I do serve as a professional trustee, not just executor, or our Solo Ager clients. We’ll cover why our Solo Ager clients are looking for a professional trustee, why they don’t use banks, and how much it costs to hire a professional trustee.

Disputes between trustee and beneficiary

Why are our Solo Ager clients looking for a professional trustee? The main reason is because of potential disputes between the trustee and the beneficiaries. Unfortunately, this kind of conflict is very common, even more so than between heirs and executors.

A trust creates a much longer relationship: an estate lasts a year, worst case 2-3 years. Even with tax issues and selling the estate assets, there is at least a finite relationship where the heirs can see the finish line. The heirs and executor can probably learn to put up with each other, because they know that there is an end in sight. Whereas, a trust can last decades. It usually deals with the duration of someone’s life.

A trustee usually has to make more discretionary decisions than an executor. Often, trusts are written so that the trustee can decide how and when to distribute money to a beneficiary. For example, a trustee can make a “distribution for the health and education or comfort” of the beneficiary. This can get very awkward if heirs and trustee all know each other (siblings, friends, cousins, etc.), and the heirs have to prove to the trustee why they need the money. The heirs may not want to disclose certain health or financial issues to a trustee who is close with them. Even discussing the heirs’ standard of living means that the trustee will know what the heirs spend their money on. There could be a lot of details that you wouldn’t share with your family or friends otherwise. This is why having a professional trustee could make the situation easier.

With an estate, the heirs are the people named in the will or the intestate heirs named by law if there is no will. A trust has multiple layers of beneficiaries. There are beneficiaries of the income of the trust and also beneficiaries who receive whatever is left when the trust maker dies. Those are very different incentives: the income beneficiaries want as much income generated and paid out to them as possible, whereas the beneficiaries at the end do not want the trust money to be spent or distributed so that they can still receive some. This can be a difficult balance even for professional trustees, so imagine how dicey it would be for a trustee who has a relationship with the heirs.

Naming a bank as trustee

Why not name a bank, trust company or other fiduciary company as trustee? Some of our Solo Agers have shared their experiences with us, and they tell us it often doesn’t work well because of minimums or bureaucracy.

Many of these institutions have minimum trust size requirements to qualify, or else they will just reject you. Surprisingly, these minimums can be quite high, because they only want to deal with people who have a lot of money. Even if your trust meets the minimum right now, make sure you have a sufficient amount to qualify by the time you actually need the bank to act as your trustee. For example, the bank’s minimum requirements might increase at a rate that outpaces the growth of your trust assets. If that happens, your trust may no longer be eligible and your trust won’t have a trustee anymore. Another example is when you need to use the trust money during your lifetime to pay the income beneficiaries or medical bills. Taking too much money out of the trust could also disqualify you from using the bank as your trustee.

What about the bureaucracy? We’ve heard from many folks that it is a frustrating and lengthy process just to get approved by the bank. This doesn’t necessarily relate to the minimum requirement; it just takes so long to get your application approved. You’d think it would be the other way around: a person entrusting an institution with their life savings should be vetting the banks! It feels more like asking the bank for a loan rather than asking them to be your fiduciary. On top of that, there is no guarantee you will talk to the same person each time. Whereas with a professional trustee, you know exactly who you hired.

For these two reasons, many clients have reported that they just gave up trying to deal with the financial institutions.

How much does it cost to hire a trustee?

In most cases, there is no cost now, because most trusts are usually revocable or a testamentary trust. So, you won’t need a professional trustee until you pass away. Since no one is doing the job now, there is no cost now.

Once a trustee is needed, the cost for a professional trustee is the same as an amateur. Just as with an executor, the trustee fees are set by state law. If it costs the same to use a professional trustee as it does an amateur, it’s a no-brainer to choose the experienced professional! It’s a fair assumption to assume it costs more to hire a professional trustee, but fortunately, that is not the case.

