Articles and audio on New York Professional Executor

E263 Not All Lawyers are Good Executors

E263 Not All Lawyers are Good Executors


There are many excellent probate lawyers who would be terrible executors. Why? Let’s break down what you need to have to be a professional executor.

The right support team

The right support team

Probating an estate takes a LOT of hours. It is not reasonable for those hours to be charged on an attorney’s billable time; your estate will go broke in no time. Some lawyers who are just starting out might do everything on their own, but that’s a recipe for burning out quickly.

The attorney must have well-trained, experienced paralegals and support staff. This is a huge asset for an executor while carrying out their duties over a period of months or even years. We’ve had some clients ask if they can just hire the paralegals! Unfortunately, it doesn’t quite work that way.

Think technically, not strategically

Think technically, not strategically

Some probate lawyers tend to think more technically, not strategically. That’s not a bad thing; competent probate lawyers will know the steps to get from point A to point B.

But sometimes the question is, SHOULD we be trying to get to point B? You may need to step back and see the bigger picture. A good executor thinks strategically and sees around corners.

For example, a good lawyer knows which forms to send out to complete the court probate package. A good executor also knows which forms to use but also knows that some forms alarm heirs and cause them to clam up. A good executor won’t just send out the forms to the heirs but will take the time to explain the forms and walk the heirs through the process.

Pessimists make good lawyers

Pessimists make good lawyers

Lawyers are supposed to expect the worst, it helps them to draft all those contract clauses to prepare for worst case scenarios. But such pessimism may paralyze an executor, who has a duty to reasonably keep the probate estate moving forward. The executor’s job isn’t to make sure that nothing bad ever happens, but to keep the process going to get the checks into the hands of the heirs. The mindset is a bit of a balancing act.

A good executor will be aware of the downsides, because they could be personally liable for things that go wrong. But the executor should be able to weigh the situation and embrace whatever solutions are available to keep things moving. There is a difference between being aware that something bad could happen and being crippled by the possibility.

A good example of this is closing an estate with an accounting reserve. Meaning, you’re 95% sure the estate is ready to close, and you are ready to get the checks to the heirs. But there is a 5% chance that could be a tax issue or creditor. Since the executor is personally liable, it’s tempting for him not to make any distributions until he is sure that there are no issues. One solution is to close the estate but hang on to a reserve amount to handle any possible problems. This will move things forward to settle the estate.

Hopefully this will help you identify what kind of executor you want for your will. If you decide to hire a professional executor, call them and interview them before making the decision. To learn more, check out my book, “How to Hire an Executor,” available on Amazon.

 

E252 What Happens if Your Professional Executor Dies

E252 What Happens if Your Professional Executor Dies?


Listener, Raymond, asks: “What happens to your clients if you die? By you, I mean Anthony S. Park. Who is your backup?” He posted this question on a professional executor video, so we’ll answer in the context of me being a professional executor as opposed to being an attorney.

Thanks for your question, Raymond.

Can an executor transfer his duties?

Can an executor transfer his duties?

If you name me as your professional executor, can I delegate my duties to someone else? No, the roles of a fiduciary (trustee, executor, etc.) are non-delegable. So, if I die, I can’t just say that my spouse, or paralegal, or law partner can take over.

Why not? Because it’s not my choice as to who should be your executor – you chose me for a reason. It’s not up to me to grab one of my colleagues to step in; there’s more to it than that. It should be your choice.

By the way, this is not a limitation to just professional executors; this applies to any executor. The same principals apply if you name a spouse, nephew, or friend – they can’t just pass it along to someone else.

Can you have a backup executor?

Can you have a backup executor?

Yes, you can and should name a successor in your will or trust. In your will, the appointment of a successor executor will be in the same or following paragraph where you nominate me as executor. For example, “I appoint Anthony S. Park as my executor, but if he cannot fulfill his duties, then I name __________ as my successor executor.”

I recommend naming at least one successor executor, but no more than three. You need at least one back-up, but any more than three just feels like overplanning. I’ve had clients come in with a depth chart of up to seven successors. It’s very unlikely that you’d get to the point where you need the seventh executor. That would be like a plane-crash involving all of the other executors! Naming that many people will probably cause more stress than you realize. Plus, if you’ve chosen your executors wisely, you won’t need such a long list. It is important to review your will every four years to make sure you’ve chosen your executors are still fit to act, if needed.

