January 15

What Does an Executor Do?

executor of estateYour father recently passed away, and you’ve learned that your sister has been named executor of his estate. Where does that leave you?

If you’ve lived through the death of someone close to you, you understand how complicated estate-related questions can become. Just as an individual can’t own property or act in a legal capacity after his or her death, anyone acting under a power of attorney for such individual no longer has the authority to manage assets or make any decisions. One mechanism that is available to settle the inevitable questions of debt repayment and the transfer of assets is commonly referred to as “probate.” Probate is a legal process overseen by the state’s probate court, and each estate is assigned a person to act as executor. An executor is responsible for handling the details of administering the estate and is usually named by the deceased in a will, or an executor may be assigned by the probate court upon the filing of a petition. If someone dies without a will, and thus without naming an executor, the individual who handles the estate often is called an “administrator” – the roles of an executor and an administrator are identical.

Individuals who are named as executor and other family members often have questions about the probate process and next steps.  Here are some common questions:

I’ve been named an executor. What does that mean? You are the person who is expressly named to make sure the wishes of the deceased individual, as stated in a will, are carried out and the estate is properly administered.

Do I have to be the executor if named? In short, no. The deceased was stating a preference, but you cannot be forced to do the work. If you decide to decline, the probate court will appoint someone else to serve as executor, whether another person named in the will, or an outside individual.

Why was my sibling named executor? Many factors typically go into the decision as to who to name as executor. Executor duties can be time-consuming, can last months or even years, and often require considerable effort, so an individual should be nominating people who can fulfill those duties. An executor serves as a fiduciary, and is required to always act in the best interests of the entire estate. An executor has no greater entitlement to the estate above and beyond what is written in the will.  Whoever is named executor should be able to work cooperatively with all family members to ensure everything is properly handled and that everyone is kept informed.

What does the executor do? The executor handles all details of managing the estate, including submitting the will to the court, attending applicable hearings, locating and inventorying assets, maintaining those assets from the estate, paying debts and any estate taxes, selling assets (such as a home), etc. Every action the executor undertakes is under the oversight of the probate court. Exact duties vary greatly depending on factors such as the condition of the estate, how assets are held, whether there was a valid will, etc.

Can the executor get paid? In general, the answer is “yes.” Compensation can be based upon time expended, a flat fee or a percentage of the estate, depending on the size and complexity, although not all of these options are allowed in every state.  In New Hampshire, any fees that are paid to an executor or administrator from the estate are subject to approval by the court.

If you have specific questions or want to know more about the probate process, please get in touch.

July 31

Why You Need to Consider Digital Assets in Estate Planning

You’re a responsible individual. You’ve done estate planning to provide for the distribution of your assets to protect those you love. If you’re like most of us, when you hear the word “asset” you think of things like your home, the money you have in the bank, or your investments. You know, all those tangible possessions that have traditionally been considered to be what makes up our property, our “wealth.” The same has been true of estate planning – meticulous indexing of and making provisions for material and monetary goods. But, when you’re thinking about who gets Aunt Martha’s prized duck lamp, don’t forget what you may own in the digital world.

The idea of owning digital assets is a relatively new concept and not anything we were considering in estate planning even twenty years ago. However, with the current domination of the Web in our private, professional, and financial interactions, personal ownership now applies to a whole host of individually-owned digital property. Don’t think that applies to you? Consider email, social media, cloud-based storage – anything with online access and a password potentially has personal value, and the typical individual has dozens of accounts. In fact, most of us use computers and email with cloud-based application and storage services gaining users every day.

An individual may even have a social media or blog that generates income or has the potential to do so. What happens to those thousands of followers or that revenue when they’re gone?

What does happen to digital assets in the event of your or a loved one’s death? All those privacy measures that protected personal data while you were alive now stands in the way of third-party access, even if that person is your trusted fiduciary. In fact, the law comes down heavily on companies that disclose personal information to a third party.

Here are a few facts about digital assets and the law:

  • Fiduciaries are only referred to in one federal law related to computer fraud and abuse.
  • Account holders must consent to disclosure of certain electronic communications under federal privacy laws.
  • The true value of digital assets is often not appreciated until after the owner is deceased.
  • States have outdated probate codes. That, coupled with passwords and encryption, computer fraud and data protection laws and privacy policies/terms of service agreements, makes for an almost impenetrable barrier to digital property access after the owner dies.

If you are thinking about your own or a loved one’s estate plan, inventorying and including provisions for properly handling digital assets should be an integral part of your planning. As you take account of digital assets, it helps to think of the following:

  1. Do you access financial accounts electronically? Examples are logins for banks and brokerage accounts, online bill pay, insurance, and accounting or tax preparation software.
  2. What electronic assets do you own that have value? Consider domain names, digital currency, online game account sales, and money transfer platforms such as PayPal.
  3. Do you store valuable information or files in a digital format? Examples in this category are family photos, work or organizational files, personal documents, medical information, and websites, blogs, or social media accounts (which may also be revenue generating).
  4. Do you communicate through emails and/or social networking accounts? Email accounts and social networking accounts contain a wealth of personal and family information and history.

Once you’ve determined your digital assets, it’s important to make provisions for your fiduciary to have the needed access to carry out your wishes. In fact, under federal law or by the seldom-read Terms of Service Agreements (TOSAs) attached to online accounts, fiduciary access may be modified or eliminated when the user has failed to sufficiently plan. One simple way to do this is by using a secure and encrypted password management program like LastPass to store logins for all accounts and then giving a trusted person access to that account. This way, they’ll always have your latest login information as well as a comprehensive list of your accounts.

November 14

Requesting Information For a Trust When You’re Not The Trustee

“My mom died and my sister is the trustee. I’m not getting any information. What should I do?”

requesting information trust not trusteeIf your mom dies and you’re named as a person who’s going to receive assets under a trust, let’s say, and you’re also not named as the person who’s making sure your mom’s wishes are followed, that would be the trustee of the trust, you, as a person who is entitled to receive a portion of the inheritance, can ask for information from the trustee.

The trustee, your sister, would have to let you know what’s going on with that trust, how your mom’s inheritance is being distributed.  That trustee has a duty to make sure your mom’s wishes are followed and make sure that she is doing things correctly in administering the trust, selling the house, making sure it sells for a good value, and just keeping the family informed.

This doesn’t mean [that everyone] in the family [is entitled to this information], but the people who are named under a trust or under a will are entitled to receive information if they request it.

 

November 14

What Is A Trust?

I was told I need a trust. What is it, and why would I need one?

What is a TrustA trust is really an ownership arrangement.  You can own all your assets on your own, in your personal name, but a trust is a vehicle that can own the assets and avoid a court process when you pass away.

[In this situation] I’m talking about a revocable trust.

If you created a revocable trust, you would be the grantor. And that just means that you’re the person who sets the terms of the document and asks a lawyer to write it up. You’d also be the trustee of the trust and that’s technically the legal owner of the trust document.  And you’d also be the beneficiary of the trust and you’re the person who gets to use all of those trust assets.

So if you think about it, if you’re the grantor, you’re the trustee, and the beneficiary, it’s really yours during your lifetime. The goal [of a revocable trust] is to get things funded into this trust, like transferring your home, transferring your bank accounts to the trust, investment accounts in the trust. Naming the trust as the beneficiary of retirement assets so that when you pass away and all of your assets are in a revocable style trust, the goal is to avoid probate. It’s really just an ownership arrangement that helps you avoid a court process when you die.