ALG Fiduciary Services LLC

Will you be my Personal Representative?

Asking someone to be the Personal Representative of your estate is a crucial part of creating a will and the basis for beginning the estate planning process.

A Personal Representative is named when a will is drafted, their duties begin once the testator, the person who had the will created, dies. Once the estate begins probate, the legal process that settles the estate of a deceased, the Personal Representative’s duties will include:

• Appearances and filings in Probate Court;
• Notifying beneficiaries and heirs;
• Sending death notices;
• Opening a checking account to pay the estate’s bills;
• Filing a tax return;
• Inventorying assets;
• Identifying and paying debts of the estate; and
• Distributing bequests to beneficiaries.

Obviously, it can be a labor-intensive process for a Personal Representative, and unfortunately it also comes during a time of grief. Appointing a professional allows your loved ones the time to grieve.

By appointing a professional Personal Representative, you have the opportunity to make the process easier and more cost effective. Having a professional Personal Representative and an estate plan in place eases the burden of your passing on your loved ones.

An estate planning attorney can help you prepare a plan to meet the needs and goals of your family, as well as discussing options in choosing a Personal Representative while creating a will. ALG Fiduciary Services offers a free initial consultation and referrals to attorneys that can assist.

TRUSTEE AND SUCCESSOR TRUSTEE

Your daughter, brother, friend, or neighbor may be perfectly capable of serving as your successor trustee, but there are many reasons they may not be the best choice. Let’s go back a step before I share why individuals you know and trust may not be ideal for this vital role.

An important part of estate planning involves creating legal documents to manage your assets during your lifetime and after your death. The person(s) creating the trust are called the trustors. It is important to carefully consider who will become the trustee of the trust after they are no longer able, and these individuals or professionals are called their successor trustees. Many people choose to appoint a family member for this role. While sometimes this works well, it is important to know that there are several advantages to naming a professional trustee to manage your trust when you’re gone.

AVOID BURDENING THOSE YOU LOVE

Acting as a successor trustee is not rocket science, but it is a completely different set of tasks than most people have had to do before. Wrapping up someone’s estate when they’re gone takes many hours of work carrying out duties they’re unfamiliar with. Not to mention that most people you might name are already quite busy with their own lives and maybe even children. Professional trustees wrap up living trusts around three to five times faster than adult children or other individuals, and with much less stress for loved ones.

AVOID CONFLICT WHEN EMOTION ARRIVES, HAVE PROFESSIONAL TRUSTEE WITH AN OBJECTIVE VIEW

Even in families that get along extremely well, the stress and pressure of wrapping up your trust can cause tension in relationships. All it takes is one decision that siblings don’t agree with to cause a rift in a previously happy family relationship, all when you’re no longer here to help mend it.

CASES WHEN A BENEFICIARY CANNOT ALSO BE A TRUSTEE

The most obvious case where a professional trustee works best is in the case of minor children or adult children who aren’t quite ready to receive a larger check all at once. Children under 21 do not have the experience and capacity to manage estate assets. A professional trustee could manage a trust for minor children until they become of age. Another example of a situation where a professional trustee is a good idea is a special needs trust. Beneficiaries with developmental disabilities, for example, might not have the capacity to manage complex finances. In this case, a professional trustee ensures that trust assets will support vulnerable loved ones for years to come.

EXPERIENCE WITH TRUSTS, TAXES, REAL ESTATE, FINANCIAL ADVISING. IS YOUR BROTHER READY TO BE A TRUSTEE?

Many revocable living trusts last only long enough to close out the original trustee’s estate. However, this often involves many months and significant paperwork. This will require at least filing one set of taxes for the deceased. Each year, trustees review investments, keep up real estate and file taxes. For generational trusts, the responsibility could go on for much longer. Why shoulder your children with the burden of managing the trust assets when you can hire someone to do it for them?

PROFESSIONAL TRUSTEE PROVIDES LEGAL PROTECTION

In addition to providing expertise, objectivity, and continuity, a professional trustee can also help manage risk associated with the trust’s management. Professional trustees are held to exacting standards of care and are required to carry insurance to protect the trust’s assets. This provides protection for the trustors and beneficiaries. A professional trustee protects against legal or financial liabilities. They also help to identify and manage potential risks associated with the trust’s assets. A professional trustee will be on the lookout for investment risks or tax liabilities. While there could be additional costs associated with hiring a professional trustee, the benefits often outweigh those costs. This is especially true for trusts with complex assets or beneficiaries.

In conclusion, appointing a professional trustee can provide significant benefits to providing for your loved ones. By choosing a professional trustee, you can benefit from their expertise, objectivity, continuity, and risk management skills. This can help to ensure that your assets are managed effectively during your lifetime and distributed according to your wishes after your death, to your family who still love each other.

Probate is the legal process of ‘settling’ the estate of a deceased person. You may be unaware that the average estate spends 9-24 months in probate in Colorado although it can take much longer.

The three different types of probate determine the complexity and length of the probate process:

A small estate proceeding for estates valued at under $70,000 that have no real property
An informal proceeding for uncontested estates
A formal proceeding for contested estates and those with invalid or questionable wills.

So why would this process take a year or more? There are several tasks that take place during probate, and some of them require waiting times, legal notifications and property inventories.

In a typical probate, each of the following will take place:

Validating the will.
Opening a bank account for the estate to pay creditors and pay out funds to beneficiaries.
Identifying the deceased’s creditors, locating them and notifying them of the death.
Identifying heirs and beneficiaries, locating them and notifying them of the death.
Identifying and inventorying the property that was owned by the deceased.
Creating an accounting
Liquidating any necessary assets
Filing a final tax return for the estate and paying any estate taxes owed.
Paying off creditors.
Distributing property to heirs according to the valid will or state law without a will.

Each of these tasks take time and some must be completed prior to the next. Documents must be filed with the probate court. This is why probate in Colorado can take 9-24 months.

But that's only if there aren't other complications.

These are some of the situations that will require extra time and may complicate the process:

Choosing the wrong executor.
An estate that includes complex financial assets.
If the estate needs to file taxes with the IRS.
When beneficiaries do not agree or get along.
Having no will or multiple conflicting wills.
When there are homes or other titled assets in other states.
If the estate has a lot of debt or many creditors.

The best way to keep probate short is to have a comprehensive estate plan that allows you to avoid it altogether.

Avoid the legal and financial headaches and heartaches of probate. Make it easy on your loved ones, make it clear how you want your estate handled.

Although many people have heard the term 'fiduciary', many don't know what a fiduciary firm is or what we do. A fiduciary firm is an organization entrusted to manage an individual's assets and financial affairs in the best interest of that individual. There are a few ways that can happen. ALG Fiduciary Services LLC can be a Trustee, Power of Attorney, Conservator, Personal Representative, and we can also help with Daily Money Management. Check out our website for more information!