What happens when a lawyer dies?

What happens when a lawyer dies?

I am both a licensed attorney and a professional executor. Like most good lawyers, I have backup counsel, as recommended by ethics rules and as required by my insurance carrier.

I have a “notify in case of death” colleague who will take over my files in case I die. This doesn’t necessarily mean that he or she will be your attorney, but at least they can notify you that I passed. You could then keep the file with my colleague or retain new counsel.

This is the same process for me as a professional executor. If something happens to me, you will be notified. As you may know, I have annual check-in phone calls with clients who’ve named me as their executor. We call to get updates from you, but also partly so you know that I’m still here! It’s a two-way street. If you haven’t heard from me in a year or two, you may need to make sure I’m still around!

Again, we appreciate Raymond’s question, and we encourage others to submit their questions, as well.

If you want to learn more about professional executors, check out my book, “How to Hire an Executor,” available on Amazon.

 

E249 Annual Professional Executor Checklist

E249 Annual Professional Executor Checklist


When you name me as your professional executor or trustee, we have an annual “check-in” call or email to make sure I’m up to date on your plan and wishes.

We’ll review below what we chat about during our annual check-in.

But first, why annually? As your executor and potential witness if your will is contested, it’s useful for me to be familiar not just with a snapshot of your wishes upon your death, but the trajectory of your wishes.

For example, it helps me to track that year after year your niece was gaining your favor. Maybe she only made phone calls in the beginning, then she sent Christmas cards to you, and ultimately, she finally started visiting you. At each annual check-in, you talk about her more and more. On the flip side, if every year you report the same thing about your niece and she contests your will, then I’ll know what that relationship was like if I have to testify in court.

1. Are you alive?

Are you alive?

If you answer our check in call each year, then we’ll know you’re alive! Of course, we care more than whether you are dead or alive. We’ll ask about your health and check to see if there are any signs of capacity issues. For example, are you becoming frailer each year? Perhaps you might need a trust or other sort of estate planning advice.

2. Does your plan still reflect your wishes?

Does your plan still reflect your wishes?

Does your plan still reflect who you want as your beneficiaries? Are any of your beneficiaries dead or incapacitated since we chatted last? Perhaps there is now someone you would like to cut out of your will or maybe a beneficiary is no longer worthy of an outright inheritance. Maybe your nephew is now a drug addict or gambling addict, and you need to put his share into a trust because you still want to give him something, just not all at once. Maybe one of your beneficiaries is now in a nursing home, and you want to make sure her share is protected (not counted as an available asset).

3. Have your assets changed?

Have your assets changed

Have you bought or sold anything major? As your professional executor, I need to collect and distribute your property after your death. It would definitely help me to know that your summer home in the Poconos has been sold or maybe you bought a big piece of land in Montana.

Also, are you significantly richer or poorer than when we last checked in? Did your crypto crash or your Bitcoin pop? There is a cost-benefit analysis involved, and the size of your estate plays a big role in that.

4. Do your assets still have correct titles and beneficiaries?

Do your assets still have correct titles and beneficiaries

If you have a trust, you probably want a good number of assets to be no longer owned by you personally, but rather owned by the trust. Is that trust paperwork in place with the bank?

Even if you don’t have a trust, do you have beneficiaries on your accounts? Have you named who automatically gets your 401(k), life insurance, IRA, brokerage account, etc.? It’s important to make sure the correct person is named. Is your old girlfriend from ten years ago still listed as the beneficiary?

As a caveat, we generally don’t recommend structuring your estate plan with beneficiary designations. There are many problems with that approach, and you can check out this link to learn more. If you do have beneficiary designations, we’ll make sure the designations are at least reasonably accurate.

5. Are we still a good match?

 

Are we still a good match

The last thing we’ll check is if you and I are still a good match. Do we still like each other, and do we still trust each other? Am I still young and fresh and up to date on estate administration? Or maybe when I am older, you’ll want a younger professional executor. I mean, you should have an executor who is likely to survive you! Does my style of doing things match the way you want things done?

There is no right or wrong answer.

The check-in is usually a 15- or 20-minute phone call, or even a few emails back and forth. The check-in helps us keep in touch over the years and gives me a better picture of your wishes each time.

If you want to learn more about professional executors, check out my book, “How to Hire an Executor,” available on Amazon.

 

E244 Who Should Have the Original Will

E244 Who Should Have the Original Will?


So, you finally did it: you made and signed your will. Now, where do you store the original? We get this question a lot from Solo Agers, particularly those who have named me as executor in their wills.

Can you keep your will at home?

Can you keep your will at home?

It’s not a good idea, even if you have a fireproof box or filing cabinet. The big drawback (at least in New York) is the legal presumption of intentional revocation. Meaning, if you lose the original (in absence of evidence), the court will assume that you intentionally destroyed it.

If you store it with the court, lawyer, or executor, they do not have the right to revoke your will. If your executor loses your will, they can still potentially probate a copy of your will.

Storing your will in a safe deposit box is a bad idea. Getting into someone’s safe deposit box after death can be a pain. That pain is compounded if the will that authorizes your executor to access the safe deposit box is in the safe deposit box!

Does probate court keep original will?

Yes, there is a mechanism called “filing a will for safekeeping” in the New York courts. You go to your local county surrogate’s court and pay a fee of $45.00. They will keep it in the court’s vault.

Does probate court keep original will?

The benefit of filing a will with the court is that it’s a centralized process. One of the first things we do when we probate an estate is to check with the court to see if they have the will.

However, there are two major cons: 1) A publicly filed will is a semi-public record. This doesn’t mean that anyone can walk in and look at it. Rather, suppose you make a new will years after you filed your first will with the court. Maybe you forgot you ever filed the first will, and now your executor is probating your subsequent will, which names different beneficiaries. Your executor may need to notify the beneficiaries of the first will. This is probably not the case if you didn’t file your will with the court. 2) Another drawback is: which court do you file it with? What if you file it in Manhattan, but then you move to Long Island? Probate occurs where you die. If the will isn’t stored in that court, then the benefit of checking the court for the will doesn’t exist anymore.

Do lawyers keep original wills?

Do lawyers keep original wills?

Yes, some lawyers offer fireproof storage for wills, trusts, and other client documents. Most do not charge a fee for this. Not all lawyers offer to hold wills due to the risk involved. As mentioned above, if the lawyer loses your will, the executor should still be able to probate a copy.

Should I give my will to the executor?

Should I give my will to the executor?

Generally, the answer is no. However, a professional executor lawyer is set up to safely store your will. Most amateur executors (family, friends) are not set up and have the same issues as you for where to store it.

To find out more on this topic, check out my book, “How to Hire an Executor,” available on Amazon.

 

E243 Heir Won’t Leave the House

E243 Heir Won’t Leave the House


When one of the heirs won’t leave the family home, what can you do? It’s a pretty common situation. For example, mom passes away leaving three adult children. One adult son was living with her when she passed away, and he doesn’t want to leave.

Why heir won’t leave

Why heir won’t leave

The top reason is pretty straightforward: it’s like having free or reduced rent. Sometimes there’s the feeling of entitlement. As in, “I was the one taking care of mom during her last years, so what’s the big deal if I stay in the house?”

Then, there’s that litany of “dog ate my homework” type of excuses: I have an injury and can’t move right now; I don’t want to move my kids in the middle of the school year; I’m too busy to deal with a move, etc. We’re not saying these excuses are justifiable, we’re just saying that we’ve heard it all!

Can you evict an heir?

The short answer is yes, but it is an uphill battle. Evictions generally tough. You deal with notice requirements, assumptions that tenants have rights, extensions, etc. It could take many months to years to evict a tenant in a normal situation. Add to that, the complication that the heir is partial owner. In our example where mom passed away with three surviving children, that adult son is still an heir to one-third of the estate, even if he leaves the home. So, now it’s psychologically more than just evicting a tenant, it’s evicting a one-third owner.

Can you evict an heir?