Thank you to our listeners who’ve submitted questions like this. It helps our Solo Agers to know that they’re in good company. If you have not done so already, click the link below to receive a free E-copy of my book, “The Solo Ager Estate Plan.”

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Our Solo Agers friends often ask this when they’re ready to name me executor in their will. We support well-done DIY wills and anything that helps make your plan as frictionless as possible. Some kind of plan is almost always better than no plan!

So, do you need a lawyer to make a will? No, we’re not aware of any state that requires a lawyer to make your will. We do nonetheless recommend that our Solo Agers at least hire a lawyer to supervise the signing. Here’s why:

Signing ceremony technicalities

A signing ceremony sounds like a long, drawn-out event, but it could last as little as 15 minutes. Still, there are many technicalities to follow, or else the will may be invalid.

Just a few examples, the person making the will (the testator) has to make a proper declaration in the will. The pages of the will must also be stapled together, or else there is a potential for page-swapping. Lastly, to demonstrate that the testator is competent to sign a will, lawyers often chit-chat about current events with the testator. If testimony is ever needed to prove that the testator is competent, then the witnesses can refer back to that conversation.

If any of the technicalities go wrong, then the will may be invalid. Yes, DIY services provide detailed instructions for drafting your will, but most people don’t follow instructions to a T (or even read the instructions). It’s easy to miss a step and invalidate the whole will.

It’s much easier to get an experienced attorney to supervise the signing. It’s also cheaper than hiring an attorney to draft your entire estate plan.

Lawyer-supervised presumptions

In many states, the probate court will give the benefit of the doubt if the signing was supervised by a lawyer.

For example, the court is more likely to accept a self-proving affidavit signed by your witnesses, instead of requiring the witnesses to appear in court to testify. Suppose you die 15 years later…tracking down the witnesses, getting them to agree to come to court, and having them accurately recollect your signing ceremony would be very hard. There is no guarantee that they will remember that day or even still be alive.

Without the lawyer supervision and the self-proving affidavit, it may be harder for your executor to probate your estate.

Best will witnesses

DIY wills often use subpar witnesses. It’s natural to want to ask family and friends to witness, because they are close to you. Using a witness who is named in the will or who could potentially inherit your estate creates a conflict of interest. Their testimony as a witness won’t hold up well in court because they have beneficial interest.

But, it’s also not the best idea to grab a passer-by as a witness (UPS delivery person, doorman, bank teller). If you don’t even know the witness, chances are it will be hard for your heirs to find them if ever needed. Sometimes the address they provide is the physical address where they signed!

For these reasons, lawyers will provide their own experienced witnesses (paralegals, other staff, the lawyer’s spouse, etc.). These people have witnessed wills many times before and can give good testimony if needed.

If you decide to do your own will, at least have the signing supervised by an experienced attorney. For more answers to your estate planning questions, click the link below to receive your free electronic copy of my book, “The Solo Ager Estate Plan.”

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Since we do so many probates, we see what parts of your planning actually helped with probate (dos), and which ones didn’t really matter (don’t bothers).

We are reviewing this info so that you don’t spend too much of your valuable time on planning that won’t help all that much. This is based on our annual executor check in calls, in which we hear from our clients who have well intended plans to gather information for us, should we need it. Which in most cases, we don’t. We are trying to save you stress and make the estate planning process a little bit easier.

Solo ager estate planning “dos”

Good and proper storage of original documents is important. It’s best to keep the original with your professional executor or other third party. Do not keep it yourself. This is for many reasons, such as access your home or apartment. Additionally, if a third party loses your will, probate could still move forward with a copy. However, if you lose it, it’s presumed that you intentionally destroyed it. Same goes for a safe deposit box – it’s hard to get access to this. It’s not impossible, but it’s very challenging.

Update your emergency contacts and be sure your executor is among those listed. An emergency contact list should be given to someone who will know of your death. This could be a building manager, doorman, neighbor, primary care physician, etc. You want to make sure they know who to notify in the event of your passing, including of importance, your executor and next of kin.

