What is an Executor?
An Executor is an individual named under a Last Will and Testament. The executor has the responsibility of administering the estate of the decedent and of following the instructions provided in the Last Will and Testament.
What is a Trustee?
A Trustee is an individual or corporation named by an individual, who sets aside property to be used for the benefit of another person, to manage the property as provided by the terms of the document that created the arrangement.
How do you Select an Executor?
The American Bar Association recommends that you choose someone financially responsible, stable and trustworthy. The executor may be a close friend or relative. Attorneys, accountants, and other professionals may also aid or serve as an executor. In some cases, appointing an outside executor avoids the risk of a potential conflict of interest.
How do you Select a Trustee?
A Trustee should have expertise in collecting estate assets, investing money, paying bills, filing accountings, and managing money for beneficiaries. The beneficiaries must feel comfortable with the trustee to handle the estate’s assets. The trustee may be a close friend or relative. Additional options are banks, attorneys, or sharing the job among co-trustees.
What is a Trust Protector?
A Trust Protector is an individual appointed to ensure the trust is not adversely affected by changes in the law, circumstances or trustees.
How to Select a Guardian for my minor children?
A guardian should understand your values and philosophies for raising your minor children. Other factors to consider when choosing are guardian are the guardian’s age, physical ability, financial stability, and living arrangements.
What can I do if one of my descendants has an addiction or behavior problem?
If one of your descendants has an addiction or behavior problems, there are provisions you can establish to ensure the descendant is better prepared to receive their inheritance. Common circumstances are:
Consumption. The most common behavior that is discouraged is reckless consumption. Thus, many clients do not want to give their estate outright to young adults. Many parents plan for their assets to be held in a trust until the child reaches a minimum of 25 years of age. The older the client, the more the minimum distribution age increases or is stretched by providing a distribution schedule, such as one third at the age of 25, then half of the balance at the age of 30, and the remaining balance at the age of 35.
Sloth. Some parents will want to provide that if the intended beneficiary does not intend to join the work world, then the beneficiary may be disqualified from receiving any trust distribution during his/her life time. The professional should inquire whether any family member suffers from a mental illness, such as bi-polar. Many emotional illnesses develop at a young adult age and may prevent the beneficiary from holding a steady job. Therefore, a complete estate plan should provide a provision for a disabled adult child, particularly if there is an incentive to work included.
Self-Destructive Behavior. Beneficiaries suffering from an addiction present a special challenge for parents. Self-destructive behavior may be in the form of drug abuse, alcohol abuse, or criminal. The donor may wish that the child be free from drugs or alcohol. Instructions may be provided that the beneficiary is regularly tested. Some beneficiaries may find this degrading, will not comply, and forgo the benefits of the incentive trust. This aspect of measurement may create difficult problems between the trustee and the beneficiary. For instance, what constitutes satisfactory testing for alcohol use? Often questions do not have a clear answer. When there are such incentive provisions, the trustee should be a third party and not a sibling, in order to alleviate arguments between the trustee and the beneficiary.
What are the common encouragement/incentive languages that I can include in my estate plan?
Desirable behavior may be encouraged by a cash bonus incentive. Parents may want to encourage their children as follows:
Education. Perhaps the most common shared goal of parents is to encourage the education of their children and/or grandchildren. Many recent documents include a broad definition of “education” intended to include not only college but private secondary education, post-graduate education, professional schools, and other sorts of schooling. Such a definition may also include the living expenses incurred by a student.
Industry and Creation of a Business. Many parents wish to encourage hard work. However, the incentive language may be hard to draft because values or situations may change over a period of time. Parents may like to authorize a child to receive an advance of his/her share for starting a business. The trustee may request that the child provide a business plan and a market study in order to assess whether this entrepreneurial project is viable.
Service. Parents may seek to encourage altruistic behavior, by providing special supplements for those children who are teachers, artists, social workers, college professors, foreign service officers, or other professions. This practice was more common thirty years ago. Today most incentive trusts will provide a small salary.
Family Dynasty. Parents may want to encourage children to involve themselves in the process of building and preserving assets for future generations or be involved in the family business. They may discourage charitable gifts because they want to preserve the wealth for future generations.
Philanthropy. Some may want to encourage their children to be philanthropic. Most seek to accomplish this goal by involving their children in family foundations, charitable trusts, donor advised funds, and the like. This can actually teach children about asset management. The donor may often select family members as directors or trustees of the private foundation, or create a mechanism whereby family members are likely to be selected. This will teach the family members to learn about the large universe of charitable organizations in this country and internationally. It can teach family members to understand and love the arts. By working together on the board of a charity, family members may stay close and enjoy the activities necessary to run a private foundation. Giving money to worthy causes is satisfying and provides a certain stature in the community.
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