Choosing an Executor, Trustee and Guardian

Clients frequently ask me for advice on who they should name as Executor, Trustee or Guardian when creating their Last Will and Testament.  First, let me explain the difference between the three roles.

The Executor is the person who probates your Will, goes into your house and looks through all your things, safeguards your assets, gathers up your money, pays your bills, files any income tax, estate tax or inheritance tax returns that need to be filed, and then distributes the balance of your money according to the instructions in your Will.  One or more individuals or corporate fiduciaries can serve as Executor.

The Trustee is the person who takes the assets that the Executor (or Grantor) gives him, invests the money in a prudent fashion, and distributes the money to the beneficiary of the trust in accordance with its terms.  One or more individuals or corporate fiduciaries can serve as Trustee. 

The Guardian is the person who will raise your minor children until they are 18 (or longer for an incapicitated individual). 

The three main qualities that you want to look for in an Executor and Trustee are:

1. Someone that is trustworthy and won't steal the money;
2. Someone that will not be overwhelmed by the role, there is a lot of work involved; and
3. Someone that does not have a bad relationship with the beneficiaries and will be able to communicate with them.

You will notice that I did not say that the exeuctor or trustee must be good at investing money.  That is because I believe the other characteristics are much more important.  An honest person who is diligent can always hire an investment manager. They just need to keep an eye on the investment manager.

The three main qualities that you want to look for in a Guardian are:

1. Someone that will love and care for your children;
2. Someone that will raise your children in a manner that you wish (including religion, education, diet, etc.); and
3. Someone that will have a stable family household.

Frequently, clients will name one party as executor or trustee and another person as guardian.  Sometimes this can be a good idea as the two parties can then monitor each other.  Additionally, this is a way to get two parts of the family to interact.  However, if there is someone that you truly trust to serve in all three roles, it is usually best to name them and not divide the roles just for the sake of dividing the roles.

For all of these positions, age may be a factor as well as you may not want to name someone too young or too old.  It is a heavy burden to put on people.  I never, ever recommend naming people just so they won't feel excluded. 

Finally, an attorney can serve as an Executor or Trustee, but you can name whomever you wish.

Same Sex Marriage Now Legal In New Jersey

Effective today, same sex marriage is now legal in New Jersey after Governor Chris Christie dropped his plans to appeal the ruling of Superior Court Judge Mary Jacobson.  On September 27, 2013, Judge Jacobson had ruled that New Jersey must allow same sex marriages in the wake of the Supreme Court's decision in United States v. Windsor.

Previously, New Jersey had only allowed Civil Unions and it recognized same sex marriages from other jurisdictions as Civil Unions.  The Governor elected to drop his appeal after receiving very clear signals from the New Jersey Supreme Court that his appeal would not be successful. 

Remaining at issue is whether or not all Civil Unions in New Jersey would automatically be treated as same sex marriages.  The New Jersey legislature had sought to pass a bill to that affect several months ago, but it was vetoed by the Governor.  (The bill included a provision that couples could opt out of the automatic conversion to marriage if they did so within 30 days.)  As it stands, if a couple wishes to be recognized as a married couple, they should not rely on this automatic conversion, but should instead proceed with a marriage ceremony.

I would like to remind individuals who were married in another state that they should consider refiling their income tax returns for the past few years if there is a tax benefit to do so.

When Should I Write a Will?

Many people question when they should start their estate planning. The short answer to this is that there is no specific age someone should see an attorney to plan their Will, Financial Power of Attorney and Advance Directive for Healthcare. However, you do need to be a minimum of 18 years of age.

If you know a major event is going to happen in your life such as marriage, the birth of a child, retirement, or divorce it is time to start planning your estate. However, there are some major life events that we simply cannot anticipate, including contracting a terminal illness, receiving a large sum of money, or even a fall out with a family member. So it is always good to be prepared.

This brings us to another factor to consider when you begin to plan your Will, Financial Power of Attorney, and Advance Directive for Healthcare. You should take into account the size of your family and if you are married. If you have assets that you own with a spouse, such as a house, a car or a bank account, your assets automatically go to your surviving spouse through Joint Tenants with Right of Survivorship.

However, this plan only workd properly if you have no children from any other relationships. If you have children from another relationship, a Will must be created so your assets can be divided up to care for both your new spouse and children from your previous relationship. In other words, if you are in a non-traditional relationship, it is much more important for you to do proper planning. 

At the end of the day, the most important thing to realize is that you want to have your estate plan in place before you need it.  The more complicated the plan, the earlier you should start.