Judd Matsunaga, Esq.
The Covid-19 pandemic has caused many people to start thinking about their own mortality. As you make your estate plan, one of the most important decisions you will have to make is deciding who is going to be the executor of your will. Choosing an executor can be stressful, especially if you have more than one child or have a complicated estate.
The role of executor is a big job. Your executor is responsible administering your estate upon your death. Their duties include: (1) Safeguarding and managing the assets until they are distributed; (2) Selling assets if necessary to pay estate debts or distribute the estate; (3) Appearing in court on behalf of the estate if the estate is a party to a lawsuit; (4) Filing your final income tax return and paying any taxes due; and (5) Distributing the estate to the beneficiaries in accordance with the terms of the will.
The most common executors are spouses. After spouses, children, and then siblings. A trusted child can be a good choice, although sometimes choosing one child over another can cause hurt feelings.
In the interest of family harmony, many parents will want to make both children “co-executors” of their will. However, I recommend that parents pick one child to act as primary executor and name the second child as the alternate.
It would be wise to choose an executor that won’t’ cause your heirs to bicker, argue or squabble. If you anticipate strife among your heirs, a beneficiary may not be the best choice. In lieu of choosing a child, it may be better to select a trusted friend. A trusted friend (or relative) who will not inherit under the will may be a better option since he or she will have no conflict of interest.
You are looking for three things in your executor: (1) He or she must be someone you trust; (2) They must be capable of doing the job; and (3) They must be willing to do the job. You want to choose a person who is intelligent, responsible and well-organized. An executor is considered to be a fiduciary, someone who is trusted to hold high ethical standards and act in the best interest of the estate.
The principal qualities that an executor should possess are honesty, organizational skills and the ability to communicate effectively. You want someone who is financially accountable, stable, reliable and trustworthy. The executor has many responsibilities, some of which can be complex. Although some of the necessary tasks may be complicated, your executor can hire professionals (attorneys, accountants, investment advisors) for assistance.
Make sure you talk with the person you wish to designate as executor of your will. Find out whether the person is willing to serve. And if so, you can inform that individual of the whereabouts of your legal documents and holdings. It’s also wise to ask the person before you finalize your will if he or she is willing to serve as executor.
Be mindful of the possibility that although the person you choose to be your executor agreed to fulfill that responsibility, he or she may refuse to accept the appointment when it is time to carry out the required duties. Thus, it is best to name alternate executors. If you do not designate any alternate executors, and your original executor declines the appointment, the court will select an executor for you, and the court’s choice may or may not be to your liking.
What about Living Trusts? For the very reasons you selected your executor and alternate executor for your will, you want to name the same people as “Successor Trustee” (and “Alternate Successor Trustee”) of your trust. “Say what?” you ask. If you own your own home, paid for or not, you need a Living Trust. A simple will is not enough. A will has to go through the costly court process called “probate.”
According to a Google Consumer survey, 63 percent of Americans do not have a will, and 9 percent have a will that is out of date. This means that 72 percent of Americans do not have a will or do not have an up-to-date will (source: USLegalWills.com, June 2016). Since many people were told that Living Trusts are for the rich, the number of Americans who own homes without a Living Trust is too big. The remainder of this article is for you.
What is a living trust? A living trust is a legal document created by you (the grantor) during your lifetime. Just like a will, a living trust spells out exactly what your desires are with regard to your assets (your home, bank accounts and stocks, etc.) when you die. The big difference is that a will becomes effective only after you die and your will has been entered into probate. A living trust bypasses the costly and time-consuming process of probate.
What are the advantages of a living trust? The main benefit of a living trust is that it avoids probate – saving tens of thousands of dollars (or more!!!). A living trust does not go through probate, which often means a faster distribution of assets to your heirs — from 1 or 2 years with a will down to a few weeks with a living trust.
Most people name themselves as the trustee of their own trust. As trustee, you stay “in control” and “in charge” of managing your assets. If you want to sell your home – you can. If you want to spend your money – you can. You also appoint yourself the “Primary Beneficiary” of your own trust – which means you can spend all your money. Furthermore, you may amend or revoke your trust at any time.
What are the disadvantages of a living trust? None. Because you appoint yourself the trustee of your own trust, you can remain in control of your assets during your lifetime even though your assets have been put into the trust. However, anyone who believes that his or her family would benefit from paying tens of thousands of dollars for court supervision over the administration of his or her estate should probably not have a living trust.
In conclusion, according to Rocket Lawyer, the No. 1 reason people don’t have a will or trust is because they haven’t gotten around to it yet. Hopefully, the pandemic brings estate planning to the top of the “Things to Do” list. Having a Living Trust and other estate planning documents could be extremely important in the event of an accident, sudden illness or death. You need to do it for your family’s sake.
Judd Matsunaga is the founding attorney of Elder Law Services of California, a law firm that specializes in Medi-Cal Planning, Estate Planning and Probate. He can be contacted at (310) 348-2995 or judd@elderlawcalifornia.com. The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Pacific Citizen or constitute legal or tax advice and should not be treated as such.
