Putnam County Estate Planning & Medicaid

Picking an Executor a Critical Part of Your Estate Plan

Choosing an executor is not easy, but it is very important. A person who is not capable of managing the tasks can turn even the best estate plan upside down.

Part of creating an estate plan is naming an executor who will be responsible for carrying out the wishes of the decedent, according to a recent item on InsuranceNewsNetMagazine.com, “The Wrong Executor Can Destroy Even the Best Estate Planning.” These tasks include everything from making sure that assets are distributed to tidying up outstanding debts and cleaning out houses. It’s important to select a person who can manage these tasks and—if they are stymied—who will recognize when they need help from professionals.

Executors sometimes are under the impression that it’s a quick and easy job. This might be the fault of the testator or the person who has executed the will. They select an executor and believe that he or she possesses the ability, acumen, time, and desire to carry out the duties of the position. Many don’t inquire as to whether the executor is interested in and capable of serving, or the chosen executor may be hesitant to say no.

Prior to designating an executor, the testator should understand the role and consider whether the potential executor has the qualities to handle the job. In addition, the testator should discuss the decision thoroughly with the chosen executor so everyone understands the expectations and what is needed to do the job.

A big mistake is an executor’s failure to communicate adequately with the decedent’s family, friends, heirs, and loved ones. People like to be kept updated and to understand why some things have been done or not done. This can help keep peace and family harmony at a very emotional time.

On such example involves family heirlooms. The executor can distribute the assets as he or she wants as long as his or her actions comply with the will, but beneficiaries may have particular interests in specific assets like heirlooms and collectibles. There can be headaches and heartaches if the executor unwittingly distributes an item to another heir who’s not as emotionally tied to the item. It’s best to talk to the heirs and determine their preferences.

Another problem can arise when the heirs aren’t satisfied with the time needed to finalize the estate—particularly if one of the heirs is also the executor. Conduct regular update meetings with all parties who have an interest in the estate.

An executor’s job isn’t simply to distribute wealth—it’s to make certain that all debts and liabilities are discovered and resolved and to handle and finalize the decedent’s day-to-day affairs. The list of the executor’s duties is quite long and includes the following:

• Dealing with the court to probate the will and distribute the assets;
• Collecting all of the assets, which means combing through the decedent’s belongings and records and also dealing with banks, brokerage houses, insurance companies, and the decedent’s employer;
• Valuing assets;
• Keeping the assets safe;
• Handling the decedent’s creditors;
• Maintaining businesses while the estate process is proceeding;
• Winding up the decedent’s last affairs; and
• Filing tax returns and investigating estate taxes.

Sometimes being an executor can feel like a thankless task, especially since the person who is most appreciative of your efforts, time and dedication is not able to say thank you. But starting with a clear understanding of the tasks at hand and having a team of professionals—including an estate planning attorney and a CPA—can help you move through the process.

Reference: InsuranceNewsNetMagazine.com (June 2016) “The Wrong Executor Can Destroy Even the Best Estate Planning”

Over 21? You Need an Estate Plan

If you are old enough to drive, work a job and have a bank account, you need to have an estate plan. It’s part of being a responsible adult.

Leaving adolescence behind means a life that includes responsibility for yourself and for those you love. That has traditionally included basics like a paycheck, a bank account and life insurance. But today, we also include an estate plan, which The Huffington Post says in “Why Estate Planning Makes Sense at Any Age” is just as important when you are 20 as it is when you are 64.

It should be noted that an estate plan is essential no matter what your financial situation or age.

We know that it’s easy to not think about taking steps for estate planning. In fact, a recent ABC News poll found that only about 50% of Americans have created a will. Fewer still have created supporting estate documents. But having an estate plan in place can help bring you peace of mind, get you on the road to stronger financial security, and help those about whom you care most.

Estate planning can be a holistic process to set your finances on a much more successful track for the rest of your life. Proper planning is about creating and maintaining good financial behavior.

The estate planning process isn’t supposed to be a “set it and forget it” process. When your life changes in a significant way, that’s a reminder to review both your financial and estate plans to make sure you’re still on course. Estate and financial planning need to be connected.

How do you begin an estate plan? Of course, there are a lot of carefully drawn documents involved. But it’s the planning behind them that really makes it work.

