Should I Use a Bank as My Executor Instead of a Family Member? – Annapolis and Towson Estate Planning

You can choose anybody you like to be the executor of your will but consider who will do the best job.

Executors are legally responsible for several tasks, including identifying everything in the estate, collecting all the assets and paying the debts and liabilities. Finally, the executor makes distributions to beneficiaries, in accordance with the terms of the will.

nj.com’s recent article on this topic asks “Should I choose a bank to be the executor of my will?” The article explains that there are a few advantages to designating a bank as an executor.

Banks are in the business of managing money and are experienced in administering estates.

This typically means they may be able to settle the estate more quickly and efficiently than a family member.

Banks have policies and procedures in place to make certain that the assets are protected from mismanagement and theft.

Banks are impartial parties that cannot be influenced by beneficiaries. This can be a big headache for a family member asked to be executor. Relationships can deteriorate over the enforcement of the terms of a will, especially when one sibling is named executor and has the authority over the administration of the estate—perhaps to the detriment of her brothers and sisters.

One distinction from using a family member is that while an executor is entitled to compensation, family members frequently waive this. However, banks charge fees for serving as executors, and these fees may be higher than you’d expect.

For example, the bank’s fee might be up to 4% of the first $100,000, then decrease incrementally until it’s just 0.5% of values over $9 million.

One other note to keep in mind is that many banks won’t serve as executor, unless the estate is substantial enough to meet the minimum fees charged by the bank to serve as the executor.

Reference: nj.com (November 5, 2019) “Should I choose a bank to be the executor of my will?”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

How to Find Money in Forgotten Accounts – Annapolis and Towson Estate Planning

Many people who retire find it hard to live on a reduced income, so any windfall is a delight. From bank accounts to life insurance, utility company security deposits and retirement accounts, you might have anywhere from a few bucks to hundreds or thousands of dollars sitting around gathering dust. The trick is to know where to look, since you might not remember all the possible companies that still have some of your money.

Here are some tips for seniors on how to find money in forgotten accounts.

Where to Look for Old Bank or Investment Accounts

If you had money in a bank or brokerage account you did not use for several years, the bank probably sent the funds to the state of your last known address. Your last known address usually means the last address the bank had for you when you actively banked with them.

Let’s say you went to college out of state. You opened a checking account at a local bank for convenience while in school. After graduation, you forgot about the account. Eventually, the bank will send the remaining balance to that state or the state from the permanent address you gave when you opened the account.

You can try to track down obsolete accounts online. Go to unclaimed.org and check every state where you have lived. You will have to fill out and send in a form, either online or by mail, to request the funds. The website contains funds that other types of companies, like utilities, have also surrendered to the state.

This type of search can be time-consuming, but the rewards can make your efforts worthwhile. If you have ever gone by another name, be sure to check under all the names you have used. If you use a nickname, check under all possible combinations of last names, legal first name and nickname.

If you have a common name, you might have to sift through many possible accounts to find yours. You might also be surprised at how many other people have the same name as you.

Pensions and Retirement Accounts

You have several options to try to dig up an old employer-sponsored retirement account, including pensions. You need to find the current administrator of that employer’s plan. You might be able to find the contact information for the plan administrator on freeERISA.com or by calling the personnel office of that employer.

Sometimes a 401(k) plan gets terminated. In that situation, you can look for contact information on the Employee Benefits Security Administration’s website. Additional options include the Pension Benefit Guaranty Corporation, or the nonprofit Pension Rights Center.

How to Search for Life Insurance Policies

You can look for an old life insurance policy you owned or of a deceased relative by using the Life Insurance Policy Locator. Some life insurance policies show up on unclaimed.org, but for others, you might have to find the name of the insurance company at naic.org and then contact the insurer.

Scammer Alert

Some companies defrauded people by charging exorbitant fees to conduct searches for them, but do not deliver the promised service. If a company charges a fee upfront before they find your lost funds, that is a red flag the firm is fraudulent. If you want someone else to do the search for you, only agree to pay a percentage of the money recovered. The search firm’s cut should not exceed 10 to 20 percent of the recovered funds.

