Anthony S. Park

It’s understandable that beneficiary designations seem like an excellent and easy estate planning tool. But from our experience, when someone actually dies, beneficiary designations are often bad news.

We’ll describe a few reasons why beneficiary designations cause problems in probate when estate plans become reality. Then you can decide for yourself if beneficiary designations are worth the risk.

Outdated beneficiary designations don’t reflect your wishes

Often, by the time a person dies, their beneficiary designations are way outdated and no longer reflect the wishes of the decedent. How do we know that the designations are outdated? The beneficiary designations clearly conflict with the will, trust, letter of last instructions, and last conversations.

Why? It is too easy to forget to update your beneficiary designations. It’s easy to download a beneficiary form from the bank website, sign, and return it. But, it’s very easy to forget to submit a change of beneficiary form when you make changes to your estate plan. For privacy reasons, the bank doesn’t list your beneficiaries when you get your statements. You have to remember to check if you’re not reminded on a regular basis.

During our annual reviews, we try our best to nudge our solo agers to keep their beneficiaries up to date (or remove them). My preference is to remove the beneficiary designations and let everything flow through the will.

What happens if there is not enough money in an estate?

Accounts with beneficiary designations are NOT part of the probate estate. This means that your Executor has no control over those funds. The money will go directly to your named beneficiary (who could be your girlfriend from decades ago that you forgot to remove...).

Too many accounts with named beneficiaries can result in a cash-poor estate. There are not enough funds to pay for estate expenses, court fees, appraisers, debts, or even for the heirs named in your will. Not having money to pay debts and creditors can cause more problems, because creditors may go after the heirs.

Even worse, there may not be any funds available to pay the beneficiaries named in your will, because the bank accounts went directly to the account beneficiaries. It will be sad for the heir in the will, since it wasn’t your intent to leave them with no inheritance.

Hard to know until probate has already begun

It creates an annoying catch-22. Meaning, banks/brokerages only reveal if there are named beneficiaries to the beneficiaries themselves or to a court-appointed executor. How do you know if probate is necessary if you don’t know whether there are any beneficiaries?

Your executor may waste time and money to set up probate, only to find out that there was no reason to probate because the accounts have named beneficiaries. It’s frustrating to tell the family that they paid us just to tell them that the account funds are going elsewhere.

Also, the banks do not reveal this information easily, even to the court-appointed executor. Sometimes executors still have to jump through hoops to get the banks to cooperate.

Solo Ager Book

Beneficiary designations seem great on paper, and I get it. But, time and again, we’ve seen how this does not end well in reality. Hopefully this prompts you to just take a look at all of your accounts sometime soon.

If you don’t have it already, click on the link to my book, “The Solo Ager Estate Plan,” for a free download.

Free copy of "The Solo Ager Estate Plan"

Complete this form to receive your complimentary copy of Anthony’s Amazon best-seller, “The Solo Ager Estate Plan”

Tax clearance is taking even longer lately because of a new twist: 1040 verification. Everyone agrees it’s important to keep the tax bogeyman satisfied, but all these layers of delays are frustrating our clients and us. Below we'll explain what’s happening here.

What is tax clearance and why does it take so long?

The executor needs to make sure that the IRS agrees no more taxes are due. This is important because the executor is personally liable for unpaid taxes. If the executor makes distributions to the heirs and the heirs sign indemnity agreements, then the heirs will be liable for taxes.

Maybe you’re thinking that your loved one’s estate was so small that there’s no estate tax. We’re not just talking about estate tax, but final 1040s, payroll, small business, retirement payouts, and just about everything else. Still don’t think it applies? You’d be surprised how complex someone’s tax situation can be. The IRS is pretty good at combing through the past six years to make sure they get everything owed to them (it’s the IRS’s last chance to be paid).

Why does it take so long, generally? As with any bureaucracy, it takes the executor a while to gather all information and past returns. (Try getting a tax transcript quickly from the IRS!). The IRS will also take their time since this is their last bite at the apple. And lately, everything related to the IRS takes way longer due to unprecedented delays and backlog. As you recall, the lock-downs were in 2020. It’s mind boggling how the IRS is so backed up three years later.

