Sheryl Nance-Nash

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How To Be An Executor Of An Estate

Being named executor of estate is a big responsibility.

It’s a privilege to serve as executor of an estate. For sure, it’s no small matter to carry out someone’s  final wishes. The responsibility is huge. The last thing you want is to do anything less than a stellar job.

Here’s how to honor your loved one’s legacy.

RECOGNIZE YOUR ROLE

The executor of an estate must understand that he/she is a fiduciary. 

“This means that they have a duty to act in good faith and trust for the benefit of the beneficiaries of the estate,” says Gary Sastow, partner at the law firm of Brown, Gaujean, Kraus & Sastow, in White Plains. “The executor must also understand that they are now stepping into the shoes of the deceased person to carry out their wishes with respect to the deceased person’s assets that make up the estate.”

Know what to expect.

“It is a challenging and sometimes thankless job,” says Jeffrey Greener, an attorney specializing in estate planning with Rivkin Radler LLP in Uniondale.

GET YOUR HANDS DIRTY

Come with your A-game. There will be plenty to do and no room for mistakes.

“The main responsibility of an estate executor is to take charge,” says Mark Snyder, a financial advisor in Medford. “Families are often in disarray at this stressful time and conflicts may be emerging. It is imperative to get a hold of the will and see that the deceased’s wishes are honored above all else.”

Your duties can include things like hiring an experienced estate attorney to assist in performing executorial duties and obtaining a formal court appointment; identifying, gathering and collecting assets; identifying debts of the decedent; and communicating with heirs, among other tasks, points out attorney Candice Grossbach with the law firm of Martin Grossbach in Rye Brook.

In addition, the executor will go through the process of probating the estate before the Surrogate’s Court, marshaling the assets of the estate, distributing the assets in accordance with the deceased person’s last will and testament, accounting for all the assets, investing the estate’s money, if applicable, and filing the necessary tax returns and reports to the Surrogate’s Court.

The duties of an executor or administrator may be time-consuming and complicated. 

“Before accepting the position, first determine if you have the time to handle a process that could take upwards of a year for more complex estates,” says Greener. “While no specific educational training or skills are required, it does help to be well organized. It also helps to have the right temperament, since the estate administration process can be long and sometimes frustrating, especially when there are numerous individuals involved, each with his or her own expectations.”

If it sounds like a lot of work, it is. Know that the estate will pay you for your services. Keep a record of the hours you spend.

AVOID MISTAKES

Don’t go solo. Build a team to ensure you do the best job possible. You’ll likely need an estate attorney, an accountant, financial advisor and, depending on the estate, an appraiser.

Make no assumptions that everyone is on the same page and that the process will be without some confrontation or risk free.  

“Executors are often the only thing standing between heirs and their inheritance, so executors often feel heirs have put them under a microscope,” says Greener. “You can also be held personally responsible for losses or for failing to timely pay taxes or claims before distributing any inheritances.”

Be mindful about everything.

“Don’t distribute too much too soon and leave the estate financially depleted,” says Gary Garland, a certified elder law attorney with the Garland Law Office in New York City.  “For example, distributing all the cash and stocks, and then there are no liquid funds available to fix up the house for sale.”

You also don’t want to distribute assets without appropriate paperwork.

“If you give $50,000 to the nephew without appropriate paperwork, he can still sue the estate if he feels aggrieved,” Garland adds.

Serving as an executor won’t be easy, but what a way to show your love.

Planning For Worst-Case Scenarios

A long-term care insurance policy provides income if you become dependent on someone else’s care or require assistance for basic living tasks.

You’ve likely heard the sobering statistic: About 70 percent of people 65 and older will need long-term care.

The price tag is just as frightening. Typical monthly costs on Long Island for an assisted living facility are $4,000; a semi-private room with nursing home care, $13,535; and for a private room with nursing care, $14,220, according to Genworth’s 2017 Cost of Care Survey.

So how do you pay for care? A long-term care insurance policy is one strategy. This provides income if you become dependent on someone else’s care or require assistance for basic living tasks and needs due to a chronic or prolonged illness, degenerative disease, or other condition that necessitates care at home or in an assisted living or long-term care facility.

Policies don’t come cheap, especially if you wait until your 50s or older to buy one. They can run a few thousand dollars a year.

“I continue to hear that long-term care insurance is expensive, but compared to what?” says Brett Anderson, president of St. Croix Advisors in Hudson, Wisconsin. “If you need ongoing care, you could easily spend $8,000, $10,000, $15,000 a month. I don’t see LTC insurance as expense, I see it as pre-paying in the event you need extended care, and you want to protect your loved ones and your assets by transferring some or all the risk to an insurance company.”

EXPLORE SELF-INSURANCE

The reality is, rising premiums are too expensive for middle-income Americans, says Lingke Wang, co-founder of Ovid Life in San Francisco. For many, self-insuring is their best solution.

What does that mean? You save enough to cover your own long-term care expenses. There are advantages.

“You have more choices,” says Matthew Rappaport, counsel with the law firm of Sahn Ward Coschignano in Uniondale. “You can go to a high-level facility or choose to pay a family member to administer care in any setting. Government-funded long-term care typically is more restrictive. I wouldn’t want to be left with only the choices Medicaid provides me.”

