- by Douglas D. Wilson, CFP, CTFA


Questions you have asked...

You ARE the Executor or Trustee:
Q: I am the Executor of my Mother's Estate. I inherited the family home, as joint tenants, and all the contents that have a total value of approximately $130,000. My brother and sister equally inherit the remainder of the Estate - all cash and investments totaling $230,000, before taxes. Where I live it is required to advertise for any creditors for a period of six months, and usually any payments to the beneficiaries will not be paid until the final taxes, expenses such as legal and accounting fees, are known. I am fairly confident my Mother has no outstanding debts, so I went ahead and released approximately 20% of the total amount six weeks after my mother died to my siblings without knowing with complete certainty the total amount the Estate will owe. My problem is this - my brother is demanding his full share even before the final taxes are known. How common, or sensible, is it for an Executor to release the full share to a beneficiary?
A: Great Question! This is a judgment call. If you are confident that you have enough to cover the remaining Estate expenses, it would, I'm sure, be appreciated by the beneficiaries if you distributed the balance before the final expenses are paid and the Estate is closed. However, you should keep in mind that, as Executor, you are legally responsible to cover all Estate expenses. If you were to distribute the assets and it turns out that you don't have enough to cover the expenses, you would be personally responsible for the payment(s) unless you could convince the beneficiaries to return enough to cover the remaining costs. If an Executor is not absolutely sure about the remaining expenses and the probability of getting reimbursed if there is a shortfall, it is not uncommon, and perfectly legal, to withhold distribution until all expenses have been determined and/or paid. If you make an early or partial distribution, be sure to withhold sufficient amounts to cover all estimated expenses. I hope this has been helpful.
Q: My father-in-law passed away this February in New York. He had no life insurance and $7,500 in his bank account. His only asset, the house, has a reverse mortgage. We expect less than $10,000 after the sale. To this point, the monthly bills, funeral expenses, lawyers' fees will be more than the $10,000, leaving nothing to pay the medical expenses. So far, we have seen approximately $4,000 in unpaid medical bills. Are we personally responsible?
A: It sounds like his Estate is insolvent. You are not liable for his bills. If there is not enough to pay them, your state’s probate code dictates a priority for paying creditors. Typically, expenses of administration, such as attorney fees, are paid first, then funeral expenses, then federal taxes, followed by expenses of the decedent’s last illness and then debts. You should check your local laws for guidance.
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You are NOT the Executor or Trustee:
Q: My sister is named the Executor in my father's Living Trust in the state where he died. My other sister, the Executor and I (three of us) are beneficiaries of the Estate. Now, I was thinking to help out by giving some information I have on selling and thereby liquidating my father's property and I already have felt some resistance to my even offering that information. I have, after all, gathered some good information about the real estate he owned and would like to make the most out of this sale. Now here's my question: Does the Executor (my sister) have any legal obligation to listen to my input if she doesn't deem she needs it? (I am simply concerned that she may hire some realtor who doesn't know the market there and thereby squander what our father left to us.) Do I have any rights to see to it that she hires someone who is going to sell the property for the most we can get out of it? Or, does she simply have all the say over how it is handled? In other words, is she really the final word on how the Estate is dispensed with, or do my other sister and I have any right to have our input heard? Like for instance, can I contest who she decides to have as a realtor?
A: As Executor or Trustee (I think you mean Trustee of your father's Trust) your sister ultimately is responsible for handling your father's Trust. While she can get your input, she will be responsible for making the final decisions. If your father's Trust terminates upon his death, she should get your and your other sibling's input as the sale decision will directly affect your inheritance. If your father's Trust continues for a period of time, let's say until one of you attains a certain age, then your Trustee sister must make the best decision for managing the Trust until it terminates with or without your input. As I indicated above, she has the say as to whether or not the property is sold and for how much if your father's Trust is a continuing Trust. However, she may be responsible to you and your sibling for the decisions she makes. Any beneficiary can object to a Trustee's decision. In order to have that decision legally reversed, a beneficiary would have to petition the probate court and the court would have to agree.