In addition to a frustrating situation, evicting your sibling is probably pretty awkward! (“Happy Thanksgiving, sister; pass the turkey. And oh, yeah – here’s your eviction notice”). A situation like this can devastate families. A professional tip to avoid the awkwardness is to use someone else as the “bad guy,” such as a realtor or professional executor. If the home is a condo or part of a homeowner’s association, maybe make a call to the manager to discuss the eviction. If this works, it can save a lot of money in legal fees. The quicker the eviction is taken care of, the less money wasted. It’s expensive to let someone reside in a home for “free.”

How to buy out heirs

How to buy out heirs

More often than you’d think, the resolution is to pay the heir to leave. It doesn’t feel great to pay someone who is supposed to leave anyway but take a look at the cost-benefit analysis. It might be cheaper than the headaches, legal fees, mortgage payments, etc. As much as you might not want to pay him, it’s probably the best solution. It could also make those Thanksgiving dinners less tense!

Paying an heir to leave doesn’t mean you have to start with the highest number. Maybe start by offering to pay for the moving costs. Then offer more, as needed, until he actually leaves.

This is where having a professional executor comes in handy – he or she can do the awkward work for you. If you are interested in learning more, check out my book on Amazon, “How to Hire an Executor.”

 

E236 Executor as Home Flipper

E236 Executor as House Flipper


Sometimes, as professional executor, I must be a (reluctant) house flipper.

Why reluctant? It looks so fun and glamorous on TV shows! Renovating means time, money, and risk for the estate. That is not great for an executor. An executor’s job is to preserve value, pay creditors, and get whatever is left over into the hand of the heirs as soon as possible. I prefer to sell as quickly as possible, but sometimes we have no choice.

Low budget home renovation

Low budget home renovation

When an executor is the house-flipper, it is almost always low-budget. Any misspent/overspent dollar is money out of heirs’ pockets. I have to make decisions that don’t cost the heirs their inheritance. Knowing that, I do the bare MINIMUM amount of renovation necessary to sell the house. Am I going to get a presentable countertop or the granite one? Am I going to knock down walls to make an open floor plan? No!

Am I going to scrub the mold out of the bathroom? Of course; almost no one will buy a house like that. Will I exterminate for pests? Yes, we have to! I do what I need to do to get it sold. I don’t spend more to get top dollar; I spend the minimum amount to get a reasonable buyer.

Oversee home renovation

Oversee home renovation

As a professional executor, I must oversee the contractors, plumbers, movers, etc. I oversee who comes in and out of the home and make sure the workers are bonded and insured. That kind of project management can be challenging. Just imagine getting contractors inside to work on a co-op in the city. They have to come at scheduled times, and someone has to be there to let them in. And the heirs don’t have to deal with any of it when they hire a professional executor.

How to pay for home renovations

How to pay for home renovations

As a professional executor/house-flipper, I have to figure out how to pay for these home renovations. Who pays for this? If the estate is liquid, I can take the funds from the estate account. What if the estate doesn’t have the funds? I might have to call the heirs to ask them to contribute some money toward the renovations. That is not a fun job to do; it makes you feel like a solicitor. This a job that the heirs get to avoid if they hire a professional executor.

If the estate doesn’t have money and we can’t raise funds from the family, I arrange financing. This is not the ideal option, but there are different kinds of loans out there to help. If there is something in the house that absolutely needs to be fixed, as a professional executor, I do what needs to be done to fix it.

To learn more on what a professional executor can do, check out my book, “How to Hire a Professional Executor

 

E231 Emotional Distress During Probate (Case Study)


Death, family, and money are always an emotional mix. And those emotions can lead to headaches and expensive problems during probate.

How to clean out house after death

How to clean out house after death

In general, the clean-out can be an emotional and cathartic process as people journey down memory lane. But in our case, the daughters are from out of state. They had limited time to just tag items for the executor to keep or trash, then leave.

Then, we hired a realtor who was willing to box and move the items to storage on behalf of the daughters. Unfortunately, making decisions in an emotional state caused very confusing, very long lists. As a result, the realtor accidentally took golf clubs to be appraised, rather than leaving them in the “keep” pile. The realtor thought these nice golf clubs were in the “trash” pile, so he decided to see what they were worth instead of throwing them away. He did this so the heirs wouldn’t lose money by throwing away something potentially valuable. He had good intentions with his actions.

Little did the realtor know, the golf clubs had strong sentimental value. The daughters went ballistic when they found out that the realtor handled the golf clubs. The daughters threatened to sue the realtor and call the police on him.

How this created probate issues

How this created probate issues

The incident resulted in weeks of emails and phone calls between lawyers, daughters, and realtor to sort out and calm down the situation. Of course, this was all billable work.

The next consequence was that the realtor quit. This was unfortunate because the realtor was doing an excellent job in going above and beyond. Not only did we lose a great realtor, but it will be nearly IMPOSSIBLE to hire someone else to handle the packing and storage. Now there is a precedent that if someone makes the slightest error, the daughters might sue them or call the police.

Of course, this was not a small mistake to the daughters, but their reaction was not proportionate to the circumstances. Their response far outweighed the mistake. By the way, the golf clubs were immediately returned to the daughters with the appraised value.

Why an Independent Executor may help?

Why an Independent Executor may help?

An independent executor is emotionally unattached. As most of you may know, I am a professional executor. If there was a mistake made, I can dispassionately evaluate if someone made an honest mistake or acted out of line.

I take pride in being a professional executor, but I don’t take it personally. Mistakes won’t flare my emotions as if it were my father’s estate. Even if I think the realtor messed up, my response would be proportional. I wouldn’t have a ballistic reaction that scares other realtors away. There are consequences as to how you go about your business as an executor.

You may say, “Oh, I would never call the police on a realtor who made a mistake.” But most people are prone to some level of emotional response when grieving. Professional executors definitely care about your case and your family, but they do not have the emotional attachment. This emotional detachment allows a professional executor to make professional, independent, unbiased decisions.

You can read more about professional executors by checking out my book, “How to Hire a Professional Executor,” available on Amazon.

E218 Bitcoin Letter of Instruction to Heirs

E218 Bitcoin Letter of Instruction to Heirs


Every bitcoin estate plan must include a simple, easy-to-understand letter of instruction to your heirs or executor. If you don’t, all of your hard-hoarded bitcoin may disappear.

Explain Bitcoin to a Child

Explain bitcoin to a child

Keep it super simple! Write the letter like you are explaining bitcoin to a child. Do not give the whole history of bitcoin, block chain, sound money, etc. Just write enough to get them past this treacherous stage: handling new and complex assets while grieving.

In your letter, write about:

  1. High-level concepts;
  2. Major pitfalls to avoid when working with cryptocurrency; and
  3. Immediate to-dos or checklist.

Bitcoin vs Banks

Most of your heirs understand banks and brokerage accounts. So, explain how bitcoin is different. Explain that cryptocurrency can be lost forever if handled wrong, unlike dealing with a bank. There is no password recovery.

Bitcoin vs banks

If your heir is a little more financially savvy, explain that bitcoin is like a bearer instrument. Bearer instruments are certificates where whoever holds them owns the money. (Cash is essentially a bearer instrument). When you give someone your bitcoin keys, that person has complete no-consequence access to your funds. No one will check their ID or verify their signature.

Where You Store Your Bitcoin

In your instruction letter, explain where you store your bitcoin keys. You should have a rough inventory of what you’re holding so your heirs know what to look for. Most bitcoiners have a little bit on an exchange (Coinbase, Binance, Gemini, etc.). You may also have some hot wallets online (apps, browser extensions, etc.). Lastly you may have cold wallets, which are not connected to the internet at all (hardware or paper certificate).

It is important that your instructions are in a letter, not in your will. Your holdings could change, and you won’t want to update your will for every change.

Where you store your bitcoin

Next, explain how the heirs can access the items on your inventory.

Exchanges are simple to explain, because they are more similar to banks than anything else. You heirs will send the death certificate and letters from the court and the exchange will turn over possession to the heirs.

Wallets are a little different. A good solution for a hardware wallet is to give a clone wallet to an executor or heir and give the PIN to someone else. Or you can split up a seed phrase and pass phrase among different heirs and they must collaborate to access your bitcoin.

Bitcoin letter of instruction example

If you’re reading this, I’m either dead or incapacitated. If I’m not dead or incapacitated, PLEASE STOP READING NOW.