You should also review your beneficiary designations. We have talked before about why we don’t like beneficiary designations, but if you have them, make sure up to date. Or better yet, get rid of them. You certainly want to make sure they represent your wishes, and not your wishes 10 or 20 years ago.

“Don’t bothers” for your solo ager estate plan

Don’t use treasure maps. We have received detailed letters and emails with where the will is, where their important documents are, and even where their spare keys are. More often than not, the location of these items will change by the time of your passing. It may take us longer to use the treasure map to find them than it would to simply look on our own. Plus, it would be a waste of time searching if they have been moved. It’s not worth the amount of time you’d spend writing this type of “map.”

We don’t need contact lists. Typically, the lists we’ve seen include building managers, financial advisors, etc. These change often. We find when we make these calls, the people on the list no longer even work there.

Speaking of lists, detailed lists of assets which include balances and very specific info is also not needed. High level information is good enough (such as the name of financial institution). Balances change daily, so by the time you write it down, it’s likely changed.

Sort of helpful

There are a few things we would categorize as sort of helpful, but you don’t need to spend time on these, if you don’t want.

Password lists are one example of a sort of helpful thing to do. A list is nice to have, but post-death access to online accounts is not permitted, even if we have your password and log in. We simply can’t use those passwords. Email and social accounts may have some use to be able to access names and addresses, although again, we have rarely used these. Same with phone passwords. We seldom log into a decedent’s phone, and if we do, it’s only to find a contact name that we couldn’t find elsewhere.

A high level asset list is sort of helpful. It will give us a general sense of what you own to point us in the right direction. We would use this list along with the other items we collect (mail, past tax returns, bank statements, etc.) to be sure we aren’t missing something.

A list of contacts that are likely to not change is also sort of helpful. This includes next of kin, your primary care doctor, and possibly your CPA. It’s good info to know, but likely, we would get the newest information from the documents we have gathered.

Solo Ager Book

If you don’t already have my book, “The Solo Ager Estate Plan,” click the link below for a copy.

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If you’re a solo ager and you must use a power of attorney (POA), make it as limited as possible.

We received the following from a solo ager listener: “You state in your book that a financial power of attorney is not necessary if there’s a solid living trust in place. (I don’t feel the risk of abuse is a critical concern in my case). However, my lawyer says I need to name one.”- Lori

This attorney refused to complete our listener’s estate plan unless she included a financial power of attorney.

Why I avoid POAs whenever possible

Powers of attorney are very overpowered. It can be executed with just a simple notary with no witness requirements. But, for that basic execution, there is unlimited control over someone else’s finances, house, etc.

Powers of attorney are pretty unstructured. There are no guide rails in the law for how an agent under the POA is compensated or whether there should be an accounting proceeding.

Besides, if you have a revocable living trust, then you have most of the benefits of a power of attorney. You would only need a POA if you are traveling abroad or incapacitated. You’d need someone to manage the funds on your behalf so you don’t fall into arrears or foreclosure.

I don’t think the risk of having a financial power of attorney is worth covering those outlaying scenarios. If you ever read a standard power of attorney, you’ll see that the agent has the power to do almost anything with your finances and property.

A supreme example from the news headlines is of Brooke Astor, a famous New York philanthropist. Her son was able to siphon about $80 million from her estate with a simple POA, contrary to the rest of her estate plan.

You might read the scenario above and say, well, I’d only give power of attorney to someone I trust. We’ve seen people who used to be the most trusted candidates go astray. Money does interesting things to people. This fear should not keep you from creating an estate plan, but keep in mind that you should minimize the use of a POA.

Why would an estate planning lawyers insist you sign a POA

The short answer is that I don’t know why anyone would be that stubborn to make their client do things their way. It’s like a doctor saying, “Get this surgery and you will be better. If you don’t listen to me, then I won’t be your doctor anymore.”  If they can’t explain their reasons to your satisfaction and still insist, consider changing lawyers.

