Kevin Kiley Talks about Wills, Family Trusts, and Estate Planning, Part I Kevin Kiley Talks about Wills, Family Trusts, and Estate Planning, Part I Transcripts:
Interviewer: One of the items I think is probably the most challenging for people is that a client comes in and says, ''I think it's time I put a will together.'' What are the things that that client should be aware of, and how do you guide them through this process?
KK: What I usually do is listen to the client, hear what their wishes and desires are, and then I tell them what the law is. If you die without a will, the law is going to dictate how your assets pass. I also try to tell people that the will is a last resort. If you own your assets jointly with another person, or if you have a named beneficiary on your asset, such as a life insurance policy with a named beneficiary, or an IRA account that has a named beneficiary, that's going to take precedence over the will. So occasionally you'll have people come in and they say, ''I have three children and I want to leave everything to them equally.'' I make sure that they realize what assets they have, how they're held, and very often I'll find out, ''Oh, all my accounts are joint with my daughter because she helps me.'' People don't realize that when they die, under the law, unless the assets were placed into a convenient account, which is a particular type of bank account, those assets would go directly to that daughter and the other two children would be left out. I also look and see if they have minor children - if they have minor children I discuss with them trusts, guardians for the children. I explain what the difference is, a guardian is someone who will step in and handle the parental type of decisions - where the child is going to go to school, where the child is going to worship, what type of medical care they'll get - a trustee is the one who handles the financial issues and the investment of the assets and provides them, usually to the guardian, for the benefit of the child. In the trust a parent can set up any rules and regulations. When they have minor children I usually recommend that they set up a will with a trust in it that gives a lot of authority and gives broad discretion to the trustee. Therein, it's probably more important to select a trustee who you trust, who's going to do what you would do as a parent.
Interviewer: Now, is trustee synonymous with the term ''executor of the estate''?
KK: No, that's different also. The executor is the person who's charged with probating the will. The executor acts immediately after the death. Once appointed by the surrogate, who's procedure - a lot of people think that ''I named somebody as the executor in my will, therefore they are the executor,'' and in New York that's not the case. You actually have to go to Surrogate's Court, you have to file a petition giving notice to everyone else who would be the next of kin - all of the next of kin need to receive notice of this petition being filed - and once the surrogate is satisfied that you are qualified to be the executor, that person would be appointed. Things that might make someone unqualified would be if they had a felony conviction, if they're untrustworthy, occasionally if they have a medical problem that would prevent them. The executor, then, is charged with marshaling the assets of the deceased, getting all of the assets and putting them into an estate account that the executor then has control over. Then, after that's done, the executor has to pay all of the last bills, expenses, medical bills, debts of the decedent, file the last income tax return to the decedent, pay estate taxes, if any, of the decedent, and finally they distribute the assets in accordance with the will. In a will where you had an executor and a trustee, once the executor marshaled the assets, paid the debts, paid the taxes, and was ready to distribute, the executor would then distribute the money to the trustee, and that's when the trustee's job commences.
Interviewer: This eliminates the problem that you cited earlier, maybe the daughter in that example was doing the taxes and handling a lot of the paperwork. This way with the executor and the trustee, all the funds would be distributed equally as specified by the will.
KK: Well, they'd go in accordance to the will. Of course, even if you have an executor and a trustee, if your assets are still held in such a way that they pass by what we call the operation of law, then they won't be part of the estate. So if you have a bank account and listed on the bank account you have ''payable on death to my daughter,'' and in the will you say, ''I leave everything equally to my three children,'' that's not going to be part of the estate. If the executor were to take his certificate of authority, go to the bank and say, ''I want this money,'' the bank would tell him, ''You don't have the authority over that money; that now belongs to the named daughter.'' I think a lot of people are not aware of that. They think that the will takes precedence over designated beneficiaries on particular assets and it's actually opposite.
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