Guardian

Serving Southwest Florida

Helping clients plan for their family's future, by creating an efficient, thoughtful and comprehensive estate plan that preserves their legacy and gives them peace of mind.

Administering an Estate

When administering an estate, there are both similarities and differences between wills and trusts.  A last will and testament is used to point out the beneficiaries and trustees and the legal professionals you want to be involved with your estate when you have passed, explains this recent article What You Need To Know About Handling a Will and Trust from Your Dearly Departed Loved One” from North Forty News. If there are minor children in the picture, the last will is used to direct who will be their guardians.

A trust is different than the last will. A trust is a legal entity where one person places assets in the trust and names a trustee to be in charge of the assets in the trust on behalf of the beneficiaries. The assets are legally protected and must be distributed as per the instructions in the trust document. Trusts are a good way to reduce paperwork, save time and reduce estate taxes. It removes the estate from the probate process when administering an estate.

Don’t go it alone. If your loved one had a last will and trust, chances are they were prepared by an estate planning lawyer. The estate planning attorney can help you go through the legal process. The attorney also knows how to prepare for problems in administering an estate such as any possible disputes from relatives.

It may be more complicated than you expect. There are times when honoring the wishes of the deceased about how their property is distributed becomes difficult. Sometimes, there are issues between the beneficiaries and the last will and trust custodians. If you locate the attorney who was present at the time the last will was signed and the trusts created, she may be able to make the process easier.

Be prepared to get organized. There’s usually a lot of paperwork in administering an estate. First, gather all of the documents—an original last will, the death certificate, life insurance policies, marriage certificates, real estate titles, military discharge papers, divorce papers (if any) and any trust documents. Review the last will and trust with an estate planning attorney to understand what you will need to do.

Protect personal property and assets. Homes, boats, vehicles and other large assets will need to be secured to protect them from theft. Once the funeral has taken place, you’ll need to identify all of the property owned by the deceased and make sure they are property insured and valued. If a home is going to be empty, changing the locks is a reasonable precaution. You don’t know who has keys or feels entitled to its contents.

Distribution of assets. If there is a last will, it must be filed with the probate court and all beneficiaries—everyone mentioned in the last will has to be notified of the decedent’s passing. As the executor, you are responsible for ensuring that every person gets what they have been assigned. You will need to prepare a document that accounts for the distribution of all properties, which the court has to certify before the estate can be closed.

Taking on the responsibility of administering an estate is not without challenges. An estate planning attorney can help you through the process, making sure you are managing all the details according to the last will and the state’s laws. There may be personal liability attached to serving as the executor, so you’ll want to make sure to have good guidance on your side.

Reference: North Forty News (Feb. 3, 2021) What You Need To Know About Handling a Will and Trust from Your Dearly Departed Loved One”

 

Durable Powers of Attorney

The situation facing one family is all too common. An aunt is now incapacitated with severe Alzheimer’s disease. Her brother has been her agent with a durable power of attorney in place for many years. In the course of preparing his own estate plan, he decided it’s time for one of his own children to take on the responsibility for his sister, in addition to naming his son as executor of his estate. The aunt has no spouse or children of her own.

The answers, as explained in a recent article “Changing the agent under a durable power of attorney” from My San Antonio Life, all hinge on the language used in the aunt’s current durable power of attorney. If she used a form from the internet, the document is probably not going to make the transfer of agency easy. If she worked with an experienced estate planning attorney, chances are better the document includes language that addresses this common situation.

If the durable power of attorney included naming successor agents, then an attorney can prepare a resignation document that is attached to the durable power of attorney. The power of attorney document might read like this: “I appoint my brother Charles as agent. If Charles dies or is incapacitated or resigns, I hereby appoint my nephew, Phillip, to serve as a successor agent.”

If the aunt would make her wishes clear in the actual signed durable power of attorney, the nephew could relatively easily assume authority, when the father resigns the responsibility because the aunt pre-selected him for the role.

If there is a clause that appointed a successor agent, but the successor agent was not the nephew, the nephew does not become the agent and the aunt’s brother can’t transfer the POA. If there is no clause at all, the nephew and the father can’t make any changes.

In September 2017, there was a change to the law that required durable power of attorney documents to specifically grant such power to delegate the role to someone else. The law varies from state to state, so a local estate planning attorney needs to be asked about this issue.

If there is no provision allowing an agent to name a successor agent, the nephew and father cannot make the change.

Another avenue to consider: did the aunt’s estate planning attorney include a provision that allows the durable power of attorney to establish a living trust to benefit the aunt and to transfer assets into the trust? Part of creating a trust is determining who will serve as a trustee, or manager, of the trust. If such a clause exists in the durable power of attorney and the father uses it to establish and fund a trust, he can then name his son, the nephew, as the trustee.

Taking this step would place all of the aunt’s assets under the nephew’s control. He would still not be the aunt’s agent under her power of attorney. Responsibility for certain tasks, like filing the aunt’s income taxes, will still be the responsibility of the durable power of attorney.

If her durable power of attorney does not include establishing a living trust, the most likely course is the father will need to resign as agent and the nephew will need to file in court to become the aunt’s guardian. This is a time-consuming and slow-paced process, where the court will become heavily involved with supervision and regular reporting. It is the worst possible option, but it may also be the only option.

If your family is facing this type of situation, begin by speaking with an experienced estate planning attorney to find out what options exist in your state, and it might be resolved.

Reference: My San Antonio Life (Jan. 25, 2021) “Changing the agent under a durable power of attorney”