Estate planning should be viewed from a holistic perspective. Yes, you have to state your wishes with regard to asset transfers in a will or trust, but that’s just half of the equation.
You should also give the estate administration process careful consideration, and we will provide some food for thought in this post.
Will Administration and the Executor’s Role
If you use a simple will to serve as an asset transfer vehicle, you would name an executor to act as the administrator after you pass away. This is not a ceremonial role that you bestow upon someone because you love and respect them.
The executor will be charged with some serious responsibilities, and there is a degree of personal liability. They will be required to admit the will to probate, and there are legal guidelines that must be followed.
An Employer Identification Number will be obtained from the IRS because the executor will need to start an estate bank account. Final debts will be paid, and the executor will identify and inventory the assets. Asset preparation can include liquidation and appraisals.
The executor must possess a good bit of financial and administrative acumen, so you should choose wisely. Plus, this may sound like an instance of overstating the obvious, but you have to make sure the person you want to designate is willing to take on the responsibilities.
Longevity is another consideration, and with this in mind, you can name an alternate executor. However, it is best to update your estate plan if the designated executor was to predecease you, and this would also apply to the beneficiaries.
Living Trust Trustee
The revocable living trust is the most commonly used estate planning document aside from a simple will. When you establish a living trust, you serve as the trustee during your life, so you have complete control of the assets every step of the way.
In the trust declaration, you name a successor trustee to step into the position after you are gone. The role is similar to that of an executor, but generally speaking, the probate court is not involved when a living trust is being administered.
You can name a trustworthy person you know that has good bit of financial acumen, but you can alternately use a professional fiduciary. The latter choice can be preferable if the trust is sufficiently funded and it is going to remain intact for an extended period of time.
The “extended period of time” factor is one of the reasons why people use living trusts. You would be providing lump sum inheritances if you use a will, and this can be a source of concern if you are leaving money to someone that is not ready to handle a windfall.
On the other hand, with a living trust, the trustee can be instructed to distribute the assets on an incremental basis for any length of time you choose. The resources would also be protected from the beneficiary’s creditors.
Letter of Last Instruction
Another piece of the puzzle is a letter of last instruction. You use this document to convey information that the administrator will need to complete the tasks effectively.
The location of relevant documents should be included, and you should add login information for your financial accounts, social media accounts, blogs, and websites. You would also share the location of all property, storage spaces, keys, etc.
Your letter should include a list of all the people that should be notified about your passing. In addition to personal connections, you should add contact information for professionals who will be directly involved, like your accountant and insurance agent.
We Are Here to Help!
When you work with our firm to create your estate plan, we will make sure that all the details are addressed, and we will be prepared to assist your administrator after your passing.
If you are ready to get started, you can give us a call at 860-548-1000 to schedule a consultation in Westport or Glastonbury, and you can use our contact form to send us a message.