Q: My daughter's paternal grandmother has died. In her Will, executed in 2000, she left her cash to her nephew and niece; her house and all its contents were left to my daughter. The nephew is the Executor. The value of the house is estimated at $150K. The furniture is worth perhaps another $5,000. It is believed that there was also some jewelry of considerable value (perhaps $20K) in the house. The grandfather was a jeweler and the grandmother often spoke of the beautiful jewelry he had made for her. A few years ago, the grandmother was swindled out of most of her cash (which was estimated to have been about $150K). A small repayment has since been made by the swindler, about $25K. Under the circumstances - i.e., the house and contents are worth a lot more than the lost cash assets - the Executor has asked my daughter to consider sharing the proceeds of the sale of the house with the nephew (Executor) and niece (his sister). Thinking that it may well have been the intention of the grandmother to share her Estate equally between her granddaughter and her nephew/niece, my daughter was inclined to honor the proposal. It has recently come to light that the grandmother's jewelry has already been removed from the house. The Executor has informed my daughter that his sister took the jewelry and gave it to her daughters. Needless to say, my daughter is now less inclined to "share." The question is - what is the legal liability of the Executor in allowing the inappropriate distribution of the jewelry? Is there a criminal penalty, or merely an obligation to "make the Estate whole?"
A: The Executor of any Estate has a legal obligation to distribute the assets to those who are named as beneficiaries and legally entitled to receive those assets. Executors are duty bound to protect Estate assets during the period of administration and assure they are distributed to the beneficiary(ies) who are entitled to receive them. It sounds like the Executor, in this case, allowed assets that belong to your daughter to be taken by someone else. The Executor now has an obligation to retrieve these assets unless your daughter chooses not to pursue her rights to this property. The remedy for any wrongdoing or mismanagement by the Executor, if not worked out between the parties, is through the probate court in your jurisdiction.
Q: My late husband died and left a Will with his sister as Trustee over the children's Estate, and I am the personal representative, but most everything we owned was in both of our names. All assets are split 50/50 and I applied for my elective share and according to South Carolina law that is 1/3 of his half. Can I override his sister and ask the court to omit her as Trustee over my children's portion since my husband and I own everything together and my three children are minors in my possession?
A: You must first look at the terms of the Trust. If the Trust gives the beneficiaries the right to remove the Trustee, then you can exercise that right on their behalves if they are minors, or they can make that choice themselves if they are adults. If the Trust does not permit removal of the Trustee, you probably have to petition the probate court for removal of the Trustee and appointment of yourself as the successor Trustee.
Q: My father passed away recently and did not have a Will. My siblings and I have not had any contact or relationship with him for more than 45 years. We were recently sent a letter from an attorney regarding his assets. This letter was generated because of the concerns of my father’s two surviving sisters. They are looking for one of us to be appointed the administrator of the Estate. The problem is we DO NOT want to have anything to do with this matter. Can one of us be made to take care of the Estate?
A: No! No one has a legal obligation to serve as Executor or Trustee regardless of whether he or she is named (nominated) in the Will or Trust. However, someone needs to serve as the Executor of your father’s Estate. If a family member is not willing, the probate court will appoint an individual or bank to serve.
Q: My father has just recently passed and had no Will. My brother and I have been taking care of most of his payments through his original checking account, (of which I am a legal signer). There is very little money left in the account after paying most of his medical bills, but there is an IRA account that has about $10k in it. They are asking for a certified copy of the death certificate, which we have. And a certified copy of the appointment of Trustee/Executor, which we do not have since there was no Will or Trust. They are also asking for an IRA distribution form from the Executor, which we can fill out after there is an Executor. I guess the main question is how can my brother or I become the Trustee / Executor after the fact. Do we have to hire an attorney? There is only a very small amount of money left and it seems that after hiring an attorney, there wouldn’t be much left for the rest of the expenses. How should we handle this?
A: Typically, an IRA has a designated beneficiary. The beneficiary, technically, is responsible for making the claim for the account proceeds. If there was no designated beneficiary on the account, the account proceeds are payable to the Estate of the decedent and the Executor (personal representative) makes the claim. Most states have a small Estate option for settling an Estate. The process involves the appointment of an Executor (personal representative) to handle the decedent’s affairs. An attorney is usually not necessary in this type of proceeding. You should contact the clerk of the probate court in your jurisdiction for more information about this procedure.
Q: My father passed away in January of 2007. His sister, my aunt, is the executrix and the trustee of his estate, and I am the beneficiary. I have asked several times for the accounting and balances of the estate, but each time she has refused to tell me. I am 21 years old and I'm trying to go back to college. My father's will says that she "shall be authorized to encroach on the corpus of the property in such amounts as the Trustee may see fit to provide for college or professional training for my son (the beneficiary)." She and the accountant want me to be responsible for my living expenses during school. They want to sell my dad's house (where I live and plan on living forever) if I go back to school. Is this right? What are her legal obligations and how do I enforce them?
