A cautionary tale, many people want to keep their estate plans confidential

Dear Len & Rosie,

My wife’s father passed away recently and she and her siblings are not on best terms. They would like to see if there was a will but don’t know how to locate the executor. Her father had told her it was someone outside the family. How does one find out who the executor of a will is, and for that matter how does the executor find out someone has died?

Marco

Dear Marco,

Our first inclination was to respond with simple “How would we know?” You’re looking for a needle in a hay stack. Your father-in-law’s will, assuming he made one, could be anywhere. He could have named anybody as executor, but it’s more likely than not that he named one of his children, or maybe one of his friends. Ask his friends discretely, if you know who they are.

It is also possible that your friend named his lawyer as executor, but this is not very likely. Attorney fees in probate are fairly lucrative. A lawyer for a $500,000 estate earns $13,000 in statutory lawyer fees, the same as the executor. But if the lawyer also serves as executor, he or she gets paid only once. Double dipping is not allowed. Most attorneys decline to serve as executors for the simple economic reason that there’s nothing in it for them.

You also touched on the problem of an executor learning of the death. If the executor isn’t close to your father-in-law, how’s he or she going to know? Consider that your father-in-law’s executor may not actually know that he or she is named as executor in the will. Did your father-in-law even inform this person? For all we know, your father-in-law’s will may be gathering dust in an attorney’s filing cabinet.

What you should do is to contact the county bar association where your father-in-law lived. The county bar can send a blanket email to all of its trusts and estates members to see if any of them created the will.

You may also have to sort through your father-in-law’s belongings to see if there is a copy of a will lying around, or maybe even a canceled check made out to a local attorney. If you can’t find a will, then the estate will pass by intestate succession equally among your father-in-law’s children, with the share of an already deceased child passing to his or her living descendants, assuming he wasn’t survived by a spouse. Any of the children may petition the court to be appointed as administrator of the estate, which means this could lead to a fight over who gets to be administrator.

This is a cautionary tale. Many people want to keep their estate plans confidential, but they should not be too secretive. Some of you may go so far as to make extra copies of your wills and trusts and pass them out to your children. If you don’t want to do that - if you wish to protect your privacy, then just give your children or other beneficiaries your attorney’s business card with a note telling them to contact the attorney upon your death or incapacity.

Len & Rosie

Special Needs Trust Fairness Act, signed into law by President Obama on December 17, 2016.

Dear Readers:

Every once in awhile, we stray from our letter and response format to advise you directly about topics of some importance. Today, we want to talk to you about the Special Needs Trust Fairness Act, which was signed into law by President Obama on December 17, 2016.

A Special Needs Trust (SNT) is a trust designed to protect the assets or inheritance of a disabled person, so that person could receive needs-based benefits such as Medi-Cal and Supplementary Support Income (SSI).  These trusts are drafted in such a manner that the assets held within them do not count as assets that are available to the disabled beneficiary.

There are several kinds. The most common SNT, and the most flexible, is a “ir rty” SNT usually created by the parents or other loved ones of a disabled person. Regretfully, sometimes people do not have an SNT in their estate plan to benefit a disabled child. When a disabled person inherits assets and there’s no SNT to hold them, the disabled person will lose his or her benefits, which can be devastating.

The solution in cases like this, where it’s too late for the parents to create an SNT, is to create a different form of SNT for the disabled beneficiary, known as a “First Party” SNT, or a “d4A” SNT (named after the federal law authorizin its creation).

The difficulty in creating a d4A SNT was that it couldn’t be created by the disabled person - it had to be created by a living parent or grandparent, or by the court. This meant that a disabled person’s inheritance would be diminished by the legal fees and costs of a court petition seeking an order authorizing the creation of the trust.

The SNT Fairness Act fixes all of this. Now, instead of having to go to court, a disabled person may create his or her own Special Needs Trust.  This new law will save a lot of money for people who need a lot of help. From now on, the only time court involvement will now be necessary is if the disabled person in mentally incapacitated and does not have a valid Durable Power of Attorney authorizing the creation and funding of a trust.

There are drawbacks to d4A SNT’s. The disabled beneficiary cannot be the trustee. The trust also has to pay back Medi-Cal upon the disabled person’s death. However, this sort of SNT is in many cases the best of a number of poor alternatives.

If you have a disabled family member, it is very important that you provide for this person within your estate plan, in most cases with a Special Needs Trust.

Len & Rosie