Some attorneys have always done estate planning “packages”, and haven’t changed with the times. It might be hard to leave an attorney that you’ve been working with for a long time and who you are otherwise comfortable with. But, if you can’t get a decent answer to this pretty powerful question, it might be worth getting at least a second opinion.

Ways to limit a power of attorney

If you feel that you need a power of attorney, then ask the attorney to make it a limited one. There are two main ways to limit a POA:

The first way is to get a springing POA instead of a general POA. A general POA is effective immediately upon signing. A springing POA is conditional; those powers only come into existence if certain conditions are met. Usually this means that you must be deemed incompetent by two physicians.

The second way to limit a POA is to only choose specific powers for the agent to have. You don’t want to check the box that says your agent under the POA has the power to gift all of your money. And you certainly don’t want to check the last box that says, “All of the above.” Carefully choose only the powers that are needed to accomplish your goals. If it’s not something you would do in your own capacity, don’t give someone else the power to do it!

Solo Ager

If you don’t already have my book, “The Solo Ager Estate Plan,” click the link below for a copy.

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E303 How to Choose an Executor Who Will Accept

A common question from our Solo Agers is: does my executor have to accept?

Because our Solo Agers spend a LOT of time carefully choosing who will be their executor, it would be terrible if that carefully chosen one decides to not even serve! Our Solo Agers understand the significance about who they choose, and they take it very seriously. We touched on this in Episode 221, but we’ll dig a little deeper into the topic here.

It’s just a nominated executor

The first thing to know is that this is just a nomination for an executor. When Solo Agers pick who they want as their executor, they should remember that it is not a contractually bound role. That chosen executor is not required to serve; he or she is just nominated for that position.

It is up to them if they decide to serve at the time of your passing. There are many reasons why the nominated executor may not accept. They may have new health problems, or maybe they moved. In fact, many nominated executors don’t even know they were appointed until the time comes.

Is being executor too much work?

There are some things to consider to be sure your executor will actually accept. Being an executor is difficult, and probate is a lengthy process. We discussed this in Episode 184, touching on the hours, months, and expertise required to fulfill the executor’s duties. It almost ends up being a full-time job! Having this job hanging over the executor’s head can easily stress them out.

It is important to choose someone who is well-suited, meaning they have the legal or tax background and especially the time to devote to the task. Or you can just hire a professional executor. We have the staff and systems set up to deal with the challenges of executorship.

Unfortunately, your nominated executor may agree to serve but won’t realize it’s too much work until they’ve already accepted. It is important that you do your research ahead of time so that you know what exactly you’re asking of them.

Is there enough compensation for your executor?

An executor may decline if it’s too much work for too little pay. In New York, executor compensation is set by state law, and it is a percentage of probate estate (meaning the assets that go through the executor’s control). But it does NOT include non-probate assets such as accounts with beneficiary designations.

If your estate includes creditors or tax issues, but there are only a few probate accounts to deal with the issues, your executor may decline to serve. Otherwise, your executor will be paid very little for dealing with all the headaches. No one wants to deal with that kind of mess and barely get paid.

A solution may be to write a minimum executor compensation in your will, so that even if there are not enough probate assets, your executor could still be reasonably compensated. However, the statute is already set, so the executor may have to fight to get paid properly.

Another solution is to make sure you have enough probate accounts by removing beneficiary designations from some of your accounts. However, your executor may not be able to accurately evaluate how much work is involved vs. how much compensation they will receive. Just because an estate is large does not necessarily mean that there are enough funds available to pay the executor properly.

If it turns out to be too much work for too little pay, they may end up with unhappy memories of you. If you think your estate might present the issues discussed above, give us a call to talk through the pros and cons of hiring a professional executor or not.

Solo Ager Book

Below is the link to my book, “The Solo Ager Estate Plan,” which addresses the challenges of probate and executorship. And, as always, keep sending in your questions!

Free copy of “The Solo Ager Estate Plan”

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