Trusts: November 2010 Archives

November 23, 2010

Appointing a Bank as Executor

  woman banker.jpgDear Liza: Is it possible to appoint a bank Executor of Estate ?  I am not comfortable appointing family members or friends for a number of reasons. You bet. Many banks have trust departments who can provide services to families, as executors or trustees. They, of course, charge for this service. So, if there is a bank or financial service firm that you already work with, ask them if they have a trust department. Ask them what their fees for this are -- many charge a percentage of the assets under management, which can range from .75% to 1.5%, depending on the size of the estate. Also ask them if they require special language to be in your Will or trust, some do, and some don't. If they do, get the language and ask your attorney to incorporate that into your documents, or, if you're doing them yourself, make sure you're doing what the bank requires. Two things to think about, though. The first is that the banking industry has been through some, ahem, turmoil, lately--so you need to consider how you'd feel if your friendly local bank gets sold to some megalopolis bank and some banker in a far away city takes over as your family's executor.  If that's not OK with you, you might want to name a second choice and say that if your local bank is sold, you don't want the bank's successor to be your executor, but want your second choice to serve instead. The second thing is, if there's a particular banker you really like, you can add language to your documents that says you want that banker to do the job, even if they move to another institution with trust powers.

November 10, 2010

Ripeness is all--take your time with trust administration

clockface.jpgDear Liza: My dear friend recently died. He left his house to his mother, who lives far away. How soon can I transfer the house to her? I am eager to get this done as soon as possible because until then the trust has to pay the mortgage.  So, you have to wait until the survivorship period is over before you can distribute any property to anyone. This will be in the trust--it is usually thirty (30) days, but can be longer. A person has to survive at least that long after there's been a death to inherit anything. This is to prevent property going to someone, and then having them die and leave the property to someone else entirely. You can transfer the house the day after that period ends. But settling an estate takes time. Please don't distribute anything until you're sure you know what the bills and debts there are to pay off and whether there will be income taxes due for the last year of your friend's life. Beneficiaries are often in a big hurry to inherit, but prudent trustees take their time and let beneficiaries know that debts and bills come first.
November 7, 2010

Are Living Trusts Filed Anywhere?

safe.jpgDear Liza: My husband and I just finished creating a living trust. Do we file it anywhere, like with our county? Weirdly, no. But people ask me this all of the time. It seems that something so important should be filed somewhere. But during your lifetime your trust just lives in a fireproof safe, or a safe deposit box, or somewhere safe where people will be able to find it, if they need to. After one, or both of you, die, then a copy of the trust will get sent to the county so that names can be changed on your house's title, and sometimes financial institutions and banks will also want to see it--just to make sure that 1) it exists and 2) the successor trustee is clearly identified in the document. So, keep it safe and let your family and successor trustees know how to find it. Some words of advice: DON'T leave your trust in an unmarked binder on your bookshelf (like I did for years) and DON'T swing by Target on your way to a little league game to buy a fireproof safe when you finally feel sufficiently guilty to do the right thing--safes are heavy, I had to get a Target-guy to wrestle it into the car and then get my neighbor-the-cop to wrestle it into our house. Also, maybe don't put the safe in the room in the house with the Wii--or your nine year old may raid the safe to get the batteries out for the Wii remote.