Now the IRS wants verification

If the estate is owed a refund on any of its final returns, the IRS now requires identify verification of the decedent. It’s understandable that the IRS is taking these measures, since scammers posing as IRS agents have become ubiquitous. But the result is that estates are getting stuck for more weeks or months because of $10 refund.

Why does IRS verification cause longer delays?

It’s because all bureaucracies are slow, and are even slower if your situation is not on their main “script.” For example, if you go to the bank to open a personal checking account, it’s easy for the tellers who open checking accounts several times a day. But if you have a non-traditional request, such as closing a decedent’s account, the teller probably has to go ask a manager for help. When you go off-script from procedures that an employee is used to, then things can go haywire.

Whether it’s multinational banks or the largest government in the world (US), these bureaucracies struggle with edge case situations. It’s very hard to find a competent banker, branch manager, or IRS agent who understands what an executor is, let alone the correct procedure for dealing with a deceased customer or taxpayer. You’re pretty lucky if you speak to a knowledgeable agent on your first call, if you get to speak to anyone at all.

Can’t we just forego the $10 refund? Ah, nice try. The IRS will not process the return (not just the refund check) until they verify the decedent’s identity. When a return is not processed, you can’t get confirmation of the final balance and therefore the final release from liability.

For example, when you call the IRS to verify, they ask if you are the decedent. Once you tell them you are the executor, it heads downhill from there. It sounds absurd, but it happens.

The 1040 verification is a new procedure, so this is a heads up for those facing a new estate. For those who have been working on an estate for a while, this could be a reason why the estate is now dragging on. When we say that we’re waiting along with you, we mean it. It’s an uphill backwards in the snow with no shoes kind of battle.

Probate

Check out my book, “How Probate Works,” and when you get to the chapter on delays, just add on more time. Unfortunately, that’s the way things are right now.

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How do you sell a probate co-op, when the estate has no other cash?

Why does the estate need cash? To pay for all the preparations, such as movers to clean out the property, cleaners, contractors for minimum renovations to make the property marketable, and more.

For some houses, cash buyers/investors may be an option. But for other houses and the many co-ops in NYC, it’s not an option.

Sell personal property

When the estate has no cash or bank accounts, it’s usually because the accounts have named beneficiaries. When the estate only has accounts with named beneficiaries, there’s no operating account for the estate. Beneficiary designations are one of my pet peeves; they usually mess things up rather than solving inheritance problems.

So, the estate has a valuable piece of real estate, but no means to pay for the necessary steps to turn it into cash. Usually, the personal property in the residence is junk. I know someone may value their yard sale treasures or the dining room set that took forever to pick out, but no one else wants it. Antiques and high-end pieces can be sold easily, but generally it's not worth the cost of running an estate sale for the other personal property.

In this situation, the executor has no choice, so maybe but maybe they can sell enough pieces, jewelry, or anything to raise funds for the estate. Again, not a great situation: you’re essentially asking your executor to conduct a garage sale in hopes of raising enough money to clean out the rest of the junk!

Ask heirs to pay

Another undesirable option is asking the heirs to pay. The bottom line is that the heirs almost never have available funds. Even if heirs have the funds, they probably don’t want to contribute. Besides, even if one heir funds the estate, it causes imbalance and it is recipe for drama. The one who funds the estate will expect special treatment over the other heirs.

Bridge loans

A bridge loan is a short-term loan to get you from being illiquid to being able to sell the real estate. Bridge loans are not the same as usurious inheritance funding loans. This is a loan that is secured by the property itself. For that reason, some bridge loans have 0% interest!

So, what’s the catch? There’s lots of paperwork and specific conditions to get a bridge loan. Some loans require you to work with a particular broker or firm. But if that doesn’t bother you and you have no other options, it’s not too bad. Applying for a bridge loan is similar to filling out a mortgage application.

Executor

Those are the not so ideal solutions to selling a cash-poor probate co-op. If you dump this situation on a family member or friend, they probably won’t have nice things to say about you after your death. Hiring a professional executor is a good idea in this situation. To learn more, check out my book, “How to Hire an Executor,” available on Amazon!

