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Long Island's Elder Law, Special Needs & Estate Planning Firm

Thursday, July 31, 2008

Learn the Ins and Outs of Being an Executor or Trustee

Learn the Ins and Outs of Being an Executor or Trustee

Taking on the job of executor or trustee is not a role to be taken lightly. If you ignore certain problem signs, you could be setting yourself up for aggravation, red tape, years of work, angry battles with family members and even lawsuits, according to an article on the MSN Money Web site.

"I think people would be shocked to know what's often involved", is often stated by many elder law attorneys.

"Often the most difficult part is not dealing with the money or the lawyers or the courts; It's the personal property. People have been known to fight over Tonka toys."

An executor is a person designated in a will to see that the deceased's last wishes are carried out and to settle the deceased's probate estate. An executor's job typically lasts from a few months to two years. If you're asked to be the trustee of an ongoing trust, by contrast, your job could go on for decades. A trustee is in charge of investing the money in the trust, making distributions and filing tax returns. Attorneys say the trustee's job is often harder and has the potential for more conflict.

"If you're held to have mismanaged the trust, then you're held personally responsible, you're required to make the trust whole out of your own pocket." Executors can be sued as well.

All this doesn't mean you should necessarily say no when asked to be an executor or trustee. Very few wills or trusts are contested in court -- fewer than 3 percent -- and a competent elder law attorney can help guide you.

But the article identifies a number of red flags that should prompt you to think twice before saying yes:

You can't obtain a copy of the will or trust to read beforehand. Browning recommends that you also sit down with the lawyer who drafted the document to discuss your duties and the situation you're likely to face.

Someone's being disinherited

There is already family tension

The person who's asking you isn't well organized

The trust was created with a kit or software rather than by a lawyer

You're being put in charge of a sibling's money.

Source: MSN Money article, 6/08.

Thursday, July 10, 2008


Earlier this year (March 13, 2008), the Senate voted on four amendments to the estate tax that were filed as a part of the budget resolution debate. As background, the budget resolution gives Congress non-binding fiscal guidelines for the upcoming year. These budgetary guidelines are passed by a simple majority, rather than the 60 votes it takes to survive a filibuster and pass a bill. Given the non-binding nature of the budget resolution and the amendment, they can only serve as an indication of what the Senate might do when voting on actual estate tax reform legislation.

Senator Baucus (D-MT) proposed the first amendment, which prevents the estate tax from rising above the 2009 levels ($3.5 million exemption and a top estate tax rate of 45%). Senator Baucus’ amendment passed the Senate with a vote of 99-1.

Senator Caucus’ amendment was followed by an amendment proposed by Senator Graham (R-SC) that provided for a $5 million exemption and a maximum estate tax rate of 35%. The Senate voted against this amendment 47-52.

Senator Ken Salazar (D-CO) introduced an amendment that was “revenue neutral,” by setting aside reserve funds in order to reach a $5 million exemption with a 35% maximum estate tax rate. The Salazar amendment failed by a vote of 38-62.

The final amendment was proposed by Senator Jon Kyl (R-AZ) and it set the exemption at $5 million with an estate tax rate of no higher than 35%. Senators Lincoln (D-AR) and Landrieu (D-LA) joined the Republicans in the voting with Senator Voinovich (R-OH) voting with the Democrats. This amendment failed with a 50-50 vote because the Vice President was not present to break the tie.

The Senate Finance Committee also held the second of three planned estate tax hearings, this one discussing the inheritance tax regime versus the current estate tax regime. While none of the Senators present seemed receptive to the idea of an inheritance tax, all of the witnesses at the hearing expressed philosophical support for wealth redistribution through an inheritance tax system.

Despite the national attention given to estate tax reform in general, there has been a dramatic reduction in the number of estate tax returns filed. The IRS Statistics of Income Bulletin (IR 2007-153) indicated that in 2005, when the estate tax exemption was $1,500,000, the number of estate tax returns filed fell by 58% to about 45,000 returns, down from about 108,000 returns filed in 2001. The total amount of assets represented by those returns fell by 14% to $185 billion in 2005 and from $216 billion in 2001.