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December 29, 2009

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It would appear to me that this topic is about very large estates with values in the tens of millions of dollars. Mine is nowhere near that size and never will be so my estate planning is far simpler.

Mine starts with a living trust, the primary reason is to avoid probate and to have a seamless transition of our assets when the first of us pass away. When that event happens, one's estate plan need revisiting and probably updating or changing. At this point no taxes are due and everything carries on with the surviving spouse in total control of everything.

When the surviving spouse passes away is when the estate plan really kicks in and the work of the executor commences.

In our case we have selected one of our children to be the sole executor. We chose the executor carefully because the job requires a person that you trust 100% to carry out all of your wishes, especially those relating to health and incapacity issues. The child that we selected is a major beneficiary so there is no remuneration for the work involved in settling the estate.
A good friend of mine is in the midst of this at the present time and there can be a lot of work entailed. In my friend's case it was made unecessarily much more complicated because his father's assets were an untidy collection of stocks, CDs, brokerage accounts, etc, widely scattered and held at many companies. It was also complicated because his father had suffered from Dementia in his final years and did not take care of his affairs very well. The son even found out that the father had not paid his homeowner's insurance for several years.

I have always believed in the KISS principle (Keep It Simple Stupid) so our estate will be far, far easier for our executor to deal with. Apart from personal items it consists of just 3 brokerage accounts at one institution, 4 Credit Union accounts at one institution, and two pieces of property. When we had our estate planning documents revised earlier this year our attorney remarked that our instructions were the clearest that he had ever received, but then I'm a retired engineer, as well as being a compulsive nitpicker. It only took me two sheets of paper to diagram precisely how we wanted our estate to be disposed of, and yet after all of the legalese had been added in we ended up with documents about 1/2" thick.

Old Limey, I don't think that estate planning is only for large estates. Consider the point about an even number of executors without conflicts of interest(or trustees). This can apply to a couple with minor children or adult children they have guardianship over.

While the information about estate planning here seems solid, I doubt I will keep it on my bedside table.

Old Limey,

As I always point out the biggest problem with Living Trusts is that most people don't then retitle the assets. I am sure that is is Mr. Nass' Book.

If your home is not owned by the Trust, if your brokerage accounts are not owned by the trust, etc. than they will need to be probated upon the second death (or the first if they owned by one of the spouses vs. jointly).

This is all about executors? What about mistakes of planning our estates, not just all about executors.

Financial Samurai --

This is an EXCERPT from a book. It has 101 mistakes about all sorts of estate planning issues. The three here simply are about executors because that's what the section they gave me was about.

The choice of executor is important even for small estates.

My grandmother died in 1992 and her estate was max $200K at the time. Her will divided her estate in half between her son (my uncle) and my mother (who was dead, but survived by several children including myself). My grandmother made the mistake of naming her son as executor---but since he was property developer and had property adjacent to hers, (and he was a sketchy guy) this was a huge conflict of interest.

Strangely, he took *14 years* to sell her property and settle the will, meanwhile renting out her house and charging the estate for his "oversight" of the property (which coincidentally = the rent on the house).

Apparently he did this because he thought he could get away with it--we were just high school and college kids at first. He also kept sending us kids legal papers to sign that would turn over control of our shares of the property to him, but I never signed it so he didn't have that right.

Finally after 14 years I got fed up and hired a lawyer (which enraged him) who discovered that he'd broken many executor laws---but it was useless to sue because the small estate would be eaten up the legal costs. Instead my lawyer pressured him to finally sell the property and made him eat the capital gains and tax costs over the 14 years. Me and my sibs finally (!) got our small share of our inheritance. Which would have been more useful to us 13 years for down-payments on our first houses, but is still nice to get I suppose.

I'm sure this isn't what my grandma wanted. Choose a lawyer as your executor, not a family member. Especially not a sketchy one!

Evan: The attorney that I dealt with also provided all instructions on how our assets needed to be retitled from joint ownership into the Trust ownership. With our real estate the new ownership descriptions were also filed with the County Recorder. I cannot imagine any attorney worth his salt not seeing that this was done.

@MC,

You have to be careful when hiring a lawyer as an executor because of fees associated with doing so. Also, there are usually extra docuements associated with naming a drafting attorney as executor (at least there are in NY) - not that this should be a hurdle just something you should be aware of.

@Old Limey,

Most attorneys I have dealt with (and that is multiple attorneys each week) don't feel that it is their responsibility, unless adequately being compensated, to follow through on the changing of title of property, brokerage accounts, etc. As such, they draft the docs, send a letter telling the client to do so and walk away.

Not saying it is right or wrong, just reality.

Evan: I guided one of my daughters through a divorce. Her husband was also an attorney and his attorney was the best (and most loathed) divorce attorney in the area. We started out with a female attorney that was very low priced and inexperienced and quickly found out that she was in over her head so we switched to a very experienced and much more expensive and aggressive male attorney. The new attorney had dealt with the husband's attorney before and hated his guts. However what he achieved was that the husband soon realized that they were in for a long and expensive fight so he became anxious to settle out of court. After much haranguing between the three of us he eventually caved in with the result that my daughter obtained the settlement that she wanted, had a "no cohabitation" clause removed from the agreement; the husband avoided washing his dirty linen in public and in a court where he was very well known; and they both saved themselves lots of money in attorney and forensic accountant fees.
I feel very fortunate that my only need for an attorney in my whole life was for estate planning and with that I knew, up front, exactly what the cost would be and it was very reasonable.

I am the executor for my single brother who left an old outdated will, and an unsigned estate, it is less than 100K yet I need to go thru probate in order to get his life insurance check.

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