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If you’re a solo ager and you must use a power of attorney (POA), make it as limited as possible.

We received the following from a solo ager listener: “You state in your book that a financial power of attorney is not necessary if there’s a solid living trust in place. (I don’t feel the risk of abuse is a critical concern in my case). However, my lawyer says I need to name one.”- Lori

This attorney refused to complete our listener’s estate plan unless she included a financial power of attorney.

Why I avoid POAs whenever possible

Powers of attorney are very overpowered. It can be executed with just a simple notary with no witness requirements. But, for that basic execution, there is unlimited control over someone else’s finances, house, etc.

Powers of attorney are pretty unstructured. There are no guide rails in the law for how an agent under the POA is compensated or whether there should be an accounting proceeding.

Besides, if you have a revocable living trust, then you have most of the benefits of a power of attorney. You would only need a POA if you are traveling abroad or incapacitated. You’d need someone to manage the funds on your behalf so you don’t fall into arrears or foreclosure.

I don’t think the risk of having a financial power of attorney is worth covering those outlaying scenarios. If you ever read a standard power of attorney, you’ll see that the agent has the power to do almost anything with your finances and property.

A supreme example from the news headlines is of Brooke Astor, a famous New York philanthropist. Her son was able to siphon about $80 million from her estate with a simple POA, contrary to the rest of her estate plan.

You might read the scenario above and say, well, I’d only give power of attorney to someone I trust. We’ve seen people who used to be the most trusted candidates go astray. Money does interesting things to people. This fear should not keep you from creating an estate plan, but keep in mind that you should minimize the use of a POA.

Why would an estate planning lawyers insist you sign a POA

The short answer is that I don’t know why anyone would be that stubborn to make their client do things their way. It’s like a doctor saying, “Get this surgery and you will be better. If you don’t listen to me, then I won’t be your doctor anymore.”  If they can’t explain their reasons to your satisfaction and still insist, consider changing lawyers.

Some attorneys have always done estate planning “packages”, and haven’t changed with the times. It might be hard to leave an attorney that you’ve been working with for a long time and who you are otherwise comfortable with. But, if you can’t get a decent answer to this pretty powerful question, it might be worth getting at least a second opinion.

Ways to limit a power of attorney

If you feel that you need a power of attorney, then ask the attorney to make it a limited one. There are two main ways to limit a POA:

The first way is to get a springing POA instead of a general POA. A general POA is effective immediately upon signing. A springing POA is conditional; those powers only come into existence if certain conditions are met. Usually this means that you must be deemed incompetent by two physicians.

The second way to limit a POA is to only choose specific powers for the agent to have. You don’t want to check the box that says your agent under the POA has the power to gift all of your money. And you certainly don’t want to check the last box that says, “All of the above.” Carefully choose only the powers that are needed to accomplish your goals. If it’s not something you would do in your own capacity, don’t give someone else the power to do it!

Solo Ager

If you don’t already have my book, “The Solo Ager Estate Plan,” click the link below for a copy.

Free copy of "The Solo Ager Estate Plan"

Complete this form to receive your complimentary copy of Anthony’s Amazon best-seller, “The Solo Ager Estate Plan”

A placeholder bitcoin inheritance plan may be the solution to spur bitcoiners into action, rather than pursuing a “perfect” plan. Instead of holding off on a plan until it’s perfect, have a placeholder plan in the meantime in case anything happens to you while you are still perfecting your inheritance plan.

Perfect is the enemy of done, and using a placeholder plan may help avoid overthinking and analysis paralysis.

Why bitcoiners need SOME inheritance plan

With bitcoin, there is no default safety net. Other assets, like a regular bank account, are connected to centralized institutions, meaning the funds won’t be lost. Banks and brokerages offer features such as password recovery. You heirs can submit letters testamentary to these institutions to make a death claim on your assets. Even if no one claims in a timely fashion, the funds don’t just disappear, they go to the state’s unclaimed funds.

