Well, my parents and I sat down and had The Talk, last night. They are both around 80 and my dad had a recent health problem that convinced him that he and Mom need to make an appointment with their lawyer pretty soon to update documents in order to keep their estate out of probate, when the time comes. They will also be looking into plans for when one or both of them is no longer healthy enough to live at home.
The big news, though, is that they want me to be sole executor. Their relationship with my brother has deteriorated to the point that they don’t want him involved and don’t want me to have to deal with him. (He lives in another state and has not been in contact with any of us for several years.)
My questions to you all is–what are the best resources for me to prepare to be an executor? We live a comparatively simple life–no house, no stock portfolio, no itemized tax deductions, etc. Has anyone been through this?
There’s no emergency. They are both well and of sound mind at the moment, but it’s time to get serious.
The best preparation for an executor is an iron-clad will, particularly if the relationship with one of the children “has deteriorated to the point that they don’t want him involved.”
Other than that, the job is mostly paying bills, canceling accounts, disposing of property and selling their house.
Don’t be afraid to pay for the services of a lawyer, an accountant, etc. It isn’t worth the hassle of trying to do everything yourself without training.
Criminal lawyer (Virginia) here, but I did go to law school. I’m also the executor of my parent’s will.
You don’t really need to do anything to prepare, beyond familiarizing yourself with your parent’s estate (accounts, property, life insurance, etc…). Go through it all with your parents to make sure everything is payable upon death to XXX. My understanding is that you don’t want anything passing through probate. The only things that should be willed are special bequests, like, “grandma’s engagement ring goes to bob.”
I’m sure there is a lot of nuance that I’m missing. But unless your parent’s have a really complicated estate, you should be ok.
I have been thru this. When you say “we”, is that you and your parents?
I would recommend you be added to their banking/checking accounts, so you can write checks from their account if needed.
While they may have made you executor, have they left everything to you? Has that been made explicitly clear in the will? There is a non-zero chance your brother will show-up soon after they are gone and want something.
It may be good to just send the brother a message indicating what has taken place. You don’t want to fight a battle with him when your parents are gone and no longer able to explain why they did things the way they did - it was their decision, not yours, and you should not be put in the position to justify their choices.
Thanks for the responses. By “we” I meant me, my husband, and kids. My folks live in a paid-for home in a gated 55+ community. They are in good shape financially and still getting around on their own. I’ve offered to visit as much as they need while they are getting things in shape, but I don’t want to be too pushy about getting my name on accounts at this point. We live about 90 miles away in the same state (California, if it matters.)
They plan to be explicit about what my brother will be entitled to in their will. The major change is going to be that I will be executor and will be authorized to take care of those duties and then offer my brother his designated share of what is left over after the bills and taxes are paid.
I won’t be contacting my brother about this. Part of their estrangement was due to his pressuring them for money and threatening to “back a dumpster up to their house” as soon as they are gone. He is retired from the Army, has no dependents, and should be able to support himself where he is living.
Although many parents like to discuss this as though they will both die at the same time, that is not how it happens. I assume that they want everything to go to the surviving spouse. This will mean that the accounts will be set up to have the spouse as the beneficiary and you as the contingent beneficiary. Also make sure that you (and both spouses) understand their financial situation. What are the monthly bills? How are they paid? (by check or automatically through their checking account). Any Life Insurance? You will doubtless need to help with the situation should one parent die (especially the parent who takes care of the finances - the other parent is often clueless).
If they have a car, make sure it is in both their names. The only reason I needed to probate my father’s will was to be able to sell the car. Ask your lawyer about having it in your name as well (this might expose you to unwanted liability)
As far as the will is concerned, just make sure that it is “self proving” (the probate court won’t ask that you track down the witnesses and get statements). Since you’re going to an attorney (a good choice, even for simple wills), that shouldn’t be a problem.
It is certainly a good idea to have a list of all accounts with addresses and account numbers. Also include any obligations which are paid for automatically (say Netflix is paid monthly by credit card). Terminate those obligations immediately upon death.
If your situation is as simple as you say, you will have very little “executing” to do if you have prepared properly. The only thing in the estate will be personal property.
IANAL. Just someone whose parents have recently died.
Thanks, ethelbert. The other thing we talked about was the options they are considering for the surviving spouse. Everything will go to him or her first, and they are going to check out places both near there current home and closer to us that can provided graduated levels of care when the time comes to leave the house. They have generally worked together on their finances, especially in recent years.
I would then recommend you are clear about where their income is coming from. If from investments accounts, they can make them TOD (Transfer On Death) to whomever they wish. This means the remaining funds are distributed straight-away to their designee, and no probate. The TOD takes precedence over the will, IIRC.
The Paid-for home will be part of their estate. I am not sure how that would be handled - when my dad died he was renting. I’ll let someone else comment on the real estate aspect of this. If the home is somehow in your name, then it can avoid probate. when you go to sell it/own it.
Make sure you know where all their account info is, the will, medical directive, power of attorney, etc. My dad kept it all in a binder, and showed me where the binder was kept.
I know you don’t want to contact the brother about this, but I would still recommend he be clear on what he is entitled-to (nothing). He will show-up and it sounds like has the ability to cause trouble. Even with airtight wills and documents, there may be issues, and you don’t need that when the time comes. Get it settled-out now, while your parents are still around.
Your parents should talk to a lawyer to make sure their will is solid. For instance, if they want to cut your brother out of the will entirely, depending on where you live it may or may not be possible.