This letter is about my Bitcoin and other cryptocurrency, and how to access them. I won’t even try to explain everything about Bitcoin here, but I want you to know enough to not get robbed or lose everything.

Some important high-level concepts:

(1) Cryptocurrencies can be lost, forever! There’s no FDIC, or bank customer support to stop payment or reverse a bad transaction. Once it’s gone, it’s gone.

(2) There’s no password reset or “recover lost password.” If you lose the passwords (known as seed phrases, I’ll explain below), Bitcoin and other cryptocurrencies are gone forever.

(3) Bitcoin and other cryptocurrencies are “bearer” assets, like cash. Whoever holds it, owns it. So if you hand someone the seed phrases, it’s like handing them an untraceable bag of cash.

Nervous enough? No worries, Just follow these instructions, and you should be fine.

On Exchanges

I hold some Bitcoin and other cryptocurrencies on the following exchanges:

– Binance.com/Coinbase.com/Gemini.com

This is the easy part: just ask my executor or probate lawyer to contact the exchange with an original death certificate and letters testamentary, and they’ll give further instructions on how to transfer my Bitcoin and other cryptocurrencies.

Now it gets harder.

On Hardware Wallets

I also hold some Bitcoin and other cryptocurrencies on hardware wallets. What’s a hardware wallet? It looks like a large USB thumb drive, and my passwords/seed phrases are securely stored inside the device. You need my PIN code to access my hardware wallet.

My hardware wallet (and duplicate copies) are located:

– Describe locations

You should automatically receive an email with the PIN within six months of my death (I set up a “Dead Man’s Switch”). Just remember: anyone who has both my hardware wallet and PIN has full, irreversible access to the Bitcoin and other cryptocurrencies inside.

Seed Phrase

If you cannot find or access any of the hardware wallets, you can still recover my Bitcoin and other cryptocurrencies using my “seed phrase.” This string of 24 ordered words is the secret password to control the funds, even without the hardware wallet device.

I’ve given the first 12 words to these trusted people: Bart, Lisa, and Maggie

And the second 12 words to: Moe, Larry, and Curly

Contact whoever you need to complete the 24 word seed phrase. And remember: whoever has the full 24 word phrase has full, irreversible access to the Bitcoin and other cryptocurrencies inside.That’s it.You probably won’t be able to navigate all this without some help.But at least you now know how to find and protect the hardware device and seed phrases while you figure out the rest.

Also, consider choosing an executor who understands bitcoin custody. If you want to learn more about how a professional executor can help , check out my book, “How to Hire an Executor,” available on Amazon. I don’t have a Bitcoin chapter yet, but you’ll get a sense of how choosing a professional can make things easier, especially for something complicated like an estate that includes Bitcoin.

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E207 Hire a Professional Executor for your Insolvent Estate

E207 Hire a Professional Executor for Your Insolvent Estate


Going through probate is a grueling 1-to-2-year process. Would you want to go through all that if you don’t even get anything out of it?

If you think the estate may be insolvent, consider hiring a professional executor.

What’s an Insolvent Estate?

What’s an insolvent estate?

An insolvent estate is when the decedent’s debts are greater than the assets. For example, the mortgage, credit card debt, and medical bills are greater than the value of the house and bank accounts.

There are also situations where the estate is close to being insolvent and you don’t realize it. Examples of this are Medicare clawback and unseen taxes. If you received medical care paid for by the government, the government will want the money back when you die. This could leave your estate with a large bill. Additionally, the IRS will look over your taxes carefully to be sure they didn’t miss anything.

Who Must Probate the Estate?

Who must probate the estate?

Many family members and heirs ask: am I required to be executor? The answer is no! You can decline or not act at all. Although, some may feel like they are dishonoring their deceased loved one by leaving the estate as a mess.

If you think the decedent is close to having an insolvent estate, you have options.

One not-so-great option is to let the state take over. There’s a state office (sort of like the public defender, but called a public administrator) that can step in. But, the interest in the estate and the incentives might not be the same as a person who you hire to help.