A: As trustee, your sister must follow the terms of your father's trust. In doing so, she is empowered to sell the house if, in her judgement, it is the best thing to do to carry out the purpose of the trust. As a beneficiary, you have the right to an accounting of the trust's activities at least once a year. If you have not done so already, I suggest you make your request for accounting in writing. If, after a resonable amount of time has lapsed, you do not get a response, you can petition the probate court in your jurisdiction to order her compliance.
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Executor / Trustee Responsibilities:
Q: Trustee vs. Executor? What are the differences between these two titles?
A: An Executor is responsible for settling a decedent's probate Estate. A probate Estate deals with the property that was in the decedent's individual name. The Executor is responsible for collecting the property, paying final expenses and taxes and distributing the property in accordance with the decedent's Will, or if he or she did not leave a Will, in accordance with state law. The job of an Executor ends when the property is distributed to the beneficiaries, usually in a year to 18 months. A Trustee on the other hand, is responsible for the property that is placed in, or is owned by, the Trust. The Trustee's job is to manage the Trust property for the benefit of the beneficiaries named in the Trust. This responsibility could extend for many years, depending on the terms of the Trust. The Trustee's duties end when the Trust, by its terms, terminates and the Trustee distributes the Trust property to the remainder beneficiaries named in the Trust.
Q: If I am nominated under a Will or Trust, should I serve as the Executor or Trustee?
A: This will depend on your willingness to assume legal responsibility for the Estate or Trust, whether or not you are mentally and emotionally prepared to begin the settlement process (i.e., gathering information, handling legal and regulatory requirements, managing financial matters, dealing with heirs, etc.) and your willingness to make the time commitment.
Q: If I am named Executor or Trustee, will I be required to serve?
A: No. Simply being named in a Will or Trust does not legally obligate you to serve. You must accept the nomination before you assume any responsibility. Even after you have accepted the position you are not obligated to continue. However, once you begin serving you will not be relieved of responsibility until someone else takes over.
Q: How do I find out what my responsibilities are?
A: Read the Will or Trust thoroughly. A well-written document will contain specific instructions for the Executor or Trustee to follow. An attorney or other Estate/Trust professional can be contacted to explain the duties and responsibilities that apply under the Will or Trust and local law. Executor & Trustee Survival Guide is also a good resource.
Q: Will I be able to handle the job?
A: Yes, if you are willing to make the time commitment and seek professional assistance when you need it, you will be able to handle the job. The size of the Estate or Trust, how complex it is and your level of knowledge in handling financial matters will determine to what extent you will need help from an attorney, CPA or other professional.
Q: My Executor refuses to contact me. Do I have any legal recourse to force him into his obligations?
A: Most state laws require an Executor to provide a beneficiary with an accounting and information concerning the administration of the Estate. I suggest you contact the clerk of the probate court in your jurisdiction about this requirement or find out the specific section of your local statutes that requires this and bring it to the attention of the Executor. If this doesn't work, you may have to compel the Executor to provide you with this information through the probate court.
Q: I am the Trustee and have had the first meeting with the Attorney who set up the Trust. It was called a Post Mortem Procedure Conference. I was also left property that was included in the Trust. At the time of death, the person who died had very little money left because of enormous medical bills during the last years of his life. The Attorney tells me his fee to do everything is close to $4000. There is not $4000 left in the checking account. He also says I am responsible for all the continuing medical bills which will be coming in and that I will have to sell the property that was left to me to pay for them. Or I can keep the property and pay the bills with my own money. This does not seem right at all. I cannot pay the medical bills. I was not a family member, just a friend. Is there some way I can take care of settling the Estate without continuing with this attorney, since I cannot pay him? It will involve changing the Deed, appraisal fees, etc..
A: As Trustee, you can hire the attorney of your choosing. It seems that all you need to do under the circumstances that you have described, is to pay the final expenses of your deceased friend and distribute the balance to the beneficiary(ies) named in his Trust. If this means selling his property to raise the needed cash, then that is what you need to do. Depending on local law, the only need for an attorney is to prepare a deed to transfer any real estate assets to the beneficiary(ies).
Q: Can the Executor/Trustee choose who should take over duties if he cannot fulfill the obligation, or will a judge decide who takes over? For example: can the person named as Executor choose to appoint the adult beneficiary (also the parent of minor beneficiaries) or will the judge choose to appoint a bank Trustee who will possibly deplete the funds of a long term (28 years) Trust?
A: You must first look at the Will to see if an alternate Executor is named. If no alternate is named in the Will, then a court will name a successor. The court will typically name a family member, but sometimes will appoint a bank if the bank is willing to serve.
