So, you’ll get it right in appointing an executor and filling other key roles in your estate plan
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It would be normal if you had little time planning your own death.
However, there is one key aspect of creating an estate plan that experts shouldn’t label as euphemistic. For example, choose who will grant the wishes set out in your will and make important decisions on your behalf if you are incapacitated at any point before your death.
“These designations are important and should be considered very carefully regardless of the size of the property,” said Samantha Weyrauch Davis, attorney and estate planning director at Hall Estill law firm in Tulsa, Oklahoma.
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Basically, “inheritance” only refers to everything you own when you die: your financial accounts, real estate, and possessions. An estate plan – whether your wealth is massive or meager – aims to ensure that your wishes are granted when you die and to provide some guardrails for other end-of-life considerations.
When you die of no will (known as the dying gut), the courts in your state decide who gets your wealth. The process is public and can get messy if potential heirs disagree on what should rightfully be theirs. And if you have children but don’t have a will or some other document designating a guardian, the courts will also decide who will look after them.
Here are some tips to keep in mind when choosing the executor and who to give authority over your finances and medical care before your death.
First the executor
The role of the executor is a big one.
This is the person in charge of everything from filing your will with the court to paying off your debts, closing accounts, and making sure your remaining assets are distributed as stated in your will. (Note that some assets – such as retirement accounts and life insurance policies – are allocated based on the beneficiary named on the account, not the will.)
To start with, this means that the person has to be trustworthy and organized. They also need to be able to balance the job with their other life responsibilities, Davis said.
I usually recommend to clients that it is best to have someone in this role.
Samantha Weyrauch Davis
Director at Hall Estill
According to online software provider Estateexec.com, it takes an average of almost 16 months to process an estate. Those valued less than $ 10,000 get it done faster (11 months average), while properties valued above $ 5 million take the longest to complete: 42 months (3.5 years).
If you’re thinking about naming co-performers, make sure they can work together, Davis said. And be aware that the shared responsibilities could make the process more complicated.
“I usually recommend to clients that it is best to have someone in that role,” she said. “Only one signature would be required instead of two [on documents]which can take longer and sometimes be awkward. “
You should also ask the person if they are willing to act as the executor before finalizing your will.
“You should … discuss your expectations,” said Niv Persaud, a certified financial planner, founder of Transition Planning & Guidance in Atlanta. “It’s a lot of responsibility and you can refuse.”
Even if they accept this, it is worth naming an emergency executor (and fixing that person as well) in case the situation changes.
When creating a trust relationship and selecting a trustee as part of your estate plan, the same general attributes should apply. And if you’re struggling to identify someone in your personal life who is acting as an executor or trustee, you can count on a professional like a lawyer or accountant or trust company (or an escrow department at a bank).
Married couples usually call each other as executors. In these cases, carefully consider the security person.
Also, executors receive a modest fee based on state law (although some individuals choose not to receive payment), Davis said. For example, in Oklahoma, the fee starts at less than 1% of the estate, depending on the size of the estate.
Powers of attorney
It pays to create two separate authorization documents: one for healthcare decisions and the other for your finances. Many people end up naming separate individuals to serve in these roles.
On the medical side, the person with the power of attorney can make important healthcare decisions when you cannot. Creating something called a living will that states your desires when you are life sustaining or suffering from an incurable disease can aid your representative’s decision making.
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As with appointing an executor, the first thing you should do is make sure that the person is comfortable in the position. You should also let them know in advance of your desires (i.e., don’t revive order), Persaud said.
For financial powers of attorney, the person should have the same general characteristics as the executor. This person could act on your behalf to manage your finances (i.e. paying bills or other monetary affairs) when you cannot.
“You can also decide how broad or specific the role will be,” said Persaud. “For example, [the person] could access your account to pay bills but not make investment decisions. “
You should generally review your estate plan every three to five years – even if it’s just a will – said Davis of Hall Estill. If you have previously experienced a major life change (divorce, child birth, acquisition of major assets, etc.) it is worth checking earlier.
Regardless of how often you review your plan, keep in mind that an individual’s life situations – that is, health or judgment – can change over time. It is therefore wise to affirm that each person is still accountable for the responsibilities that you expect from them.
“Make sure the people you named still make sense,” Davis said.