When a person dies, others are called upon to manage their estate. The executor, named in their will, oversees the distribution of assets. If they didn’t have a will, the court names an executor, sometimes referred to as an administrator. Beneficiaries are those designated to inherit the decedent’s assets, as explained in a recent article, “Executor vs. Beneficiary Rights: Estate Planning Guide” from Nasdaq.

The terms beneficiaries and heirs are used interchangeably. Beneficiaries are typically persons named in a legal document, such as a will or a trust. Life insurance policies, retirement accounts and bank accounts also have named beneficiaries to inherit the assets or proceeds. In the case of life insurance, it is on the death of the original owner. In most cases, the person making beneficiary designations has the right to change them.

State inheritance laws legally identify the heir as having the right to receive assets from a deceased person’s estate, usually their spouse, children, or other relatives.

The executor is appointed by the will or the court to oversee probate. This is where assets are inventoried, outstanding debts are paid and any remaining assets are distributed to heirs.

When having a will prepared by an experienced estate planning attorney, it’s possible to name a beneficiary as an executor. However, there are some pros and cons to doing this.

An executor who will benefit from the will could simplify things, if the estate is relatively straightforward. However, if the estate is large, or if other beneficiaries might challenge the will, it could get messy.

Executor tasks may include:

• Consulting with estate planning attorneys, accountants, financial advisors, and others whose services are needed in the probate process;
• Collect and inventory assets of the decedent;
• Give notice to creditors of the person’s death, so they may bring claims against the estate for any outstanding debts;
• Receive reimbursement for expenses paid to manage the estate, including professional fees;
• Collect a fee for their time and services provided as the executor, which could be a percentage of the estate or a flat fee, depending on what is permitted by state law and local custom.

Beneficiaries have certain rights:

• Receive assets from the estate they’re entitled to according to the terms of the will or state law in a timely manner;
• Request and receive information about the administration of the estate, including financial details;
• Request the removal of the executor.

Beneficiaries also have the right to sue the executor of an estate, if they believe a breach of fiduciary duty has occurred. The executor is a fiduciary, meaning they must act in the best interest of the beneficiaries or other persons represented in financial matters.

Executors can be sued only if there are grounds for doing so. For example, a beneficiary might have grounds to sue the executor if the executor:

• Fails to provide financial statements upon request.
• Delays distribution of assets for no reason.
• Favors one beneficiary over others when distributing assets.
• Mismanages or misuses estate assets for their benefit.
• Uses estate assets to make risky investments.
• Has an obvious conflict of interest because they are also beneficiaries of the estate.

Understanding the difference between executor vs. beneficiary rights is essential if you’ve been assigned either role. If you’re preparing a will with an experienced estate planning attorney, they will clarify these roles and help you determine the best candidate for executor.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Nasdaq (March 10, 2023) “Executor vs. Beneficiary Rights: Estate Planning Guide”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Because of the extreme rate of inflation, which hit 6.5% in 2022, more of us are worried about estate planning than ever before, according to the annual Wills and Estate Planning Survey from Caring.com.

SI Live’s recent article entitled, “More young adults are creating wills because of COVID-19, inflation, survey says,” reports that roughly 20% of survey respondents said they believe an estate plan is now more important because they worry about how inflation will affect their heirs’ financial future. More than one in 10 said inflation changed their view on estate planning because they see their assets, such as real estate, as more valuable than in the past.

However, 9% of survey respondents said they feel inflation reduced the value of their assets, creating less of a need for estate planning; and 7% said they had to sell many of their valuable assets to keep up with the cost of inflation in their day-to-day lives.

Although 64% of Americans think having a will and an estate plan is important, only about a third (34%) of Americans have a will or an estate plan. Caring.com found younger Americans are 63% more likely to have an estate plan in 2023 than compared to 2020 – and more than a third said inflation made them realize the need for an estate plan.

Sixty-three more young adults aged 18- to 34-year-olds have estate planning documents than the same age group did in 2020, because of inflation, according to the results. This makes young adults almost as likely as middle-aged adults to have an estate plan. According to the survey, the coronavirus (COVID-19) pandemic had a significant impact on young adults wanting to create an estate plan, with the number increasing by 69% between 2020 and 2021.

Just 32% of Americans age 55+ said inflation changed their mind about estate planning. However, older adults have an overall higher rate of already having a will. The 2023 Wills and Estate Planning Survey found 3% more Americans have a will in 2023 than last year – from 33% to 34% — and 6% more Americans have a will than in 2020.

A total of 42% of Americans said they haven’t created a will because of procrastination. One in three people said they don’t have an estate plan because they don’t think they have enough wealth to leave behind when they die.

Everyone should consider estate planning. Ask an experienced estate planning attorney for assistance.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: SI Live (March 3, 2023) “More young adults are creating wills because of COVID-19, inflation, survey says”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Mindful estate planning can create tax and investment efficiencies and help ensure that your wishes are fulfilled, says a recent article titled “Estate planning basics: Tips for strategic preparation” from Atlanta Business Chronicle. Before creating a plan, it may be helpful to understand the components of a comprehensive plan, how assets can be transferred and how to get started.

Thoughtful estate planning starts with key documents. Your last will and testament provide details on wishes about property distribution and assets after death. The will creator names an executor, who oversees and manages the estate until its final distribution, including payment of any outstanding debts or taxes.

The will has no impact on insurance proceeds, retirement assets, or transfer-on-death investment accounts. A will can be amended during the creator’s lifetime and should be reviewed every three years or so to ensure that it still aligns with the testator’s wishes.

Trusts are legal entities allowing a third party—the trustee—to manage assets on behalf of beneficiaries. There are many different kinds of trusts, depending on the family’s needs. The grantor, who is the person creating the trust,  can define how and when assets pass to beneficiaries.  They can be revocable, meaning the grantor can amend the trust as long as they are living, or irrevocable, meaning the grantor cannot amend the trust after its creation.

A letter of intent can accompany a will and is published to the executor, trustees and beneficiaries. This provides detail from the decedent on their wishes but is not legally enforceable.

Power of Attorney is used when the person creating it is physically or mentally disabled due to illness or injury. It allows an agent to manage financial and legal affairs, can be temporary or permanent and is revoked upon the death of the principal.

Advance directives for health care provide detailed guidance to caretakers and medical professionals regarding wishes for healthcare when the person is unable to communicate their own wishes.

Transferring assets to beneficiaries occurs in several different ways, including designations, jointly held accounts and property, probate, or trusts. Beneficiary designations are typically used with life insurance policies, annuity contracts, retirement accounts and investment accounts.

Some assets are owned through Joint Tenancy With Rights Of Survivorship (JTWROS). They pass by title or registration to a surviving co-owner. This type of ownership is usually used with bank and investment accounts, real estate property, vehicles, or boats. The asset automatically transfers to the surviving owner. Be sure to avoid conflicting instructions in wills or trusts when assets are owned with JTWROS.

Probate is the method through which the estate is approved by the court and assets are distributed using the will as guidance. The court also authorizes the executor to manage the estate.

Assets held in trust are maintained by trustees who hold the assets on behalf of beneficiaries. They are passed on based on the trust agreement and don’t go through probate.

Once you have created an inventory of all assets and properties, meet with an experienced estate planning attorney to draft the documents needed to carry out the plan. The attorney will help refine goals and clarify key issues. Assets may need to be retitled and trusts may need to be funded. Executors, trustees and beneficiaries should be notified, so they understand their role in your estate plan.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Atlanta Business Chronicle (March 1, 2023) “Estate planning basics: Tips for strategic preparation”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys