Wealth and Honor

Helping Families Navigate the Financial Challenges of Age Transitions

Tag: fiduciary duties

Do you really want to be an executor?

March 5, 2020 /

You may find that you have been named as executor (executrix if you are female) of your parents’ will. After reading the duties below, you may not want the job. It is a tiring, time-consuming, and frequently a thankless responsibility that you may want to resign from– and certainly have the right to do so.

Some of the more important duties and responsibilities of being an executor include:

  • Find the latest will and read it.
  • File a petition with the court to probate the will.
  • Assemble all the decedent’s assets.
  • Take possession of safe deposit box contents.
  • Consult with banks and savings and loans in the area to find all accounts of the deceased. Also check for cash and other valuables hidden around the home.
  • Transfer all securities to your name (as executor) and continue to collect dividends and interest on behalf of the heirs of the deceased.
  • Find, inventory and protect household and personal effects and other personal property.
  • Collect all life insurance proceeds payable to the estate.
  • Find and inventory all real estate deeds, mortgages, leases and tax information. Provide immediate management for rental properties.
  • Arrange ancillary administration for out-of-state property.
  • Collect monies owed the deceased and check interests in estates of other deceased persons.
  • Find and safeguard business interests, valuables, personal property, important papers, the residence, etc.
  • Inventory all assets and arrange for appraisal of those for which it is appropriate.
  • Determine liquidity needs. Assemble bookkeeping records. Review investment portfolio. Sell appropriate assets.
  • Pay valid claims against the estate. Reject improper claims and defend the estate, if necessary.
  • Pay state and federal taxes due.
  • File income tax returns for the decedent and the estate.
  • Determine whether the estate qualifies for special use valuation under IRC Sec. 2032A, the qualified family-owned business interest deduction under IRC Sec. 2057 or deferral of estate taxes under IRC Sees. 6161 or 6166.
  • If the surviving spouse is not a U.S. citizen, consider a qualified domestic trust to defer the payment of federal estate taxes.
  • File federal estate tax return and state death and/or inheritance tax return.
  • Prepare statement of all receipts and disbursements. Pay attorney’s fees and executor’s commissions. Assist the attorney in defending the estate, if necessary.
  • Distribute specific bequests and the residue; obtain tax releases and receipts as directed by the court.
  • Establish a testamentary trust (or pour over into a living trust), where appropriate.

If you find the task to be too over-whelming, talk to your parents about it if you can. Examine their wills to see if anyone is named as an alternate and discuss these duties with that person. You may even find that the person(s) named as executor are no longer living; or they may have named a bank trust department with which they no longer do business.  If you feel it is a duty that you can and want to do, be sure to contact a qualified lawyer in your parents’ state of residence to help you in the process.

I’m Trustee For My Parents’ Trust – Now What?

September 9, 2019 /

So, your parents have a trust, and you’ve just found out that you are the trustee. Do you thank them or did they reward you with the booby prize? A trustee is held to a high standard of accountability and must act in accordance with an established standard of care as outlined below. To fail in one or more of these – called a breach of fiduciary duty – is to invite litigation and sometimes results in broken family relationships where a family member is also the trustee. Professional trustees, like banks with trust departments, or corporate trustees will be given very little leeway if they fail in any of these duties, but untrained family members or individuals who find themselves in this unenviable position are often not excused for lack of knowledge either.

frustrated man
  1. Duty of loyalty. A trustee has a fundamental duty to administer a trust solely in the interests of the beneficiaries. A trustee must not engage in acts of self‐dealing.
  2. Duty of administration. The trustee must administer the trust in accordance with its terms, purposes, and the interests of the beneficiaries. A trustee must act prudently in the administration of a trust and exercise reasonable care, skill, and caution, as well as properly account for receipts and disbursements between principal and income.
  3. Duty to control and protect trust property. The trustee must take reasonable steps to take control of and protect the trust property.
  4. Duty to keep property separate and maintain adequate records. A trustee must keep trust property separate from the trustee’s property and keep and render clear and accurate records with respect to the administration of the trust.
  5. Duty of impartiality. If a trust has two or more beneficiaries, the trustee must act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries’ respective interests.
  6. Duty to enforce and defend claims. A trustee must take reasonable steps to enforce claims of the trust and to defend claims against the trust.
  7. Duly to inform and report. A trustee must keep qualified trust beneficiaries reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests.
  8. Duty of prudent investment. A trustee who invests and manages trust property has a duty to “invest and manage trust property as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust.

Much like the position of Executor, the role of Trustee is not to be accepted lightly and can often be a lifetime of responsibility. If you are not comfortable serving in this capacity, discuss this with your parents now so that alternate plans can be made.

Trusts are excellent vehicles for protecting an estate from creditors, transfer taxes, or misbehaving heirs. Their operation may be simple or complex, but it is incumbent upon you to talk to your parents about their trusts, and especially who the parties are if you are in the role of financial caregiver.

Source: American Bankers’ Association.

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