Elderlaw Advocates Jan. 15, 2018
Dear Len & Rosie,
A good friend of mine died last month, and I have just discovered that he named me as his executor. I havenít the faintest idea what Iím supposed to do. Iím not an attorney, and I donít know if I want to devote the time to it. Iím not even sure that I want to be executor. My friend is survived by his four adult children, two sons and two daughters. They have never gotten along with each other. I just know that they are going to start fighting over their fatherís estate, which is worth over $500,000. Just last week they were arguing over who would get his stereo and television. What is an executor, what does the job pay, and what can I do if I donít want to do it?
An ďexecutorĒ is a person nominated in a will, and appointed by the court, to oversee the distribution of a decedentís probate estate. The good news is that if you take the job, you get paid, and paid well. The probate executor (or administrator) gets paid the same fee as the probate attorney. In your case, a $13,000 statutory fee for an estate with a gross value (before debts are subtracted) of $500,000. If the estate is worth $1,000,000, youíll get paid $23,000, for more or less the same amount of work.
It will be your responsibility to gather the assets of your friendís estate. You will need to publish a notice to creditors to ensure that those your friend owed money to shall have the opportunity to present their claims for payment. All of the assets in the estate have to be inventoried, itemized, and accounted for before the court will order you to distribute the estate in the manner provided for by your friendís will. Your friend may have a final income tax return due next April 15. The estate will also have to file an income tax return if it earns more than $600 of income during the course of administration.
Most of the heavy lifting will be done by the lawyer you hire to probate the estate. Just follow the lawyerís advice. The difficulty will be if your friendís children fight with one another over every little thing. Your friendís possessions of sentimental value should be divided equitably among his children and, hopefully, they can do this on their own. If they are fighting over the television, thereís an easy solution: Sell it to the highest bidder, or hire an agency to conduct an estate sale.
The real question is whether or not you want the job. If your friendís children are going to fight over an old stereo and TV, you may not want the hassle. Or, you may not be a suitable person to be executor. You need to be honest, organized and diplomatic. You also need to be fairly good with your own money. This doesnít mean you have to be well off, but if you canít get your own bills paid youíre likely to have difficulties managing your friendís assets. If you think youíll get in over your head, donít take the job.
If you donít like the idea of having to put up with your friendís children, you can simply decline the honor. Nobody can force you to be the executor. If you feel your friendís children are going to fight over the estate like dogs snarling over a bone, then the $13,000 fee may not be worth the hassle. If you do not want the job, the next executor named in the will should do it, or your friendís children will fight for the privilege of being executor.
Len & Rosie
Dear Len & Rosie,
I have a $100,000 life insurance policy. I also have a 24-year-old son from a previous marriage. Heís in drug rehab. Originally my son was the beneficiary of the policy, but since I found out about his drug use I thought it best to leave it to my wife. She has agreed to dole out money to my son as he needs it.
If my wife and I pass away tomorrow who will get my life insurance? Is there some document I can draw up that would allow my son to benefit from the insurance without being able to spend it all on drugs?
If your wife dies first, your $100,000 insurance policy will pass to the alternate beneficiaries that you named on the insurance company beneficiary form. If you have not named any alternate beneficiaries, then most policies will pay out to your probate estate. If that happens, all or part of the money will probably wind up in your sonís veins.
If you are survived by your wife and she gets the money, she may not leave it to your son when she dies. The money will be hers and she will have the right to leave it to anyone she wants upon her death. Thereís also no guarantee that she will not become frustrated with dealing with your son and simply keep the money for herself. Remember, heís not her son, and she may not be willing to be his keeper for the rest of her life. Clearly, you need some estate planning.
You should create a revocable trust, and name it as the primary beneficiary of your life insurance policy. A trust would protect your sonís inheritance, even if you are survived by your wife. Your wife can be the trustee after your death, and she can manage the money for your sonís benefit Ė spending money on him as he needs it. You can also name successor trustees who will take over if your wife is unable or unwilling to do the job.
A trust like this can be flexible. You can give the trustee discretion to make or withhold payments directly to your son, or spend money for his benefit, depending on your sonís condition. She can be empowered to withhold payments if heís not clean, and even require him to pass a drug screening test before he receives a distribution. You can even allow the trustee to end the trust and give your son his inheritance outright, if he cleans up his life. If your son is on public benefits, your trust can give him his inheritance within a special needs trust that will not cause him to lose his eligibility for Medi-Cal.
A better alternative may be to leave your son his inheritance within a dynasty trust that will provide better protection against your sonís creditors. You have a lot more options than giving the money to your wife and hoping for the best. You should see a trusts and estates attorney and figure out the best way to provide for your son while also protecting him from himself.
Len & Rosie