Be Kind To Your Executor – Trustee and Beneficiaries
No one wants to think about it, but we are all going to die sooner or later.
Statistically speaking, most of us will first suffer through some period (or periods) of incapacity. (Seriously, no one wants to think about this.)
But you are reading this, so you are up for some thinking about it.
Congratulations to you for doing so
You have an opportunity to do some very good things for those who will have to deal with the practical consequences of your incapacity and death (let’s call them the “responsible parties”), and those who you will name as beneficiaries of your estate. No one but you can do these things for them. Or, you can do as many unfortunately do, which is to take few if any steps to plan for the things that will have to be taken care of at your incapacity or death, and leave it up to others to deal with such matters.
Let’s look at a few scenarios and consider the impact of them upon the responsible parties and beneficiaries.
Scenario #1. Mr. Smith doesn’t have a Will. Doesn’t have a power of attorney or advance health care directive. He doesn’t make anyone aware of what his financial resources / assets / obligations are prior to incapacity or death. (Yes, sometimes these persons are married.)
Outcome. This is the full disaster for the responsible parties and the beneficiaries. For many families the greatest lasting damage is to the personal relationships of the family and loved ones, as the lack of planning often leads to fighting and discord. The costs of dealing with Mr. Smith’s incapacity will be much higher than if he had a power of attorney since it very likely will lead to legal proceedings in the probate court to have him conserved. The costs of settling his estate will be much higher than they would be if he had left a Will and communicated with his responsible parties and beneficiaries about matters while he could do so. Assets will be distributed under the laws of intestacy, at least to the extent they are not governed by the way in which the account / asset was titled, or by beneficiary designations.
Scenario #2. Mr. Smith does have a Will. Maybe even a power of attorney. He mentioned something about them to someone before becoming incapacitated or dying. But no one knows where they are or who prepared them. Maybe they are somewhere in the house. He doesn’t make anyone aware of what his financial resources / assets / obligations are prior to incapacity or death.
Outcome. The outcome here may be little different than in Scenario #1 if the governing documents can’t be located quickly, although if the Will is ultimately found probate assets will pass under the terms of the Will, and not through intestacy. And even if they can be found Mr. Smith has left the responsible parties and beneficiaries in ignorance about his assets and debts, so the costs of administering his estate or managing his affairs will no doubt be much greater than they would have been if he had taken steps to inform his responsible parties about his affairs. (It can be very difficult and often impossible to find a Will that was not put into safekeeping with instructions as to its location.) The delay in locating a Will or power of attorney can lead to unnecessary worry in the responsible parties, and can lead to discord and fighting among the responsible parties and beneficiaries.
Scenario #3. Mr. Smith made a Will and power of attorney and advance health care directives. He communicated with his responsible parties about where these documents are and also about his financial affairs (possibly by providing the responsible parties with a memo that describes his assets and financial affairs and responsibilities).
Outcome. The responsible parties happily know what their responsibilities are, and who they can call upon to assist them in their work (be that while Mr. Smith is living, or after his death). They can contact Mr. Smith’s attorney and financial advisor and others who can assist in the responsible parties discharging their duties or at least provide them with important information. However, if Mr. Smith has died, as the responsible parties undertake their work to administer Mr. Smith’s estate they find that Mr. Smith had numerous bank and investment accounts or CDs, and that he had named various persons on those accounts as co-owners, or beneficiaries in ways that designations vary substantially from what his Will says. They learn that Mr. Smith’s Will does not control how many of the assets will be distributed, because the co-ownership and beneficiary designations, will control to whom the assets pass. They may even find that the estate does not even have enough assets to pay for a funeral or administration of the estate because the assets automatically transferred at Mr. Smith’s death to his named beneficiaries!
You get the point. You can do your responsible parties and beneficiaries a tremendous benefit by PLANNING AHEAD!
There are many ways to do this. Here are a few.
- Keep your estate plan up to date. Far too many people die with plans that name a deceased or frail person as an executor or that fail to take into account other changing circumstances and laws. It also is important to keep your health directives and powers of attorney current. It is vital to be sure that the ownership of assets coordinates with your overall plan. Too many families are torn apart by a plan that includes a Will that leaves everything in equal shares to all children, combined with accounts that name children as beneficiaries or co-owners in unequal amounts.
- Plan your own funeral. It will be very helpful to your family if you let them know what sort of arrangements you want. You can pre-purchase a funeral or just let your family know your preferences. The more detailed you are, (such as what funeral home, where the service should be held, whether you want a religious organization to be a part of the service, what songs you want) the easier it is on your family.
- Write your own obituary. If you don’t actually write it, at least give the necessary information to your family so it is easier for them to write it. When and where were you born? When were you married? What was your maiden name? What important life events and achievements should be included?
- Make lists of important information.
(It is best to use a form to record this information so it is organized and in one place when your responsible parties need the information. We can provide you with such a form, and they are available from many different sources. The following is only a start on the information that your responsible parties will need upon your incapacity or death.)
- Who should be notified of your death and how to contact them.
- What assets you own, where they are held, account numbers, the names and contact information for your attorney, financial advisors, accountant and insurance agents, etc.
- User ID and password information for websites and files that your family may need
- Your Social Security number, date of birth and place of birth
- Information regarding your health insurance
- A list of your doctors and other health providers
- If you have any particular desires as to how your funeral is to be handled, discuss that with the responsible parties, or leave them a note as to your wishes
- Where your birth certificate, social security card, medicare / Medicaid and health insurance cards can be found.
Yes this is all a bit of work, but much of it will be accomplished with the help of your attorney or other trusted advisors. But as you think about these things, think about how good a thing you are doing for your family and loved ones. THEY WILL BE IMMENSELY APPRECIATIVE IF YOU LEAVE YOUR AFFAIRS IN ORDER, SO THAT THE JOBS THEY WILL HAVE (WHICH WILL BE DIFFICULT ENOUGH EVEN IF YOU LEAVE A PERFECT PLAN FOR THEM) DO NOT BECOME NIGHTMARES.