Q: If one person is the grantor and the same person is the Trustee and the Trust calls for termination of the Trust by mail, do you have to have evidence of termination of the Trust because it is an internal (same person) decision, which would require literally no notice? What action (or inaction) by this person can prove that the Trust is indeed terminated? Is there any precedence on this?
A: If the person is the grantor of a Revocable Living Trust, a written note, signed by the grantor, indicating that the grantor has terminated the Trust is sufficient. If the Trust is irrevocable and has terminated by its terms, distributing the remaining assets and obtaining a receipt from the beneficiaries is sufficient proof of its termination.
Q: My dad passed away February 2 of this year. My late brother's son (a minor) is named in the Will. Can I be his custodian or must we ask his mother?
A: In most states, a minor cannot serve as an Executor. If a successor or alternate Executor is named in the Will, that person can serve. If the Will does not provide for a successor or alternate, the probate court will have to name a successor to serve in place of your brother's son. Since your brother's son does not qualify as Executor because he is a minor, you could not serve as his custodian for purposes of settling your father's Estate.
Q: My brother lived with my mother for the last 10 years (rent free). He has helped with maintenance and remodeling of the house on occasion. My mother recently passed and I am the Executor/Trustee of the Estate. There are four beneficiaries. My brother is attempting to buy the house, however, is vacillating on his decision and is extremely possessive on any and all items in the house. I stated that the Trust needed a decision whether he was buying the house, or we were to put it on the market. I stated on a certain date he would be charged “rent” for the premises. He is livid. I thought that as Trustee it was my job to be fair to all beneficiaries, not just one. How does the law view this type of circumstance?
A: An Executor/Trustee has a duty to preserve and make all assets productive for the benefit of all beneficiaries. This means that you have a duty to charge your brother rent because he is benefiting from the property and you and the other beneficiaries are not. One way to handle this is to deduct from his share the fair market rent for the period he occupies the house from your mother’s date of death. You should, however, inform him of the rent and his method of payment. Again, you are responsible to all beneficiaries and cannot allow one to benefit to the detriment of the others.
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Executor / Trustee Fees:
Q: Can you tell me what the fee for being successor Trustee in the state of Arizona would be? Is it fixed or a percentage? How is it determined?
A: I believe Arizona allows "reasonable" fees for Trustees. Generally, this is based on what is customary in a particular jurisdiction. I suggest you contact a bank Trust department in your area for guidance. You can also contact the clerk of the probate court for information on what rates the courts have allowed individual Trustees. Lastly, you can contact a probate attorney for guidance.
Q: I am from the state of PA. Would you please explain the way the fees are determined that an attorney can charge to settle an Estate? Is there a contract that you are aware of called "The PA Code of Professional Responsibilities"?
A: My understanding of the laws of Pennsylvania is if the attorney serves as the Executor he or she is entitled to reasonable compensation. Reasonable is what is customarily charged for similar services in your jurisdiction. Often the probate court determines what is reasonable. In any case, I suggest that you agree to the fees in writing. As for attorneys' fees in general, charges can be assessed at an hourly rate or as a percentage of the Estate assets. You might want to check with a local bank for the customary rates in your area. You can also check with the local attorney bar association.
Q: Can I charge a fee?
A: Yes. Executors and Trustees are entitled to get paid for what they do and for the responsibilities they assume. In most states, the fee is set by law. In some jurisdictions, the fee is a percentage of the Estate/Trust assets. In others, local law provides for "reasonable compensation." You, of course, may choose not to charge a fee.
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How Long Will It Take?:
Q: My grandfather died and he supported himself by buying high-risk mortgages. Now we have mortgages that have 20 and 30 years left to pay, five heirs, and we don't know what to do. Should we resell the mortgages and split the proceeds and be done with it? Can we transfer the mortgages to pay automatically to an account that will automatically disperse the funds based on the inheritance noted in the Will? Please help!
A: This is a common problem. You basically have three options. First, as you mention, the mortgages can be sold to a third party and the proceeds split among the beneficiaries in accordance with their respective ownership interests. Second, one or more beneficiary(ies) could purchase the interests of the others. Third, the mortgages can be distributed (i.e., ownership put into the names of the beneficiaries) and an agent appointed, either one of the owners or a third party, to collect the principal and interest and make distribution to the beneficiaries/owners until the mortgages mature.
Q: The Estate is worth about $2 million. There is a Will naming about 30 beneficiaries. There is no litigation. Two years have already passed and not settlement as yet. How long should it take?
