Executor

last-willBeing designated by a friend or a loved one as the Executor of his or her estate is an honor, but with that designation comes many responsibilities and legal risks.

The Executor’s work begins after the death of the testator (the person who made the Will).  The Executor is responsible for “settling” the estate which means that the Executor must:

  •  identify, gather and value all of the decedent’s assets;
  •  pay the decedent’s debts and expenses, including all federal and state taxes; and
  •  distribute to the correct beneficiaries whatever assets remain after all debts and expenses have been paid, in accordance with the terms of the Will.

While this short list makes the Executor’s job seem simple, the reality is that there are many difficult tasks involved in the process and the Executor, as a fiduciary, can be held personally liable for breaching his or her duties in administering the estate.

Before accepting the appointment as Executor you should educate yourself as to the responsibilities and carefully access whether you are able to perform the tasks required.   The Executor may hire professionals such as accountants, attorneys, appraisers and others to assist in the administration of the estate.

The article The other side of a will: Serving as executor to an estate by Shelly Schwartz, CNBC, October 3, 2015 provides a helpful discussion.

Getting Legal Help

Experienced Estate Planning and Probate Attorney, Elga A Goodman, can assist you in your role as an Executor. Contact us today at 973-841-5111.

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Unfortunately, when a loved one dies, arguments may arise among the heirs to the estate (also known as the beneficiaries).  One potential area of dispute may involve a commission due the Executor for serving in that capacity.  The following is a brief overview of the Executor’s role, and an example of the type of problem that may surface.

Overview

Many of us have accumulated assets over the years (for example, a house, stocks, jewelry, and personal mementos).  When you prepare a Will, you can specify how you want these assets (your “estate”) distributed once you’re gone.  Also, in your Will, you can designate the Executor(s) – the person, persons, or entity responsible for “settling” the estate in accordance with the terms of your Will.

Among the key things the Executor must do is

– identify all the assets left upon your death, determine the value of those assets, gather the assets, and protect them.

– use the assets to pay off all your debts and expenses, including all outstanding federal and state taxes.

– distribute to the beneficiaries whatever assets remain after all debts, expenses, and taxes have been paid.

Disputes Among  Beneficiaries

As the above suggests, the Executor’s responsibilities may be very time consuming.  Settling an estate may often take one or more years.  Under the law, an Executor is entitled to receive a commission for his efforts.

However, if you do not want your Executor to receive a commission, you should state that in your Will.  If you neglect to do so, circumstances may arise that result in disputes among beneficiaries.

Example:

Upon the death of their mother, Susan and her two brothers, Jack and Robert, became the sole beneficiaries of their mother’s estate.  In their mother’s Will, Jack was designated as Executor, and he was instructed  to divide the estate equally among the three siblings.  Problems arose when, upon fulfilling his Executor responsibilities, Jack presented his siblings with a written accounting as required by law.  The accounting specified how the estate was settled, including all expenses, debts, and taxes paid out, the inheritance each of the siblings would receive, and the commission due Jack from the estate for serving as Executor.

Susan and Robert were outraged.  They clearly remembered their mother saying that she did not want Jack to collect a commission for serving as Executor.  The problem was that their mother never included this information in her Will.  So, under the terms of the existing Will, Jack was entitled to the commission.  Many heated arguments ensued.  Jack did ultimately collect his commission, but Susan and Robert never forgave him!

It’s not enough to inform family and friends of your intentions.  To help preempt feuds after you’re gone, you need to make sure that your Will accurately reflects your wishes.  Once you’re gone, you won’t be able to correct mistakes or omissions.

Getting Legal Help

Experienced Estate Planning Attorney, Elga A. Goodman, can help you with all your estate planning needs.  She can work with you to help insure that your Will  accurately reflects your intentions.  Contact us today at 973-841-5111.

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Legal documents can be difficult to understand, containing unfamiliar words.  In the case of Wills, certain key terms frequently cause confusion –  specifically,  Executor, Trustee, and Testamentary Guardian.   We hope the following discussion will help clarify these three very different terms.

1. The Executor

Many of us have accumulated assets over the years (for example, a house, stocks, jewelry and personal mementos).  When you prepare a Will, you can specify how you want these assets (your “estate”) distributed once you’re gone.  In your Will, you can designate the Executor –  the person, persons, or entity responsible for “settling” the estate.  Once the estate is settled, the Executor’s job is done.

Among the key things the Executor must do is to:

– identify all the assets left upon your death and determine the value of those assets.  For example, if you left behind a house, the Executor must get your house appraised.

– use your estate assets to pay off all your debts and expenses, including all outstanding federal and state taxes.

– distribute to the beneficiaries whatever assets remain after all debts, expenses, and taxes have been paid.

Please note, if you neglect to designate an Executor, one will be appointed by the surrogate court upon your death.

2. The Trustee

Trusts are often established in Wills.  Such trusts are called testamentary trusts.  The trusts can be for the benefit of the spouse, children, grandchildren or other beneficiaries. Generally speaking, the testator (the person making the Will) directs that certain assets or portion of the estate be held in trust. The Executor distributes the assets left in the estate after paying debts, taxes, expenses and any specific bequests to the Trustee. The testator designates the Trustee, a person or bank or trust company that is to administer the trust for the benefit of beneficiaries specified in the Will.  The Trustee must manage the trust in accordance with the terms and conditions directing how the Trustee must manage the assets.

Confusion often arises as to what role the Trustee has vs. the Executor.  As noted above, in settling the estate, the Executor must determine the sum total of all assets in the estate, including those assets set aside for the Trust.  While the Executor’s role ends once the estate is settled, the Trustee, responsible for managing the assets in that Trust, will continue in that role according to the terms of the Trust until such time as the Trust ends.  It should be noted that a Trustee may serve for a prolonged period of time.  So, for example,

John establishes a Trust in his Will for his grandson, Jim.

– The Trust stipulates that once Jim turns 35, the Trust will terminate and all assets will be distributed to Jim outright.

– John passes away when Jim is three years old.

– The Trustee oversees the Trust for the next 32 years until Jim turns 35.

3. Testamentary Guardian for Minor Children

If you are a parent of minor children (under 18 years old), it is highly advisable that you designate a guardian in your Will, officially known as the Testamentary Guardian.  Should the unthinkable occur, upon your death, the guardian will assume responsibility for your children, including, among other things, addressing their material, educational, and heath care needs until they reach 18 years of age.  Typically, in the case of a married couple, each spouse will designate the other as the Testamentary Guardian. This is also fairly common with divorced couples.  However, bottom line, each Will is tailored to an individual’s personal situation.  The important point is to make sure that you designate a guardian for your minor children.  Should you neglect to do so, that responsibility will fall to the courts (that have no record of your wishes and no familiarity with your children, family, and friends.)
The guardian will be responsible for interacting with the Executor and with the Trustee(s) (if any Trusts were established for the children) to help ensure that all estate assets legally due the children and all assets managed by the Trustee(s) are properly handled and distributed.
Getting Legal Help:
Experienced Estate Planning Attorney, Elga A. Goodman, will work with you on all your estate planning needs.  Contact us today at 973-841-5111.

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