Estate Planning Questions: Can an Estate Administrator be a Beneficiary?

Estate Planning Questions: Can an Estate Administrator be a Beneficiary?

by | May 24, 2022 | Asset Protection, Estate Planning

According to the Alabama probate code, an estate administrator serves the same function as a personal representative, which is the legal term used to describe an individual appointed by the court to carry out the terms of a will, or a matter of intestacy. There is no prohibition insofar as a beneficiary being appointed the role of estate administrator, but it is important to note the fiduciary duties that this legal role entails.

Difference Between Executor and Estate Administrator

The difference between an estate executor and an estate administrator is simply by the way in which these roles are appointed. When someone drafts a will, they name someone to act as the executor of the estate. Once the estate goes to probate, the court will appoint someone to act as estate administrator per that state’s intestacy laws. Unless the court deems the named executor unfit for the role of estate administrator, this person is generally one and the same.

That being said, there is no reason why a beneficiary cannot also be the estate executor or estate administrator, at least legally speaking. There are, however, reasons why you may want to choose an objective, third-party to administer your estate.

Let’s say you own a modest home, a car, and a 401(k) account worth $200K. After consulting with an estate planning attorney, you decide that drafting a will and naming your only daughter as the executor of your estate is the right move. You also choose to name your daughter as beneficiary. Since the combined value of your home, vehicle, and retirement account is greater than $25K, your daughter will have to enter the will in Alabama probate court.

In this example, your daughter has what it takes to be both a beneficiary and an estate executor, as well as the estate administrator. This is what the Alabama probate court will expect from your daughter:

  • Carry out your last wishes as outlined in the will
  • Use letters testamentary as needed in order to settle debts, distribute assets, transfer property titles, and manage the estate
  • Provide administrative reports to the probate court judge

As the executor, your daughter will have the right to start the probate court process, but this does not automatically entitle her to act as estate administrator (executrix)—she will have to follow procedure, submit an application to the court, and become officially appointed as the executrix by the courts. As long as the judge determines that your daughter has the means and abilities to serve as the administrator of your estate, she can be executrix, beneficiary, and administrator all at once.

Should a Beneficiary Act as an Estate Administrator?

Not all situations will be as the one we have described above. In some cases, it may be better to designate executors who are not beneficiaries, which is particularly the case with larger and more complex estates. When you have survivors whom you think may bicker over their respective inheritances, an estate planning attorney will probably recommend naming an executor who is not a beneficiary.

Close friends who have long-standing relationships with your family could be good candidates for executors. It is not uncommon to see people choose in-laws, or people with whom they served in the military, as their executors. When executors or personal representatives are not beneficiaries, they are entitled to reasonable compensation that can be paid from the estate, though this will need to be approved in probate court.

Naming an estate planning law firm as executor of your will is also a great idea. In this case, the attorney’s fees can be paid from estate proceeds, and there is a good chance that the probate court will have no objection to the appointment of a law firm to serve as estate executor. Your chosen law firm will know exactly how to navigate the probate process, quickly and seamlessly, keeping time and cost to a minimum, and working hard to get your estate settled, so your family can reap the benefits of your hard-earned assets.

Contact Miller Estate & Elder Law

Miller Estate & Elder Law is here to help will all of your estate planning, probate, estate and trust administration, and elder law needs. If you have been named executor of a loved one’s estate, we urge you to download our free guide, 7 Steps to Handling Your Loved One’s Estate.

If you’re in need of a power of attorney or have other estate planning needs, feel free to contact our office with questions. You can also download a free copy of The Basics of Estate Planning in Alabama, or attend one of our upcoming free workshops.

If you need more guidance, we are happy to help. Contact us using the brief form below.



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bill@millerestateandelderlaw.com

Four Reasons to Revise Your Estate Plan

Four Reasons to Revise Your Estate Plan

by | Apr 18, 2022 | Asset Protection, Estate Planning

The need for an estate plan is something that many Americans only recognized as important during the worst months of the Coronavirus pandemic. We generally dislike thinking about our eventual demise, but the mortality rates of COVID-19 prompted us to see matters in a different light. In April 2020, professors David Horton and Reid Weisbord, respectively of the University of California Davis and Rutgers Law School, published the results of a survey showing that 68% of Americans did not have a will or any kind of estate planning strategy in place at a time when COVID-19 contagion was at a very high level.

 

Passing away without a will or an estate plan throws you into what is known as intestacy, which essentially means that your assets and property will be distributed according to state law. The probate code in many states calls for an estate distribution among tax agencies, creditors, surviving spouses, and descendants. This is not an ideal situation for many families; moreover, the interests of couples who never married, and of people who live in non-traditional family structures, are seldom taken into account by intestacy laws.

 

Seasoned estate planning attorneys can tell you that intestacy is only one of two major problems related to probate matters in the U.S. Failing to review, update, and revise an estate plan can complicate matters at a time when you won’t be around to fix the problem. If you already have an estate plan, great…but there is also a chance that you need to revise it due to legislative changes related to taxation, probate, or trusts. Even if changing legislation hasn’t impacted your estate plan, the natural evolution of your life probably has. Please take a moment to think about the major life events you have experienced since your estate plan was created. If any of them match the situations below, this is your cue to revise your plan.

 

Family Matters

Let’s consider the joy of getting married or welcoming a baby. Think about the letdown of getting divorced, or the sorrow of losing a loved one. These are major life events that call for an immediate revision of your estate plan, particularly when they involve weddings or marriage dissolution.

