How a Letter to Your Executor or Trustee Conveys Your Wishes

A letter to your executor or trustee can help clarify your wishes and promote your goals for your beneficiaries.
A letter to your executor or trustee can help clarify your wishes and promote your goals for your beneficiaries.

A detailed, informative letter can be invaluable to those you have designated to carry out your wishes after you’re gone, says the article “Why You Should Write a Letter to Your Executor—and What to Say in It” from The Wall Street Journal. Your last will and testament or living trust does have many directions. However, there may be things you want your executor or trustee to know that may not be included in your will or living trust. This is especially important if death is sudden. The letter, which you should sign and date, can help prevent potential disputes by minimizing any confusion around your intentions, priorities and goals.

One thing to keep in mind when writing out instructions is that, if you have a will-based estate plan, the executor is charged with the responsibility of paying your debts and final expenses and then distributing the remaining assets to the beneficiaries. So the executorship is really a relatively short-term position. If you have a trust-based estate plan, it is your successor trustee who has these duties.

Because the executor has no control over your assets after they are distributed to your beneficiaries, a letter of instruction will be most helpful if you have created trusts for your beneficiares in your will or living trust. Think of the trustee of these trusts as being involved long-term. That said, there may be situations when a letter to the executor would be very helpful. For example, a letter could explain why you have decided to treat beneficiaries differently in your estate plan.

Here are some things to consider when drafting a letter to your executor or trustee.

Your thoughts about wealth. Share your story about how you came to the assets that you are leaving in your will. How was your wealth created, what do you value and what are your long-term goals for your wealth? Do you want family members to invest the assets, so they grow over generations, or do you want them used for college education costs for grandchildren?

Describe key players in the family. It is best if your executor or trustee knows the members of your family.  However, they may not know the family dynamics or history. Giving them your insights, may help them anticipate issues. Does one child tend to take over and speak for everyone, without being asked? Are there substance abuse issues in the family that need to be considered? Share your concerns, so your executor or trustee can be mindful of how the family works (or doesn’t) as a unit.

What matters to you? This is especially important, if you don’t want your beneficiaries to be dependent upon their inheritance, instead of becoming self-reliant. Share your values to encourage their earned success. Make it clear if you want to protect the family wealth, so it can be used to empower future generations and for family members to be responsible for their own financial well-being. Evidence of your intent will help a trustee if a beneficiary challenges the way a trustee is managing and making distributions from the trust.

Give your  trustee the power to make decisions, even when that means saying no. Considering the size of your wealth and the family members who are your beneficiaries, you probably have a good idea of who would do what with their inheritance. If you don’t want your wealth to be used for a start-up by a son whose financial management capabilities are questionable, say so in the letter to your trustee. If you are hopeful that a daughter will use her inheritance for a down payment on a home for her family, you should also express that.

A good estate plan is not just about who gets what and when. A good estate plan is one which tries to minimize conflict and promotes the values you hold dear. That’s why it’s important to consult with an experienced estate planning attorney who has worked with many families and who understands the challenges and pitfalls that are presented any time wealth is transferred from one generation to the next.

You may also be interest in https://galligan-law.com/does-your-executor-know-what-to-do/.

Reference: The Wall Street Journal (April 8, 2020) “Why You Should Write a Letter to Your Executor—and What to Say in It”

 

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Warning Signs That There May a Will Contest After You Die

Address issues in your estate planning now to avoid a Will Contest later.
Address issues in your estate planning now to avoid a Will Contest later.

One of the goals of estate planning is to avoid conflict in the family, including a Will contest, after a loved one passes away.

Take a look at the following situations. If any of them apply to you, know that you can take steps now to minimize the chance of a Will contest in the future.

Here are 10 warning signs that there may be family conflict after you are gone:

  • There are step-parents and step-children – and you want to be fair to everyone
  • You have lent money during your lifetime to one child; or one child has needed more help from you during your lifetime than your other children.
  • You plan to leave all or a large portion of your estate to charity or to a non-relative.
  • You have a lifestyle certain members of your family don’t approve of.
  • You have children who don’t get along – it will get worse after you are gone.
  • Your children’s abilities to handle money differ – one is prudent, another is a spendthrift.
  • Your extended family members disagree on how your minor children should be raised if you are not there do to so yourself.
  • Some of your children work in the family business; others do not.
  • One child has moved into your house to take care of you (or has moved into your house because of a financial setback).
  • You have family heirlooms and have not left instructions on how they are to be divided.

Every family has its issues. While it may not always be possible to eliminate all conflict, there are ways to structure your estate plan so as to minimize the chance of a Will contest. If any of these situations apply to you, contact an estate planning attorney now to find out what steps you need to take to preserve family harmony in the future.

You may also be  interested in https://galligan-law.com/does-your-executor-know-what-to-do/.

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When Do You Need a Special Power of Attorney?

A special power of attorney can help you take care of business when you're unavailable.
A special power of attorney can help you take care of business when you’re unavailable.

Yahoo Finance’s recent article entitled “What is Special Power of Attorney?” explains that with a general power of attorney, you can designate a person to make decisions when you are unable, due to illness or incapacity. A general power of attorney allows your agent (the person you select) to do almost anything related to your financial affairs that you could do, including, for example, file your tax returns, sell your house, access bank records, or sign financial contracts in your name. There are usually few, if any, limitations.

A special power of attorney only applies to specific circumstances. This is also called limited power of attorney. An agent named in a special or limited power of attorney can only act in situations included in your power of attorney document. Maybe you’re traveling or out of town when an important transaction need to take place. A special power of attorney is often used to sell property when the buyer or seller is unable to attend the closing in person. In a special power of attorney you can set limitations and conditions under which your agent is authorized to act.

You can have multiple special powers of attorney, depending on your situation. You may want to give one agent the power to run your business while you’re away and give another agent the power to sell your car.

Remember that a special power of attorney, like a general power of attorney, only applies during your lifetime. If the special power of attorney does not include a date when it terminates, it must end when you pass away. Your assets would then be managed pursuant to the terms of your will or trust, if you have either. If a person dies without a will, then in most cases the assets are distributed according to the probate laws of the state where the person lived.

Typically, creating special power of attorney involves the following:

  • Naming a person to act as your agent
  • Detailing the specific terms under which a power of attorney will take effect
  • Determining which authority your agent will have
  • Designating a successor agent, if necessary, and
  • Choosing an end date for the power of attorney to terminate

A special power of attorney is just one of the documents you may need for your estate plan. You should also ask your estate planning attorney about a last will and testament and a living trust to help you manage assets, according to your wishes after you pass away. Other critical documents include advance health care directives which state the kind of care you should receive when you can’t make medical decisions for yourself.

For more information on other estate planning documents you may need see https://galligan-law.com/living-wills-and-medical-powers-of-attorney-why-they-are-important/.

Reference: Yahoo Finance (Feb. 28, 2020) “What is Special Power of Attorney?”

 

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