But not with bitcoin! You need a plan for your bitcoin. The cryptographic security solutions (password, seed phrase, etc.), also make it hard for your heirs to access your bitcoin upon your death. So even though 60% of people have no estate plan, a bitcoiner MUST have some kind of plan to avoid catastrophic loss

Baselayer bitcoin inheritance plan

This doesn’t have to be a plan that you love; t’s just a placeholder until you complete your treasure map or other “perfect plan.”

Once you have your “perfect” plan, don’t just scrap the placeholder. The placeholder can shift to your backup plan. Even with traditional estate planning, people name successor executors and backup beneficiaries. Think of your bitcoin plan in the same way. It’s your own unclaimed funds scenario. If your carefully crafted plan doesn’t work, at least you have a backup plan in place.

Placeholder bitcoin inheritance plan must be frictionless

Your placeholder plan must be easy for you to set up or else you won’t do it. Otherwise, you’ll continue pondering that elusive perfect plan (or fail to have a backup).

First, your placeholder plan should be low cost regarding money and time. It should be easy to do yourself with minimal need for outside assistance.

Second, it should be a plan that you know will work to avoid catastrophic loss, even if it sacrifices a little bit of what you care about. For example, you may have to give up client information, or rely a little bit on a third party like a professional executor, or maybe it’s not your ideal security situation. As long as the placeholder plan falls within tolerable thresholds, you can be willing to sacrifice a little bit to not lose a lot!

I haven’t fleshed out a good placeholder plan yet, but a good place to start is a DIY will coupled with some version of a poor man’s multisig, while using a professional executor as a keyholder.

Again, I know this is not exactly the plan you want, but set it up so that it works for now. Otherwise, there is no safety net while you are developing your prefect plan.

Probate (can apply to Bitcoin)

My book, “How Probate Works,” will help you understand the foundations of probate. This should give you guidance as you develop your plan, because you’ll learn about situations that your heirs may encounter after your death.

Request your free consultation

 

 

How do you find a trustworthy fiduciary to make end of life decisions for you if you’re a solo ager? We get these questions often from our solo ager clients and followers:

“What provisions may be made if someone has no healthcare proxy?“

“When there is no one to take care of you as you age and you become ill, how can you ever find a fiduciary you can trust?”

We’ll review the problem, the lack of options, and if/when we’re able to help.

Solo agers’ problem

This end-of-life fiduciary problem is very similar to the executor problem, but more intimate.

Typically, solo agers do not have the traditional spouse or adult kids to fill the role. Some solo agers don’t want to burden (or are not comfortable asking) more distant relatives or friends to fill the role. An end-of-life fiduciary is not just a money or estate administration role, but rather extremely personal medical role. This means asking someone to make important end-of-life decisions for you and even be present at your death bed.

The bottom line is that you do NOT want a random court-appointed stranger to fill this role. A court-appointed fiduciary wouldn’t know you or your wishes at all.

Not many options

With executors, you have the option of choosing professional executors , as well as banks, trust companies, and in some states, there are certified professional executors. There is a small, but developed industry around professional executorship. But there are far fewer options for someone to be your hired health care proxy/agent.

In the case where a health care agent is hired, it is usually an attorney. This isn’t always a great option either. One of our followers said that she talked to an attorney and didn't feel comfortable with her because all she talked about was the hourly fee. The attorney quoted over $800.00 just to "sign her up."

Another said that the attorney “refused to have an initial meeting with me because she's a ‘busy person’ and I'd have to hire her before she'd see me.”

Obviously, an attorney won’t provide these services for free, but the attorneys can be more tactful about it. For example, when we are asked to serve as a professional executor, we meet with the person to make sure we are a good fit. It’s hard to imagine someone would want name a health care agent without meeting them first.

How (and when) we‘ll be your health care proxy

We do not accept this role capriciously. I won’t do it unless I am your nominated executor/trustee or otherwise known you for at least several years.

Again, I want to make sure we have a good working relationship. This includes annual calls and check-ins (which we have discussed in other episodes). I want to be sure that I have a directional sense of your personality and wishes before I commit to making medical decisions. When the end-of-life period comes, it is a stressful time both for the client and me. I need to feel confident I can faithfully carry out your wishes.

