We work hard for our clients.
Crafting elegant, tax-saving and easy-to-understand strategies to help you save on your taxes is a joy. And, of course, removing from our clients the annoying hassle of dealing closely with government paperwork, deadlines and personnel — while not exactly a “joy”, does also provide us with great satisfaction because we know that we get to serve our clients and help them not have to deal with stuff that isn’t exactly “fun”.
But sometimes (usually a rare instance), there are circumstances in which, despite great planning and implementation of strategy, things go sideways.
Last week, I wrote about estate planning, and I do want to touch on it one more time here today — despite the fact that it isn’t our primary area of service. It’s such a critical part of a family’s financial picture, but it doesn’t really get focused on sometimes until it’s too late.
You see, even the most well-crafted estate plan can be ruined by a poor choice of executor.
Of course, that said, we can always do our best to help our Louisville clients and their families deal with it and navigate through this poor choice, once it becomes apparent — but it’s always better if the choice is made well.
So, this week, I have some words about this, as you consider your current executor of estate, and whether they fit the profile…
Kevin Roberts On What to Look For in an Executor of Estate
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.” – Warren Buffett
Your executor of estate is what is called a “fiduciary” which means he or she must be someone who will act in good faith when handling your affairs. He or she cannot take advantage of his or her position or unfairly profit from financial transactions from your estate. The executor will meet the standard of a fiduciary duty if he or she does a competent, honest job.
You want your fiduciary to be both trustworthy and capable of handling the tasks. You have to have complete faith in him or her. Make sure he or she understands the responsibility of the job and is willing to accept it. This requires a discussion before you make your Will.
It sounds a bit strange, but name someone who is healthy and likely to be around after your death. To be secure, you should definitely select at least one successor executor to serve if your first choice is unable or unwilling to do so when the time comes.
For many people, the choice is obvious — their spouse. Others select a close friend, a grown child or other close relative. If no obvious person comes to mind, make a list of your possible selections and use common sense (and this article as your guide) to make the wisest choice.
Remember, as I wrote last week …
An executor must:
* Obtain certified copies of your death certificate
* Locate Will beneficiaries
* Examine and inventory your safe deposit boxes
* Collect your mail
* Cancel credit cards and subscriptions
* Notify the SSA and other benefit plan administrators of your death
* Learn about your property, which may involve examining bank statements, deeds, insurance policies, tax returns and other records
* Get bank accounts covered by the Will released
* Place notices in newspapers so creditors can make claims
* Hire a probate attorney
Either the executor or the probate attorney must:
* File court papers to start the probate process and obtain legal authority to act as your executor
* Manage your assets during the probate process, which usually takes six months to a year
* Handle court-supervised probate matters, including transfer of property to your beneficiaries and making sure your final debts and taxes are paid
* Have final income tax forms prepared, and, if necessary, have estate tax returns for your estate prepared and filed
So the choice is important.
But lastly, as you make these decisions, consider telling your family exactly what you plan.
This gives you the chance to head off any possible disagreements among your family about how things “should” be handled. If you happen to die or lose capacity, it’s usually too late.
Eliminate surprises and keep those family fights at bay.
Perhaps the LAST thing to say is: make sure you have competent help by your side, in ALL things financial (especially when it comes to your existing finances and tax strategy).
And that, of course, is what we’re here for.
Until next week then, I am warmly yours,