Secondarily, going through the insurance process spurs people to address related needs such as estate planning, financial planning, and retirement spending projections, he says.

One way to self-insure is with whole life insurance that builds usable cash values and has a long-term care rider.

“It’s often less expensive and a much richer and all-encompassing way to get the benefits of long-term care, along with a death benefit and the potential to build cash,” says Michele Lee Fine, financial representative with Guardian Life Insurance in Jericho.

STRATEGIES FOR SUCCESS

“Self-insuring is typically not done with accuracy or with any real ability to solve the equation,” says Lou Cannataro, partner, Cannataro Park Avenue Financial in Manhattan. “Quite often, it just seems to be the better alternative than spending significant dollars insuring against something that may not occur. Most do not realize the amount of money that can be lost to a long-term care need.”

His plan: “Build out your planning retirement model factoring in all of your goals and monetary needs through your life span,” he says.

If there is a shortage you cannot afford to self-insure. If your planning shows you can retire and not run out of money, you’re in good shape.

“Layer into this planning a long-term care need,” he adds. “If your goals are still accomplished even with the cash flow out for care, you can self-insure.”

WHAT’S A GOOD RULE OF THUMB?

“If you have at least $250,000 in current dollars to be inflated each year by 5 percent to spend on each occurrence of care in the future, plus all your other retirement assets to accomplish your goals, you can likely self-insure,” says Cannataro.

Have a written game plan for reducing debt. Free up income to invest in retirement and self-insure. Put in place an emergency fund of at least three to six months, a year if you’re older.

“Don’t put all your money in a retirement fund which is not accessible before you’re 59 1/2 and have no emergency fund,” says Kalen Omo, owner of Kalen Omo Financial Coaching in Tucson. “This could come back to haunt you if an unexpected event forces you to dip into retirement sooner than you would like to.”

Picture Perfect Planning for Art Inheritance

Inheriting art isn’t as simple as hanging a picture on the wall.

Inheriting art can feel like hitting the lottery. You have something of value you didn’t expect or work hard for. Depending on the piece, your net worth can jump significantly. It’s enough to get you excited for sure.

Settle down. No doubt, this is a good thing, a very good thing. But, know that while your treasure may have been “free,” that’s not to say there are no costs.

Here’s what you need to know about inheriting art.

FIND THE VALUE

“It is possible that the Picasso is a copy with no value at all,” says Jeffrey Greener, a trusts and estates partner at the law firm of Rivkin Radler in Uniondale. “There are many appraisers out there and each have different specialties, so doing due diligence is warranted.”

He recommends choosing an appraiser who is affiliated with at least one of the three major appraisal organizations: The Appraisers Association of America, the American Society of Appraisers or the International Society of Appraisers.

PROTECT YOUR ASSET

Once you know how much your gift is worth, look for insurance. Proof of purchase, invoice, and/or an appraisal are needed to find the insurable value, according to Rosemary Whisler, an insurance adviser with Cook Maran’s private client unit in Melville.

“Depending on the appraised value, it may be possible to include the piece under your homeowners’ insurance,” says Jeremy Larner, president of JKL Worldwide, a fine arts consultancy in New York City. “Alternately, you may want to insure your art under a special policy that covers a higher amount and takes into consideration things like breakage and movement of art.”

Also consider Art Title Protection Insurance, which protects against disputes that are related to ownership.

Considerations include determining how much coverage to buy (for example, the full value or some lesser amount), whether that coverage will be a fixed or “agreed value,” or whether you will be reimbursed at whatever current market value is at the time of the loss. Greener explains that an agreed value policy works well if the market value has fallen but not if it has increased.

Also, using an agreed value policy may also require you to have your artwork appraised from time to time to ensure that you remain fully covered. But be reasonable.

“Don’t overinsure for crazy values,” cautions Jonathan Greenstein, owner and operator of J Greenstein & Co., a Cedarhurst company specializing in Jewish art and antiques. “That will only add to your costs.”

Where should you turn for help?

“Always consult a reputable insurance broker with experience in the arena of fine art and one that has garnered relationships with the high-net-worth carriers, such as Chubb, AIG, and PURE,” says Whisler.

UNDERSTAND THE TAX IMPLICATIONS

Another reason you need an appraisal is for taxes. You need to establish the fair market value of the art as of the owner’s date of death because you, the heir, will receive a “stepped-up basis” in it.

“Essentially that means the built-in gain in the piece is wiped out and it’s as if you, the heir, purchased the art for the then-current value,” says estate planning attorney Nathan Jones of Nathan Jones Law in Missouri. “Later, if you sell the artwork, you can pay significantly less tax on any gain in value.”

Art that is appraised in excess of $50,000 could be subject to a review by the IRS Art Advisory Panel, points out Larner.

BE DILIGENT

Keep a file on works of art, especially those inherited. Are there receipts, gallery correspondence, or any family history related to that work of art?

“It is excellent practice to keep this information in a file, or directly attached to the back of the work,” says Graydon Sikes, director of artwork at Everything But The House, (ebth.com), an online estate sale marketplace. “This ‘provenance,’ or ownership history, is often critical to the value of a work. A collector always wishes to know any background information about an object.”

Proper storage and maintenance is a must. You want to preserve your loved one’s legacy and at some point, pay it forward.