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What Qualities Should You look for When Choosing An Executor?
Patricia Bloom-McDonald • Aug 26, 2021

Choosing your executor (personal representative) is an important part of the estate planning process. This will be the individual who will be taking care of all the logistical matters surrounding your Last Will and Testament and seeing to it that your final wishes are carried out. The Law Offices of Patricia Bloom-McDonald assists clients throughout Southeastern Massachusetts in planning their estates and helping them to choose appropriate executors.

All that careful work you’ve done with your  estate planning attorney  means little the Executor does not manage your estate properly.

Duties Performed by Your Executor :

How time-consuming and complex these duties will be is largely determined by the size of your estate and how complicated your assets are (i.e. whether you have a high-net-worth estate and whether you own various sizable properties, businesses, or collections of cars, antiques, etc.) Your personal representative will be legally responsible for:

  • Filing a copy of your Last Will and Testament with the probate court that has proper jurisdiction; and

  • Notifying all relevant financial entities of your death: banks, credit card companies, the Social Security Administration and any other necessary government agencies; and 

  • Determining whether probate is necessary since certain trusts and jointly held property may be distributed without the need for probate court involvement; and

  • Representing your estate in probate court if such representation becomes necessary; and

  • Creating a bank account to receive incoming funds and pay final bills of the estate; and

  • Filing an inventory of your assets with the probate court; and

  • Maintaining estate property until it can be distributed or sold; and

  • Paying estate taxes that are due (including estate taxes for high-net-worth estates) and any other outstanding debts; and

  • Distributing assets to heirs and/or beneficiaries (this can only be done after all taxes and other debts have been paid.)

If you already have a competent estate planning attorney, your executor will usually be well-served by using that individual throughout the process. 

Problems Your Executor May Face:

In many cases, the executor’s job may be simple and straightforward, but situations can arise that make it more difficult to complete the necessary tasks. If you run into any of the following problems, you will be grateful to have a capable estate planning attorney at  your side:

  1. Impatient or uncooperative heirs or beneficiaries who don’t understand why they cannot have their inheritance immediately or why they can’t take cherished possessions from the decedent’s home until it is determined whether the decedent has left those possessions to them rather than others. The estate attorney will likely recommend that a vacant house be secured until it is time for distribution of the deceased’s property.

  1. Being an executor is much more time-consuming than expected . Settling an estate can take a year or more, so your personal representative may be obligated to make a significant time investment in this project. This is more likely to occur if your estate is large with many properties. Your executor may find that she or he is spending too much time away from their own personal responsibilities or from their loved ones and would be delighted to find that the estate attorney can take over such matters as dealing with the Social Security Administration and filing the necessary legal documents with the probate court. 

  1. Being a personal representative means being accountable for your wishes in your Last Will and Testament, Trust, and memorandum. It may involve personal liability on the part of the executor . Though you will no doubt choose someone trustworthy to be your executor, that individual will be held liable for oversights and other mistakes. Having a skilled estate attorney to guide your executor can mean the difference between a smooth process or a difficult process. A sharp lawyer will make sure that a lawsuit that might use up a big chunk of the estate’s assets is avoided. 

The Law Offices of Patricia Bloom-McDonald will help your executor to make sure that no assets are distributed until every tax payment is made and every creditor who has made a claim on the estate is paid. The Law Offices of Patricia Bloom-McDonald will also be on hand to make sure that all transactions to do with your estate are legitimate, and that your executor is not been taken advantage of by predatory creditors or scam artists.

Traits to Look for in Your Executor

Because of the multiple tasks your executor will have to manage, it is best to choose someone for the position who is not only trustworthy but is also:

  • Ethical and fair-minded; and

  • Has good organizational skills and is efficient; and

  • Has the ability to handle money wisely; and

  • Has strong interpersonal skills; and  

  • Has an even temperament. 

It is also important to remember that the person you choose as your personal representative may decline to take on the position, so you must discuss this with the person you want to act in that capacity before you name her or him in your Last Will and Testament.

Because of the personality traits needed to be a first-rate executor, you will be better off choosing someone who is a good fit for the job rather than the person you love most. Also, it’s a good idea to choose someone younger than you who is less likely to predecease you. If you don’t find the right person, you may assign the role to a financial institution, or your trusted accountant.

The Law Offices of Patricia Bloom-McDonald frequently advises and assists personal representatives who may be undertaking duties unfamiliar to them. The Law Offices of Patricia Bloom-McDonald is happy to use its vast experience to help clients through the challenging period of settling an estate, especially during the time that the personal representative may also be grieving over the loss of the decedent. The Law Offices of Patricia Bloom-McDonald can take over portions of the legal tasks the Personal Representative is faced with efficiently and with great care.

 