Moving Across State Lines

If you moved to Alabama from another state, the only way to tell if your estate planning strategy will continue to be effective is to review it. Keep in mind that some states have specific provisions with regard to the number of witnesses who must sign legal documents, such as trusts, living wills, medical directives, and others. Likewise, if you purchase a vacation home or investment property in a state other than the one you reside in, your plan will need to be updated accordingly.

Changes in Trustee or Estate Executor Designation

Your estate plan likely names an executor, personal representative, or trustee who is responsible for carrying out your wishes, distributing your assets, and otherwise administering your estate. If something happens to your named executor or trustee—or your relationship takes a turn for the worse—you should revise your estate plan immediately.

Changes to Assets and Liabilities

Filing for bankruptcy, paying off debts, selling a home, winning the lottery, or purchasing a collectible car are all examples of financial events that can significantly change the value of your estate, thus calling for an adequate revision.

Want to learn more about estate planning and the important role it can play in your future? Feel free to contact our office with questions. You can also download a free copy of The Basics of Estate Planning in Alabama, or attend one of our upcoming free workshops.



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What to Look for in a Personal Representative

What to Look for in a Personal Representative

by | Sep 21, 2018 | Estate Planning, Probate

Your Last Will and Testament is one of the most important documents you will ever sign. Within that document, you will name someone to act as your estate’s executor or personal representative. Your personal representatives will make decisions and take actions that affect your loved ones. Knowing what to look for in a personal representative may make your decision a little easier.

A Personal Representative Is a Fiduciary

Fiduciaries are people or entities who are trusted to handle property for someone else’s benefit. Banks are sometimes called fiduciaries.

Responsibilities of an executor or personal representative include:

  • Gathering and protecting estate assets,
  • Managing estate assets, and
  • Distributing property according to the terms of the Will or the laws of the State of Alabama.

Because of the importance and sensitivity of these tasks, it is important to consider individuals carefully before deciding on an executor.

A Personal Representative Is Prudent

Someone who is prudent acts with care and thought for the future. Alabama state law notes that a personal representative may take a wide range of actions on the decedent’s property, including:

Voting on stocks, executing and filing deeds, receiving and retaining assets, insure estate assets, borrow money, deal with contracts and creditors, pay taxes, and so on.

A Personal Representative Is Diligent and Detail-Oriented.

Gathering and maintaining assets requires someone who is hardworking and who sweats the details. Even small estates need someone who will find all the assets, no matter where located. And the family of the decedent needs someone who can protect and maintain assets of every type. Insurance may need to be purchased, licenses and registrations obtained, and investments monitored.

A Personal Representative is Loyal

As fiduciaries, personal representatives owe a standard of care to the estate, to you, and to your family. Look for someone who is willing and able to honor the preferences set forth in your Will.

Personal Representatives Are Patient and Diplomatic

Disagreements and disputes among family and heirs may turn into a family feud during probate. It’s not easy, but a personal representative must have the patience of a saint sometimes when dealing with distressed heirs and family members. If this sounds like your family, choose a personal representative with conflict resolutions skills.

Talk to an Experienced Alabama Estate Planning Attorney.

The attorneys at Miller Estate and Elder Law help clients like you make thoughtful decisions about their estate plans. For a free consultation, contact us at 256-251-2137 or use our convenient Contact Form. Although we’re located in Anniston, we also help clients in the Birmingham, Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.

What Does an Executor or Personal Representative Do?

What Does an Executor or Personal Representative Do?

by | Aug 24, 2018 | Probate

Alexander named his oldest son, Caleb, the executor (also known as personal representative) of his estate. When Alexander passed away last month, Caleb was left grieving and wondering, “What does an executor or personal representative do?” His father’s estate planning attorney was able to shed some light on the subject.

Gather Assets

As personal representative, Caleb is responsible for finding and protecting all of his father’s property. Anything Alexander will become estate assets to be used for paying claims and distributing to heirs.

Sometimes the decedent, Caleb’s father in this case, maintain accurate, up-to-date records. This makes the personal representative’s job much easier. Whether easy to find or not, though, Caleb has to find every asset his father owned.

In addition to finding the assets, the personal representative must protect them also. This may require the estate to purchase licenses, register vehicles, and buy insurance. Care should be taken to avoid wasting or spoiling assets that require special attention.

By the way, “assets” may include: stocks, bonds, promissory notes, partnership and business interests, life insurance policies payable to the estate, household goods, personal property, artwork, jewelry, china, silverware, valuable collections, vehicles, safe deposit boxes, and real estate.

Find and Pay Valid Claims

The personal representative is responsible for notifying creditors of the decedent’s death. There are two ways to do this:

  • Publishing a notice in a newspaper with general circulation in the county in which probate was filed; and
  • Sending written notice to all known creditors.

Creditors have to submit their claims within a certain time period or they may forfeit their claim.

Common debts and liabilities include: notes, mortgages, accounts payable, and unpaid taxes.

Finalize the Estate

The personal representative typically starts and ends the probate court proceeding. Before finalizing the estate, however, all property remaining in the estate will be disposed of. This usually involves distributing it to heirs named in the decedent’s Will. However, if there’s no Will to probate, all property will pass according to Alabama’s intestacy laws.

The personal representative files an initial inventory of assets within 60 days of being appointed. Depending on the length of time required to finalize probate, the personal representative may file partial accountings until the final settlement is filed.

Learn More About Forming a Business in Alabama.

We’ve only listed three duties for the personal representative. However, each of those tasks involves multiple steps. It’s critical to obtain the services of an attorney to make sure everything is done correctly.

The attorneys at Miller Estate and Elder Law efficiently assist their clients with probate and estate planning. For a free consultation, contact us at 256-251-2137 or use our convenient Contact Form. You may also want to check out our free videos. Although we’re located in Anniston, we also help clients in the Birmingham, Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.