead to people you may not even know inheriting your entire estate.

In the absence of an estate plan, the probate court makes decisions about who will administer the estate and the distribution of property. Without a named executor, the court will appoint a local attorney to take on this responsibility. An appointed attorney who has never met the decedent and doesn’t know the family won’t have the insights to follow the decedent’s wishes.

The same risks can occur with online will templates. Their use often results in families needing to retain an estate planning attorney to fix the mistakes caused by their use. Online wills may not be valid in your state or may lead to unintended consequences. Saving a few dollars now could end up costing your family thousands to clean up the mess.

Estate plans are different for each person because every person and every family are different. Estate plan templates may not account for any of your wishes.  Generic plans are very limited. An estate plan custom created for you takes into consideration your family dynamics, how your individual beneficiaries will be treated and expresses your wishes for your family after you have passed.

Generic estate plans also don’t reflect the complicated families of today. Some people have family members they do not want to inherit anything. Disinheriting someone successfully is not as easy as leaving them out of the will or leaving them a small token amount.  Ensuring that your wishes are followed and that your will is not easily challenged takes the special skills of an experienced estate planning attorney.

Reference: Cleveland Jewish News (Dec. 9, 2020) “Tailoring estate to specific needs leads to better plans”

 

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. You should contact an estate planning  attorney to assist you.

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?”

 

How to Organize Digital Assets

Did you ever wonder what happens to old emails, videos, or photos when people die? Some family stories become headlines, when families battle with big tech firms to get their loved one’s photos or business records. Today, you need to plan for “digital assets,” as explained in a recent article “Don’t leave grieving relatives searching for your passwords: Here’s how to organize your digital life before you die” from USA Today.

Your digital life includes far more than your photos or business records. It includes financial accounts, like PayPal or Venmo, websites, videogames, online investment portfolios, social media, online video games and anything for which you need a password.

Social media accounts that are not closed down or deleted when someone dies, are at risk of being taken over by cybercriminals, who use the accounts to get access to financial accounts and use the decedent’s identity to commit crimes across the internet.

Start by making a list of all of your accounts, including account numbers, usernames and passwords. If the account has two-factor authentication, you’ll need to include that information as well. If the account uses biometrics, like a facial scan, you’ll need to find out from the platform itself how you can create a directive to allow another person to gain access to the account.

Your will needs to reflect the existence of digital assets and name a person who will be your digital executor. Many states have passed legislation concerning how digital assets are treated in estate planning, so check with your estate planning attorney to learn what your state’s requirements are.

In many cases, the best option is to use the platform’s own account tools for digital assets. Google, Facebook, PayPal, and a number of other sites offer the ability to name a legacy contact who will be able to gain some access to an account, to access the information and to delete the account in the event of your death.

One big issue in digital estate planning is that some platforms automatically delete accounts and their contents, if the account is inactive for a certain amount of time. Content may be lost forever, if the proper steps are not taken.

Some financial advisors maintain online portals, where their clients may store important documents that can be accessed from anywhere in the world. This may be an option, in addition to keeping a list of digital assets in the same location where you keep your estate planning documents.  We all live in a digital world now, and when a person dies, it’s challenging to locate all of their accounts and gain access to their contents. Your grandchildren may be able to figure out some workarounds, but it would be much easier if digital assets were part of the conversation you had with your children when discussing your estate plan.

Reference: USA Today (Nov. 25, 2020) “Don’t leave grieving relatives searching for your passwords: Here’s how to organize your digital life before you die”

 

Zappos CEO had No Will and That Is a Mistake

Former Zappos CEO Tony Hsieh, who built the giant online retailer Zappos based on “delivering happiness,” died at age 46 from complications of smoke inhalation from a house fire. He left an estate worth an estimated $840 million and no will, according to the article “Former Zappos CEO Tony Hsieh died without a will, reports say. Here’s why you should plan for your own death” from CNBC.

Without a will or an estate plan, his family will never know exactly how he wanted his estate to be distributed. The family has asked a judge to name Hsieh’s father and brother as special administrators of his estate.

How can someone with so much wealth not have an estate plan? Hsieh probably thought he had plenty of time to “get around to it.” However, we never know when we are going to die, and unexpected accidents and illnesses happen all the time.

Why would someone who is not wealthy need to have an estate plan? It is even more important when there are fewer assets to be distributed. When a person dies with no will, the family may be faced with unexpected and overwhelming expenses.

Putting an estate plan in place, including a will, power of attorney and health care proxy, makes it far easier for a family that might otherwise become ensnared in fights about what their loved one might have wanted. Reaching out to an estate planning attorney should have been done.

An estate plan is about making things easier for your loved ones, as much as it is about distributing your assets.

What Does a Will Do? A will is the document that explains who you want to receive your assets when you die. It can be extremely specific, detailing what items you wish to leave to an individual, or more general, saying that your surviving spouse should get everything.

If you have no will, a state court may decide who receives your assets, and if you have minor children, the court will decide who will raise your children.

Some assets pass outside the will, including accounts with beneficiary designations. That can include tax deferred retirement accounts, life insurance policies and property owned jointly. The person named as the beneficiary will receive the assets in the accounts, regardless of what your will says. The law requires your current spouse to receive the assets in your 401(k) account, unless your spouse has signed a document that agrees otherwise.

If there are no beneficiaries listed on these non-will items, or if the beneficiary is deceased and there is no contingent beneficiary, then those assets automatically go into probate. The process can take months or a year or more under state law, depending on how complicated your estate is.

Naming an Executor. Part of making a will includes selecting a person who will carry out your instructions—the executor. This can be a big responsibility, depending upon the size and complexity of the estate. They are in charge of making sure assets go to beneficiaries, paying outstanding debts, paying taxes for you and your estate and even selling your home. Select someone who is trustworthy, reliable and good with finances.

Your estate plan also includes a power of attorney for someone to handle financial and legal affairs, if you become incapacitated. An advance health-care directive, or living will, is used to explain your wishes, if you are being kept alive by life support. Otherwise, your loved ones will not know if you want to be kept alive or if you would prefer to be allowed to die.

Having an estate plan is a kindness to your family. Don’t wait until it’s too late to take care of it. Contact an experienced estate planning attorney.

Reference: CNBC (Dec. 3, 2020) “Former Zappos CEO Tony Hsieh died without a will, reports say. Here’s why you should plan for your own death”