Using a Credit Card When You Have a Special Needs Trust

25 May, 2023
A special needs trust (SNT) allows you to meet your needs while receiving government benefits, such as Medicaid/MassHealth and Supplemental Security Income (SSI). When you have a special needs trust, you can use it to pay for goods and services government benefits do not cover, such as therapy, education,and housing. Since receiving income directly from your trust would jeopardize your eligibility for benefits, your trustee cannot give you cash from your SNT. When you use a credit card for permitted transactions, and your trustee pays off the balance with funds from your trust, these payments to a credit card company are not considered income. An SSI or Medicaid/MassHealth recipient who is capable of managing their own affairs can therefore use a credit card to make small purchases, and the trustee of the special needs trust need not micromanage every transaction. In the past, beneficiaries of SNTs sent their bills to their trustees for payment. Today, an individual with an SNT who qualifies for a personal credit card may find that using a credit card is more convenient. Credit cards have several benefits. Using a credit card to manage payments from your special needs trust allows you to maintain independence, gain access to some of the advantages of a credit card, and easily keep records while preserving your eligibility for Medicaid/MassHealth and SSI. Although credit cards can help people manage their special needs trusts, there are also several important restrictions and considerations to keep in mind. Consult with a special needs planner to ensure all transactions are acceptable under the trust's rules and comply with government regulations. The Benefits of Using Credit Cards When You Have a Special Needs Trust If you have a special needs trust, using a credit card has many benefits, including: Independence : Allowing you to maintain your independence. You can use your card to make qualifying purchases yourself. Your trustee does not have to make the transactions for you. Access to the Typical Advantages of a Credit Card : Using it responsibly can help you establish or build credit history, which may be important for your future financial needs. Record-Keeping : Credit cards provide easy record-keeping and a convenient way to monitor transactions from your special needs trust, which can also help special needs trustees fulfill their duty to maintain records. When you use your card, your trustee can observe your purchases and ensure that all expenses are allowable under the trust’s rules. Your statements can help your trustee keep track of funds leaving the trust. Benefits Eligibility : While adhering to Medicaid/MassHealth and SSI’s income and asset limits, you can access funds from your SNT. Credit cards can help prevent your trustee from accidentally providing you with cash payments that could affect your eligibility for government benefits. Considerations When Using a Credit Card for Your Special Needs Trust While you can use a credit card to access funds from your special needs trust for certain transactions , restrictions apply. If your trustee sees a charge on your card that could affect your benefits eligibility , they can flag it for review. You cannot use your credit card to pay for food and shelter, which SSI would cover. When administering your funds, your trustee must ensure that any expenditures are for your sole benefit if you have a first-party special needs trust. While using a credit card is appropriate, you should not use a debit card. Debit cards are considered cash income. Best Practices When using a credit card for a special needs trust fund, remember several best practices. Choose a card with low fees and interest rates. Set a clear budget and monitor transactions regularly. Keep thorough records and receipts of expenses. Consult with your special needs planning attorney. A special needs planning attorney can help you navigate the rules that apply to your trust and understand how to use a credit card to preserve your Medicaid/MassHealth and SSI eligibility. 

How an ILIT can help offset estate taxes

12 May, 2023
With the Federal estate tax exemption possibly about to be lowered, it may be time to think about steps you can take to keep your estate from being taxed. An irrevocable life insurance trust allows you to pass on money to your heirs while avoiding both the federal estate tax, as well as any applicable state estate tax which is currently $1 million in the Commonwealth of Massachusetts. Senate Democrats have proposed lowering the current estate tax exemption from $11.7 million for individuals and $23.4 million for couples to $3.5 million for individuals and $7 million for couples. While it is unclear if this proposal will pass, it is likely that some change to the estate tax is coming. Even if Congress does not take any action, the current rate will sunset in 2026 and essentially be cut in half, to about $6 million per individual. In the Commonwealth of Massachusetts, the current estate tax exemption is $1 million for individuals and is taxed at dollar $1.00. A proposal to raise it to $3 Million and the tax to start at $3 Million (not at $1.00) has been submitted in the legislature but has not yet been voted on or enacted. One way to make up for any estate tax your estate may have to pay is by setting up an irrevocable life insurance trust [ILIT]and funding it with a policy that has a death benefit that would pay your heirs some or all of the amount your estate will be taxed. If you purchased such a life insurance policy directly, it could end up being taxed as part of your estate. But if a trust owned the policy, it could pass outside your estate. While a life insurance trust can be highly beneficial, it is also complicated to set up and maintain properly. The following are some of the requirements: Trustee . If you are setting up the trust, you cannot also serve as a trustee. If you are the trustee, you have control of the trust, which could lead to the trust being included in your estate. You will need to name another trusted person or financial institution to act as trustee. Policy ownership . The trust must own the life insurance policy. If you transfer an existing policy to the trust and die within three years, the policy will still be considered a part of your estate. To avoid this risk, the trust can purchase a policy directly rather than receive an existing policy. Premiums . You need to transfer funds to the trust to pay the policy premiums, which creates an issue with gift taxes. A transfer to a trust is usually not subject to the $15,000 yearly gift tax exclusion. For a gift to qualify for the exclusion, the recipient must have a "present interest" in the money. Because a promise to give someone money later does not count as a present interest, most gifts to trusts aren't excluded from the gift tax. To avoid this, you can use something called a “Crummey” power which gives beneficiaries the right to withdraw the funds transferred to the trust for up to 30 days. As part of the process, the trustee needs to send them a letter, known as a Crummey letter, letting them know about the trust funding and their right to withdraw the funds. After the 30 days have passed, the trustee can use the funds to pay the annual insurance premium. You run the risk of the beneficiaries withdrawing the funds, but if they know that by allowing the money to stay in the trust they will receive more money later, it shouldn’t be a problem. Beneficiaries . The beneficiary of the life insurance policy is usually the trust. Once the funds are deposited in the trust, the trustee can distribute the assets to the beneficiaries in the way specified by the trust. For example, if your beneficiaries are minors, you can wait to have the trustee distribute the assets. Keeping the assets in the trust will also protect them from your beneficiaries’ creditors. The downside of an irrevocable life insurance trust is that you do not have the ability to change it once it is set up, although the policy would effectively be canceled if you stopped paying the premiums. If you are considering this type of trust, discuss it with your attorney.
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