My book, “The Solo Ager Estate Plan,” can help you prepare for end-of-life decisions. Click the link below to receive a free copy.

As always, keep your questions coming!

Free copy of "The Solo Ager Estate Plan"

Complete this form to receive your complimentary copy of Anthony’s Amazon best-seller, “The Solo Ager Estate Plan”

 

What information are heirs entitled to, and how often can they request it? There is a delicate balance for executors to keep heirs in the loop without draining their time or estate resources in constantly responding to inquiries.

Executor vs. beneficiary rights

Why is it important to balance executor and beneficiary rights?

If heirs demand too much, an overwhelmed executor may make errors with actual estate decisions, or grow weary. On a more emotional level, the executor may begin to resent the decedent for putting them through this.

On the flip side, if the executor ignores or stonewalls the heirs, the heirs may resent the decedent for his choice of executor. Disgruntled heirs may pointlessly sue the executor at the end during the accounting process.

The best way to strike a balance is to address their respective legal rights.

The Accounting

The main legal requirement of the executor is the accounting. Note that the accounting comes at the END of the estate. The accounting records every dollar in and out during the executor’s tenure. The executor presents the accounting to heirs, the court, and possibly creditors.

Unlike some other states, New York generally has a “give them enough rope” approach, where the executor has tons of autonomy and authority. But with great power comes great responsibility: the executor is personally liable for any “mistakes” at the end.

There is no statutory legal requirement for providing the heirs with constant updates, just the accounting at the end. But, real world expectations outside of the statutory limitations means giving periodic updates to the heirs.

Periodic updates

It is best practice for executors to update heirs during the big milestones, such as selling the real estate or successfully filing the tax return. Sometimes those milestones are far apart, so at the very least, the executor should update the heirs every 6 months or even quarterly. It is important for executors to set expectations in the beginning of how often the heirs will hear from them.

If the executor doesn’t update the heirs, a judge may not be happy. When heirs get frustrated, they can file a motion to compel accounting with the court. The judge won’t normally grant such a request 6 months into the estate. But, if the judge finds out that the heirs haven’t been updated in those 6 months, maybe he will be annoyed and approve the request.

Executors should also update the heirs because they may want to buy-in from the heirs regarding major decisions along the way. It would be bad if the heirs found out months later that mom’s house was sold for a certain amount. Keeping the heirs informed eliminates unpleasant surprises and lessens the chance that they will sue the executor for decisions they disagree with. The executor doesn’t have to ask the heirs for permission to do anything, but keeping them in the loop gives the heirs a say in decision-making.

If you want to find out what is required of an executor, I suggest reading my book, “How to Hire an Executor.” A non-professional executor may get overwhelmed by all of the questions and requests from heirs and may not know where to draw the line. Something to consider is hiring a professional executor to deal with your heirs instead of placing the burden on a family member or friend.

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Heirs often want to know if there is any way to get their inheritance faster.

Probate can take a long time, for various reasons, and lately it has been taking even longer because IRS delays are making tax clearance even slower. So, here are some options for heirs in a cash crunch.

Expense reimbursements

First, the executor can pay expense reimbursements as soon as possible. This includes reimbursing heirs who paid the funeral bill, court or lawyer fees, clean out or move out costs, co-op fees, mortgage payments, and property repairs. Heirs who fronted these funds are entitled to be reimbursed from the estate.

Of course, reimbursements are not actually your inheritance, but repayment of money owed back to you. But if you need liquidity NOW, this can usually come out of the estate quickly with minimal delays. For example, court fees are unequivocal, so those can be reimbursed immediately once the estate has funds available.

Requesting a reimbursement from the estate is a quick way to get cash back into your pocket. Some heirs pull thousands of dollars from their personal bank accounts to cover the estate expenses and can’t afford to wait a year or longer to replenish their accounts.

Intermediate accounting

Another alternative it to do an intermediate accounting. One of the main steps to close an estate is to do an accounting of the full books and ledgers of the executor’s tenure (every dollar that came in and out of the estate). The accounting is usually done at the end of the estate process because it is time-consuming and costly. It’s difficult to track down every transaction over the span of several years, even though the executor keeps track as they go along.