References: AARP. “How to Find “Forgotten” Cash.” (accessed October 2, 2019) https://www.aarp.org/money/budgeting-saving/info-2019/find-unclaimed-cash.html

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Are Your Company Benefit Plan Designations Up-to-Date? – Annapolis and Towson Estate Planning

On the first day of your new job, you probably talked to the Human Resources Director, who had you complete a huge stack of forms. You needed to sign off that you understood all the corporate policies and received the company handbook. You probably took a stab at how many exemptions to claim for payroll tax withholding and also completed Form I-9 affirming your eligibility to work. In the stack was most likely a form to choose a medical plan, as well as a form to designate your beneficiaries for employee benefit plans. This might include life insurance, stock purchase plans and your company’s 401(k) plan.

Forbes’s recent article, “Company Benefit Plan Designations Can Lead To A Huge Estate Planning Blunder,” says that now, you should fast-forward to when you met with your estate planning attorney to sign your estate documents. After a few meetings, you probably felt good that this was checked off your to do list.

However, assets that have a form of joint or survivor ownership, or have named beneficiaries, pass on to heirs by law and aren’t part of your probated estate. This usually applies to homes, bank and investment accounts, life insurance, retirement plans and corporate asset accumulation plans. In other words, these are all the plans and accounts where you originally named beneficiaries, but probably haven’t changed those beneficiaries since your first day of work.

When you started your job, you probably named your spouse as your primary beneficiary. If you named a contingency beneficiary, it was probably your children. The secondary designation is probably not something to which you gave a lot of thought. However, if your spouse predeceases you and if your plans designated your children as contingent beneficiaries, they would inherit all your company benefit plans at once, or upon reaching majority of age 18 or 21.

If that’s not what you want to happen, you need to review your work beneficiary designations. Chances are, you’d prefer to pass assets to your children in stages at, say, ages 25, 30, and 35. If you don’t make any changes, one of your largest bequests derived from employee stock plans and life insurance may not pass the way you want.

Talk to a qualified estate planning attorney for help concerning how your company’s benefits should be titled. The process of revising your beneficiary designations only takes a few minutes.

Reference: Forbes (April 22, 2019) “Company Benefit Plan Designations Can Lead To A Huge Estate Planning Blunder”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Figuring Out A Parent’s Financial Life, When They Cannot – Annapolis and Towson Estate Planning

Imagine that your parent has had a minor stroke and is no longer able to manage their financial or legal affairs. For years your parent has been living independently, waiving off offers of help or having someone come in to clean. It seemed as if it would go on that way forever. What happens, asks the Daily Times, when you are confronted with this scenario in the aptly-titled article “Senior Life: What a nightmare! Untangling a loved one’s finances”?

After the health crisis is over, it’s time to get busy. Open the door to the home and start looking. Where’s the will, where are the bank statements and where’s the information about Social Security benefits? When you start making calls or going online, you run into a bigger problem than figuring out where the papers are kept, because no one will talk with you. You are not legally authorized, even though you are a direct descendant.

This happens all the time.

Statistically speaking, it is extremely likely that your parent will end up, at some point, in a nursing home or a rehabilitation center for an extended period of time. Most people have no idea what their parent’s financial situation is, where and how they keep their financial and legal records and what they would need to do in an emergency.

It’s not that difficult to fix, but you and your hopefully healthy parent or parents need to start by planning for the future. That means sitting down with an estate planning attorney and making sure to have some key documents, most importantly, a Power of Attorney.

A Power of Attorney (POA) is a legal document that gives you permission to act on another person’s behalf as their agent. It must be properly prepared for your state’s laws.  It allows you to pay bills and make decisions on behalf of a loved one while they are alive. Without it, you’ll need to go to court to be appointed as legal guardian. That takes time and is much more expensive than having a POA created and properly executed.

If you have downloaded a Power of Attorney and are hoping it works, be warned: chances are good it won’t. Many financial institutions insist that the only POA they will accept are the ones that they issue.

Once you have a POA in place, it’s time to get organized. You’ll need to go through all the important papers, and set up a system so you can see what bills need to be paid, how many bank accounts or investment accounts exist and review her financial status.

Next, it’s time to consolidate. If your parent was a child of the Depression, chances are they have money in many different places. This gave them a sense of security but will give you a headache. Consolidate four different checking accounts into one. The same should be done for any CDs, investment accounts and credit cards. Have Social Security payments and any pension checks deposited into one account.

If you need help, and you might, don’t hesitate to ask for it. The stress of organizing decades of a loved one’s home, plus caring for them and managing the winding down of a home can be overwhelming. Your estate planning attorney will be able to connect you with a number of resources in your area.

Reference: Daily Times (April 9, 2019) “Senior Life: What a nightmare! Untangling a loved one’s finances”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys