Selecting Your Executor - Be Extremely Careful

Your executor serves a critical role in making sure your estate benefits those individuals you intended to be benefitted. First, they have to be someone you trust. Secondly, it should be a trusted person who has the ability to get the job done or know how to hire and oversee qualified professionals. You do not want your executor to be a spendthrift because if they can not handle their money, they probably will not be able to properly handle yours.

Tobacco heiress Doris Duke, who died in 1993 with a fortune estimated at $1.3 billion, named her butler as executor and as trustee for a huge charitable foundation. After the butler's lifestyle and spending habits were called into question, he was removed from his duties by a probate judge, then reinstated by New York's highest court. A settlement agreement created a board of trustees to manage the foundation.

She may have trusted her butler but apparently his lifestyle was not conducive to being a trusted executor. Leave your comments here or contact us at www.ythlaw.com

How can I provide for my grandchildren?

Here is another question raised by a reader.

"How can I best provide for my grandchildren? My son has been divorced twice. His 2 children (5 and 9) do not have the same mother. I have a wonderful relationship with my grandchildren but not with their mothers. My son has full custody of his 9 year old son and joint custody of his 5 year old daughter. However, he is not financially responsible. What is the best way for me to provide for my grandchildren during my lifetime as well as when I die? Giving or leaving money to either parent for the care of the children is not an option."

In Response to your question:
During your lifetime, you may want to consider a gifting program. This would allow you to annually gift up to $13,000 (as of 2009, amount changes periodically) in a separate trust for each child. The terms of the trust will dictate how the money will be spent. You should not serve as the trustee but designate a person or institution that you trust. Other options for gifting would include custodian accounts (distribution required at 18 or 21) and 529 Plans (limited to college education expense). You should also be aware of any tax implications. Prior to any final decision, consult with your tax advisor.

If you set up an irrevocable trust during your lifetime, it could continue under the same terms and conditions when you die. If you did not set up anything during your lifetime, you could establish a testamentary trust with terms and conditions that you desire for the care of your grandchildren. However, whenever assets skip a generation (ie. to grandchildren instead of children), a generation-skipping transfer has occurred and a tax is imposed unless the amount is within the exemption. There is no tax if you do not exceed your 1.5 million dollar lifetime exemption.

Made your comments here or email a question via my website http://www.ythlaw.com/ .

THIRD of TEN Hot Estate Planning Topics

THIRD, a Trust is an important document to have. A Trust serves many purposes. First, you can avoid probate since it is an alternative way of transferring property at death. Second, if you are concerned about privacy, a Trust works well. Unlike a will, it is not required to be filed when a person dies. Third, if you have property in multiple states, you can avoid probating in all the states where property is located if your property has been placed in a Trust. Fourth, it is an excellent vehicle for disability planning. You place your business in a Trust and if you become incapacitated your business trustee can continue to operate your business until you regain capacity.

Across the country, the topic of whether to have a Trust or not is discussed at length. Those who want to protect and preserve the assets they have acquired during their lifetime see a Trust as the most effective estate planning document. Share you thoughts here!!