An intermediate accounting takes place in the middle of the probate process, so that the executor is approved to distribute a portion of the funds to the heirs. The problem with an intermediate accounting that the executor is duplicating work that they have to do all over again at the end of the estate.

An intermediate accounting doubles the cost but may be worth it if heirs need cash and the delays are really long. This may frustrate other heirs who do not see a need for an intermediate accounting, and they may demand that the duplicate costs be paid for by the heir who wants the accounting. Most people don’t like paying for something twice if they don’t have to!

Inheritance advance loan

There is another option, but I highly discourage it: the inheritance advance loan. It is BAD idea, because it is a loan that takes advantage of an heir’s need for money.

With an inheritance advance loan, you can pay 50-100% interest/fees! If your share of the estate will be $50,000 and you need $10,000 now, the loan company will give you $10,000 now. But, at the end of the estate, the executor will give you $30,000 because for the $10,000 that you borrowed, you owe the lending company $20,000. If for some reason your share of the estate becomes less than you thought it would be or if you need to spend more money on litigation, repayment may be a problem.

In the narrowest of circumstances, this option may be worth it. Please explore the other options of expense reimbursements and intermediate accounting first. Talk to your executor or attorney to make sure all other options are exhausted before perusing an inheritance advance loan. This option exists for worst case nuclear emergencies.

Probate

Check out by book, “How Probate Works,” so you can understand the probate process and have reasonable expectations up front about getting your money. We try to make it clear to our clients that this process could take months or even years. Some clients may decide to go to other more optimistic attorneys, but I don’t like to over-promise and under-deliver.

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What are some less costly alternatives for a managed multi-sig bitcoin inheritance plan?

Why poor man’s multi-sig?

A multi-sig setup is good for inheritance purposes, because multiple keys are needed to access your funds. This way, there’s no pressure on one single keyholder to have high-level security. In a multi-sig, if one person loses their key, an attacker or hacker can’t do much without the other keys. Of course, the keyholders should keep the keys secure. But if one leaves his 12 key words laying around, it’s not as risky as it would be if he was the sole keyholder. Also, the keyholders should be geographically distributed – don't give them to people all living in the same house.

A drawback of using multi-sig is that it can be expensive, especially if your stack isn’t that big. Having 3 to 5 hardware wallets can cost several hundreds of dollars. It might not be cost-justified by the current level of your holdings.

Many of the good plans are through popular services (such as Unchained Capital, Casa, and Nunchuk). However, those are possible single points of failure. If a hacker knows that some of your keys are with these companies, they may find a way to access them. It’s easier for a hacker to hit one of these companies instead of hitting a computer in a random house.

These companies are also an easy target for subpoenas. Maybe you going through a divorce or a child custody battle, or maybe you have IRS or creditor issues. They may figure out that you are using a big company and figure out where to serve papers in hopes of getting your account information.

Separate seed from passphrase

What are some poor man options to avoid the expense of multiple hardware devices, as well as the small risk of using a centralized key-holding company?

One option is to separate your seed from your passphrase. If you have a wallet with 12 or 24 words, you can additionally add a passphrase (which is an equivalent of a 13th or 25th word). Now you need both the 12 or 24 words and the passphrase to access the wallet.

While you are alive, you can just transact normally with your wallet and passphrase.

But the plan is to give the seed phrase (the 12 or 24 words) to your executor and backup executors, while giving the passphrase to your heirs or someone else. After your death, those two parties need to team up to access your wallet. While you are alive, they cannot access your wallet unless they combine the seed and passphrase.

This is similar to multi-sig, where neither keyholder has to exercise extreme caution. But you should choose people who will keep these safe.

BUT what if your executors and heirs are the same people? In that case, you may want to hire a professional executor as a professional keyholder. Giving your adult children the seed and the passphrase makes it very easy for them to conspire together while you are alive.