Instead, Hire a Professional Executor for the Estate

Instead, hire a professional executor for the estate

A better option is hiring a professional executor. You won’t have to do the stressful work yourself and you don’t have to feel bad about abandoning your loved one’s estate to the public administrator.

Even if the estate is NOT insolvent, you now have a relationship with the hired executor. This helps to make sure you get your inheritance. If the estate IS insolvent, then you can relax knowing that a professional is there to wrap up the estate.

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E201 Should I Name a Trust as Beneficiary of My Accounts

E201 Should I Name a Trust as Beneficiary of My Accounts?


Another question that we receive often is “should I name a trust as beneficiary of my estate?” In a recent case, Rhonda reached out to us, because she wanted the benefits of a trust (avoid probate, reduce chance of a “will contest,” etc.), but she was not quite ready for the headache of a full-blown trust setup. In her particular situation, naming her trust as beneficiary makes sense. If you are considering this doing this, here are a few things you should consider.

How to Name Trust as Beneficiary

How to Name Trust as Beneficiary

A full-blown trust has to be set up and funded. It can be a nominal amount, even as little as $10. It has to own things and you will need to convert your banking accounts, houses, and related items from your individual name to the trust name. It may be quite a bit of work in some situations. For example. if you live in a co-op, this can be a lot of work to change your deed. You will likely need board approval, and this will take time and work. If changing your banking, you will need to go to the bank and open new accounts in the trust name. You’ll then need to change any direct deposits and withdraws once the new account is open.

In Rhonda’s case, instead of changing all of her accounts now, she is leaving them in her name and changing the beneficiary of the accounts to a trust. For example, when you have life insurance, you can name a person or multiple people as beneficiaries. However, instead of naming a person, you can name your trust to be the recipient.

In her situation, her trust will be unfunded until she passes. Upon her passing, the trust will be funded using the beneficiary designations.

To name a trust as a beneficiary, there are three basic steps. You must create the trust document, you then fund the trust (even a nominal $10), and finally, you name a beneficiary. Usually, you can obtain change of beneficiary forms for your accounts to change the names. The result: you have a hollow, but ready, trust on standby, which is ready to accept funds as beneficiary upon your passing.

Pros of Your Trust as Beneficiary

Pros of Your Trust as Beneficiary

One of the pros for taking this route is that, in theory, you get to avoid the costs and headache of probate. Probate is generally not easy and takes a long time. If there is a beneficiary on an account, then the account does not need to go through probate to be liquidated. You simply need a death certificate and a copy of the trust to withdraw the funds. Having a trust also reduces the chance of a will contest. If there is a wayward heir, they can contest the will if it is probated. If you do not probate, it’s much harder. You essentially create a challenge barrier with a trust.

There is also a phycological connection. Changing all of your accounts out of your name and into a trust name may feel as if it’s not yours. If that is an issue for you, then this option may be a good way around that feeling.

Cons of Your Trust as Beneficiary

This way of doing a trust does not protect you from court-appointed strangers (known as guardians) controlling your funds during your life. If everything is still in your name and you become incapacitated or someone can assert that you are in cognitive decline, then a guardian can be appointed to control your funds. However, if everything is owned by the trust, then a court-appointed guardian can not access those items. Only the trustee of the trust, as chosen by you, can control what happens. Not only does a full trust prevent a court-appointed stranger from controlling your assets, but they most likely won’t bother with you, because there are no funds for them to control.

Cons of Your Trust as Beneficiary

In general, Anthony is not really a fan of naming a trust as a beneficiary, because in his experience, people generally do not do a good job tracking their beneficiary designations. We see very often where people forget to change their beneficiaries after relationship ends and people die. It is very easy to forget, even if you are really well organized. The designations are not conspicuous and are not usually listed on the statements, so people do forget. Bottom line – people do not remember.

Another reason that Anthony doesn’t suggest this route is that honestly, doing it this way does not really save as much time as you would think. It is actually very similar to what you will need to do with your assets when you create a full-blown trust. In either scenario, you will have to submit forms and provide documentation, which is almost the same process in both situations.

Naming a trust as your beneficiary is a good steppingstone as first step to a fully funded trust. We suggest you talk out your wishes and situation with an experienced estate planner to determine the best route for you.

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