The first step is making an appointment with an estate planning attorney to discuss your current situation, how you’d like to take care of those you love, and what is needed to help you reach these goals. Remember that if you do not have a will, your state law will determine what happens to your assets after you pass away. You may not like that plan, so it is better to have one that you create with the help of an estate planning attorney.

Reference: Huffington Post (June 8, 2016) “Why Estate Planning Makes Sense at Any Age”

Too Young to Die? You Might Want to Think Again

Most twenty and thirty year olds believe that they are immortal, but millennials do die prematurely. There are some basic steps you may want to consider in the unlikely event of your early demise.

Your mother may cry and your father will definitely be uncomfortable, but it's not a bad idea to discuss the "what if's" of your death if you are a millennial, even if you don't have any children or a spouse.

But you might think about it if you want to spare your family members the added stress of locating your financial accounts or bearing responsibility for your debts at the same time they are dealing with your death.

Unfortunately, it's entirely possible to die young. The leading cause of death for millennials is accidents or unintentional injuries. That's why you should take these four simple steps to protect your loved ones, says Forbes in "Here's How To Financially Prepare For Your Death While You're Still Young And Unmarried."

1. Check the beneficiaries on all your accounts. You probably can go online and change account beneficiaries. Let your beneficiary know what he or she is inheriting and where the account is located. Something like, "Hey, you'll be inheriting my 401(k) and here's the information on the sponsor of my company plan," would be good. You can also put beneficiaries on your bank accounts and other investment accounts with Payable on Death (PoD) and Transfer on Death (ToD) designations. Review your designations periodically for any updating after major life events like a marriage, the birth of a child, or divorce.
2. Try to Avoid Probate Court. Probate is where the authenticity of your will is determined, your debts and taxes are paid, and your heirs are given your belongings according to your wishes in your will. Placing beneficiaries on accounts keeps that money out of probate while saving you unnecessary fees because the money goes directly to your beneficiary.
3. Get a basic will! Creating a basic will is relatively easy and inexpensive. Your will should detail who is to receive various assets and should also provide guardianship for children and care for your pets.
4. Consider life insurance if you have co-signed student loans. Student loans may be a real curse, but it can quickly be transferred to your parents if they co-signed on a private loan. Federal student loans are usually discharged in the event of the death of the borrower, but private loans aren't always discharged. If your parents or anyone else co-signed on a student loan with you, you should have life insurance that at least will cover the loan. Set up the life insurance policy with the person who co-signed on your loan as the beneficiary. You also should have both life insurance and a will if you have children or other dependents who rely on your income.

Don't be surprised if your parents wave away your concerns and refuse to have the discussion with you at first. Use the steps outlined above as a guide for things you need to do and then speak with them about the steps you have taken. The goal is to make their lives easier and protect those you love should the unexpected occur.

Reference: Forbes (May 31, 2016) "Here's How To Financially Prepare For Your Death While You're Still Young And Unmarried"

Selecting an Executor Who is Not a Family Member or Friend

If you don't believe any friends or family members can serve as your executor, what are your options?

A question is raised by a well-to-do husband who is concerned that his wife is not prepared to handle a significant estate if he should predecease her. The couple has no children, and he is concerned about what will happen. In MarketWatch's "My wife and I don't trust anyone to be executor of our will," several different ways to prepare for this situation are examined.

One important note to consider: while mulling over the executor issue, do not table your estate planning. With both spouses still living, the planning should start right away.

Collect the information about important accounts and assets and keep it in a safe place at home or at your bank. Make sure you and your spouse know where these materials are located.

The best route is to have your spouse act as executor of your will with the help of a lawyer upon your death. As an alternative, an estate planning attorney can act as an executor. However, he or she will need to be paid.

The executor is required to act in your best interests. He or she must inventory the assets and coordinate cash for expenses, sales, and dealing with taxes.

There's no problem choosing an attorney you may not know personally, but you should do your research on www.lawyers.com and www.avvo.com. You can also ask friends for recommendations.

There are other, unforeseen issues you should take into account with your estate planning attorney—such as the unlikely event that both spouses pass simultaneously or a surviving spouse does not have mental capacity to handle his or her affairs. In such instance, you need an alternate executor, trustee, and/or power of attorney.