Separate clone wallet from PIN

Another option is to separate your clone wallet from your PIN. You can load your seed phrase into a dedicated hardware wallet that is not directly connected to the internet. In order to turn on your device, you have to enter a PIN. During your life, you transact with your wallet and PIN as usual.

Here, the bitcoin inheritance plan is to give a clone wallet to your executor and backup executors without the PIN. Then you give the PIN to your heirs or someone else, creating your own 2 of 2 multi-sig. Again, neither keyholder needs to exercise extreme caution, since there is not much anyone can do with only one piece of the puzzle.

A huge drawback is that without the PIN, your executor cannot keep the clone wallet up to date (software updates, etc.). Depending how much time lapses before you die, he could end up with a very outdated device. To address this, you may have to do some periodic updates for the executor.

Probate (can apply to Bitcoin)

There’s no perfect plan; these are some options for folks who can’t cost-justify using a multi-sig, but like the idea of splitting up access for security reasons.

My book, “How Probate Works,” applies to your bitcoin inheritance planning because it explains the kinds of tasks your executor has to do when you pass.

I’ll be doing more talks to groups on this topic and we plan to post them shortly. In the meantime, keep your bitcoin questions coming!

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E303 How to Choose an Executor Who Will Accept

A common question from our Solo Agers is: does my executor have to accept?

Because our Solo Agers spend a LOT of time carefully choosing who will be their executor, it would be terrible if that carefully chosen one decides to not even serve! Our Solo Agers understand the significance about who they choose, and they take it very seriously. We touched on this in Episode 221, but we’ll dig a little deeper into the topic here.

It’s just a nominated executor

The first thing to know is that this is just a nomination for an executor. When Solo Agers pick who they want as their executor, they should remember that it is not a contractually bound role. That chosen executor is not required to serve; he or she is just nominated for that position.

It is up to them if they decide to serve at the time of your passing. There are many reasons why the nominated executor may not accept. They may have new health problems, or maybe they moved. In fact, many nominated executors don’t even know they were appointed until the time comes.

Is being executor too much work?

There are some things to consider to be sure your executor will actually accept. Being an executor is difficult, and probate is a lengthy process. We discussed this in Episode 184, touching on the hours, months, and expertise required to fulfill the executor’s duties. It almost ends up being a full-time job! Having this job hanging over the executor’s head can easily stress them out.

It is important to choose someone who is well-suited, meaning they have the legal or tax background and especially the time to devote to the task. Or you can just hire a professional executor. We have the staff and systems set up to deal with the challenges of executorship.

Unfortunately, your nominated executor may agree to serve but won’t realize it’s too much work until they’ve already accepted. It is important that you do your research ahead of time so that you know what exactly you’re asking of them.

Is there enough compensation for your executor?

An executor may decline if it’s too much work for too little pay. In New York, executor compensation is set by state law, and it is a percentage of probate estate (meaning the assets that go through the executor’s control). But it does NOT include non-probate assets such as accounts with beneficiary designations.

If your estate includes creditors or tax issues, but there are only a few probate accounts to deal with the issues, your executor may decline to serve. Otherwise, your executor will be paid very little for dealing with all the headaches. No one wants to deal with that kind of mess and barely get paid.

A solution may be to write a minimum executor compensation in your will, so that even if there are not enough probate assets, your executor could still be reasonably compensated. However, the statute is already set, so the executor may have to fight to get paid properly.

Another solution is to make sure you have enough probate accounts by removing beneficiary designations from some of your accounts. However, your executor may not be able to accurately evaluate how much work is involved vs. how much compensation they will receive. Just because an estate is large does not necessarily mean that there are enough funds available to pay the executor properly.

If it turns out to be too much work for too little pay, they may end up with unhappy memories of you. If you think your estate might present the issues discussed above, give us a call to talk through the pros and cons of hiring a professional executor or not.

Solo Ager Book

Below is the link to my book, “The Solo Ager Estate Plan,” which addresses the challenges of probate and executorship. And, as always, keep sending in your questions!

Free copy of "The Solo Ager Estate Plan"

Complete this form to receive your complimentary copy of Anthony’s Amazon best-seller, “The Solo Ager Estate Plan”