A: Most states allow for a “reasonable” amount of time to settle an Estate. Once the Federal Estate Tax Return (Form 706) has been filed and the nine-month time period to absolve the Executor from personal liability has elapsed (total of 18 months), the Estate should be ready for distribution. However, there could be extenuating circumstances, such as litigation, the sale of a business, etc., that could delay the distribution and closing. Two years should be a reasonable amount of time and at this point, you should ask the Executor for a time frame for making final distribution or provide a reason why a distribution cannot be made at this time.
Q: How long will it take to settle the Estate?
A: If the decedent's property is required to pass through probate, it could take 18 months to 2 years to settle.
Q: How long will I have to serve as the Trustee?
A: This will depend on the terms of the Trust. If the Trust terminates at the death of the settlor (i.e., creator of the Trust), it takes a little less time than settling an Estate through the probate court. If the Trust continues, your responsibility as Trustee only ends when the Trust terminates or a successor Trustee replaces you.
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Distribution of Assets:
Q: If cemetery lots were owned by the decedent, and they are sold by the three children, must the monies received be split among all those named in the Will? Our lawyer told us only the house is considered part of the Estate - not the personal belongings inside, etc. There was another person named in the Will besides the three children. Therefore, we need to know this information about the cemetery lots in order to follow the law.
A: If the decedent owned the cemetery plots in his or her own name, the plots, or the proceeds if they were sold, must be distributed in accordance with the terms of the decedent's Will.
Q: Does the Executor/Trustee have to obey what is specified in the Will? What if the Trustee goes against what is specified in the Will? (EXAMPLE: If a person's Will states that land or property be auctioned off, can the Trustee go against that request and wait for a private sale...even if the sale may take years to occur?)
A: A personal representative or Trustee is obligated to carry out the instructions in the Will or Trust. However, if the intent is to sell the property and in your judgment the auction method would be detrimental to getting the best price, you may consider another method if that method would achieve the intent of the testator/testatrix or settlor (i.e., creator of the Will or Trust). I would, however, get the beneficiaries to approve of your method for selling the property for your own protection.
Q: As Trustee, I am looking at distributing the household items in my deceased parents' house to the four beneficiaries. We are inventorying the “items” and seeing which beneficiary wants them before attempting to dispose of them. Disposition will be by donation, and/or sale. One sister does not want anything and feels ALL items should be put up for sale. Three others disagree. In addition, the other sister residing in the house is wanting to purchase the house and feels all items should remain in the house. She is also making it very uncomfortable, allowing us in the house to inventory and clean. She strongly objected to even items being taken to Goodwill. How in the world does one handle this type of situation?
A: First of all, as Trustee, your job is to follow (specifically) the terms of the Trust. If, for example, the Trust directs that all tangible personal property is to be distributed to all four beneficiaries in equal shares, then each of you should select the items you want and the rest can either be sold or given away. To equalize the distribution, differences should be adjusted by increasing or decreasing what each beneficiary gets from the rest of the Trust assets so that the net value each receives is the same. If there is no provision for tangible personal property, then it becomes part of the residuary of the Trust and is distributed accordingly. If you decide to dispose of these assets in another way, such as giving some of it to charity, you should get the approval of the other beneficiaries, preferably in writing, especially if these items have value. Majority approval might be sufficient in your jurisdiction. If not, you may want to seek court approval if the items have significant value. As Trustee, you have the legal authority to access Trust property to carry out your Trustee duties.
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Beneficiaries:
Q: I am the executrix of my father's estate, which consists of a home with a large mortgage. Since we have been unable to sell the house, I have had to let the house go into foreclosure. None of the beneficiaries want it or can afford it. Do I have any PERSONAL liability or anything I need to do other than just let it go?
A: You do not have any liability if the estate is insolvent.
Q: My question concerns a request by the executor trustee, by advisement of his hired trust attorney, for me, a beneficiary of my late father's trust, to sign a waiver prior to distribution disclaiming any futher claims against the trust. I have been told that if I do not sign this waiver, funds will be collected from the trust to cover any possible litigation expenses resulting in a considerable decrease in my portion of the distribution. Is it in conflict of the trust document to request such a waiver with obvious intimidation and consequences of a decrease in my portion of the distribution?
A: This is a common practice. That is, executors and trustees often ask the beneficiaries for approval, and release from liability, of their administration. This is a reasonable request as an executor should not be held liable "forever" for his administration unless he has committed a breach of his duties. However, the executor or trustee cannot make this a condition for distribution. Distribution must be made in a reasonable amount of time and cannot be pre-conditioned on your approval. If you do not release the executor/trustee, he can seek approval of his administration through the probate court in your jurisdiction at the estate's (your) expense.
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