Another helpful thing for them to do is to add your name to their bank accounts, so you can have immediate access to cash if one or both dies. This is particularly important if you don’t have 7 or 8 grand in cash lying around to cover funeral expenses and cemetery plots, etc.
But for YOU, there’s really not much of anything to do.
That’s a very good point about the income. I know my dad has a pension and mom has SS and they also have investment accounts, but we will talk more.
Their wish right now is to keep my brother out of it. Part of the reason for their talking to their lawyer is to find out the most ironclad way to do that. They don’t want to disinherit him, just to prevent us from having to hash things out later on.
The executor has two responsibilities, really: (1) distributing any assets passing via probate, and (2) filing any estate-related tax returns.
If your parents succeed in setting things up to avoid probate, part 1 of your job as executor goes away.
(Stuff that really won’t be your problem: there may be more ways than I can remember from my long-past days as a trusts-and-estates paralegal to keep assets outside of probate, but the three I remember are: (1) joint ownership (if your name and mine are both listed as owners of anything from a bank account to a piece of real estate, you automatically become the owner if I die first), (2) insurance policies with named beneficiaries (which pay off to the named beneficiaries on death, without a court’s intervention), and (3) placing assets in trust (which avoids probate, but creates its own set of paperwork - someone has to be the trustee and file the trust’s tax returns and so forth).)
The other job of the executor is filing the estate’s tax returns. *Get a lawyer or tax accountant specializing in estates to handle this. *Whichever of your parents is first to die, this won’t likely be an issue: everything will likely pass directly to the surviving spouse.
Unless your parents have assets worth more than $5 million, their estate won’t have any Federal tax when your second parent dies, but it might be taxed at the state level even if their estate is smaller than this. If you tell us which state they live in, someone here will surely look up what the tax laws are in that state.
They’re in California. They mentioned that the house and land are going to be reassessed and that there will probably be capital gains taxes, but that is going to be taken care of sooner rather than later.
They’re going to sell now? Otherwise, how does one “take care of” taxes that haven’t been assessed yet – these are taxes based upon the profits of a sale, correct?
No, they aren’t going to sell now, but they are planning to have the house re-appraised now. They don’t have any current expenses that would justify a reverse mortgage. I presume that would be something that they would discuss with any care facility they are considering as an option when they do leave their current home. We have friends of about the same age that sold their house and moved into the type of care facility that will maintain them at the appropriate level of care as long as they live, regardless of how long their money holds out. My parents may opt for something like that. Right now they want to keep their house.
Avoid probate.
With little that requires a judge’s sign-off, this may simply be a matter of having yourself added to all their accounts so you can write out checks and, when all bills are paid, simply close the accounts.
IANAL, IAN YOUR Lawyer. Nolo.com is a good starting point for DIY wills.
I had 2 siblings who went through this - it is NOT fun - you take bank statements and bills, and determine which bills are legit (sleazoids will come out of the woodwork when they hear “no lawyer”).
A $100- $200 consultation is worth it’s weight in gold.
If the estate is not large enough to do the living trust (absent real estate, it probably isn’t), find out every step you need to take (besides having a copy of the death certificate(s) to hand out to creditors) to keep probate out of it (unless your local probate procedure in your case is actually a good idea).
SEE A LAWYER LICENSED AND COMPETENT TO PRACTICE IN YOUR JURISDICTION.
This is one thing where a simple oversight can make a mess.
since you are trusted and they are getting old and may turn unhealthy at any time you should also look into legal and medical power of attorney for them.
while the things are different legal things you are thinking the whole situation and going through lawyer talking and paper filing.
They don’t have to have current expenses to justify a reverse mortgage. It’s just a way of drawing some of the value out of it while they’re still alive to enjoy the money. They can use the money for trips, or for hookers and blow.
But I hear there are lots of shady operators in this business, so maybe the risk of some kind of scam is too high to consider.
It’s not exactly executor business, but do they have funeral preferences? Burial vs. cremation? Preferred location for memorial services? That kind of thing.
If they haven’t made their wishes clear, it can be hard to guess and it’s another place where relatives can insert themselves and start having opinions. The easiest way to deal with it is to have it prepaid, or to have insurance and instructions.
You mentioned getting the house appraised because of capital gains, which kind of confuses me. For a principle residence, there is no capital gain from the house if your parent(s) sell it and they lived in it two years out of the last five AND the increase is less than $250,000 for one owner or $500,000 for two. That’s the increase, not the value of the property. If it’s the estate selling it, I don’t think capital gains taxes apply at all. And any gain would be calculated by taking the actual sale price and subtracting the original purchase price. I guess an assessment would tell you whether they were likely to be above the personal exemption or not.
In fact, in California Proposition 58would allow you to keep your parents’ property tax rate when you inherit the property, provided you fill out the proper forms, and provided the property is valued at less than a million.
You may suggest to them to look into having the estate go into a trust upon death. This guarantees that it will be kept out of probate, whereas a will may not. As the executor, you don’t want to be spending months unsnarling an estate and going to court to fight with your brother’s claims, if any. A trust designates who the money goes to and is usually settled in under a month.
My understanding is that it is already a trust, but they need to have it updated to take the current situation into account. This isn’t our first Talk. We went over things a number of years ago and they have established their funeral preferences in a lot of detail, which have not changed.
Thanks, Yllaria. There will undoubtedly be some increase, given where they live, but it doesn’t sound like it will reach that level.