By virtue of having an estate plan in place that includes designating your favorite charitable organizations, you have already solved the biggest problem. Remember that most Americans still do not have a will, which puts you way ahead of your peers.

Reference: MarketWatch (May 31, 2016) "My wife and I don't trust anyone to be executor of our will"

When Life Throws You a Curve Ball, Be Prepared to Respond

We never know what's around the corner. Big changes come in all different types. Best strategy: be prepared and deal with whatever comes.

Of those Americans who actually have a will and an estate plan in place, there's still a tendency to let years go by before they update their wills and finances. Any good estate attorney will tell you that a will needs to be updated every three or four years to take advantages of any changes in the law and to address any life changes that occur.

The Middletown Transcript warns in "Game-changing life transitions that need attention" that sudden transitions need to be addressed immediately. However, many times these events will have more complex consequences impacting other parts of your life. Don't stick your head in the sand when such an issue comes up. Deal with it in the context of your overall life.

Some of the major transitions that impact us are retirement, the sale of a business, divorce, the disability of an adult child, the loss of a business or life partner, and perhaps an inheritance. While some of these are negative and some are good, each one necessitates a thorough review of your entire financial situation—includes your estate plan.

If you come into an inheritance, you should assess its impact. Research whether there are any financial or estate planning opportunities that might mitigate the cost or tax burden within the estate.

If your spouse has no estate plan, it may be a rather large headache. It can be exceptionally painful to suffer through an extended and possibly contested period of settling the estate. Even if your spouse had a plan, this transition may necessitate some revisions to your own plan or changes to your beneficiary designations.

When there's a divorce, the majority of the time is spent dealing with the financial settlement of marital assets, child custody, and any future division of earnings. However, a lot of divorce attorneys don't help you with the tax issues and other financial matters that come into play beyond the negotiation of the settlement agreement. You need to take a look at your entire financial picture.

Any kind of large life event requires a thorough examination of your entire estate plan and your financial situation. Having a trusted group of professionals that includes an estate attorney is the best way to protect yourself and those you love.

Reference: Middletown Transcript (May 31, 2016) "Game-changing life transitions that need attention"

Protecting the Family Farm or Business For the Next Generation

If you have a family business or family farm, you know how hard it is to be successful. But if you’d like that success to continue after you retire or after you die, the challenge may be even greater. Succession planning is more than choosing who’ll succeed you as “boss.”

A well-thought-out succession plan can:

• Keep things running smoothly after you retire or after you die. That can mean more income for you and your loved ones, now and into the future.
• Transfer management responsibilities to someone you choose, with the skills to succeed (perhaps with input from your family or from other business advisors).
• Give your successor(s) time to grow into the job. (Having your successor work alongside you, gaining experience and expertise, is better than having him or her thrown into the job when you can’t do it anymore.)
• Help fund your retirement. The business, if it keeps running smoothly, can provide you with much-needed income. Or if you choose to sell it, the business can provide a tidy sum to invest in other ways.
• Help your successor(s) buy the business or pay required taxes. Having someone buy your business can be a big plus, but only if the buyer has the money to pay you. And leaving the family farm to your children may mean a lot to them, but only if they can pay any taxes that might be due. Life insurance can provide your successors with funds to buy the business or pay any taxes owed.
• Distribute assets fairly. Some of your children may have contributed to the success of your business, while others pursued a career of their own. Some family members may want land or a piece of the business, while others would prefer to have cash. A proper plan can address these issues.
• Reduce taxes. If you plan ahead, estate taxes, property taxes and capital gains taxes can be managed or reduced.
• Protect your assets from lawsuits, creditors and more. Proper planning can protect your business and your personal assets so they can’t be taken from you or your loved ones – now or after you’re gone.

What’s included in a succession plan? From the list above, you can see that there are lots of things to consider. It all depends on what you’d like to accomplish. An estate plan and a financial plan are essential. You may also want to do tax planning, asset protection planning and more.

If you run a business or a farming operation, you probably rely on some professional advisors already. Talk to them about goals and objectives for your retirement and your estate. Your accountant, financial advisor, insurance agent and attorney can each be helpful.

If you can, get your key advisors to work together as a team. That way, you can create a comprehensive and coordinated succession plan – one that addresses all your needs and concerns.