Sunday, November 25, 2012

Insights from Being an Executor

Being an executor for my parents' estate had required me to learn a lot about the process of transferring assets, estate taxes and titling assets.  Much of this was new knowledge for me, but I probably won't be an executor again.  The new knowledge won't be wasted since I can apply it to my own assets and asset transfer.  Here are my learnings:
  1. Live in a state with no estate tax.  My parents' state has no estate tax which reduced the complexity of their estate by one level.  The value of their estate was below the federal threshold of $5 million.  So no estate tax return was needed at the federal or state level.
  2. Trust complications.  My assumption that assets in a revocable or family trust would be easier to transfer was not correct.  In most cases, it had the same level of difficulty.   In a few cases, assets in a trust were more difficult to transfer since court certification were required, or some financial institutions would not medallion guarantee signatures, even though I was a long time customer.
  3. Over diversification.  Having multiple financial institution may be beneficial when alive, but significantly increases the work after death.  For example, each dividend reinvestment program, each mutual fund, each brokerage and each bank all require separate forms, with different requirement to transfer assets. Number of forms =  number of decedents X number of companies X number of heirs.
The experience has caused me to evaluate our residency options, trust management and diversification strategy. I'll post some thoughts on changes that we will make in a future post.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

1 comment:

K. W. Callahan said...

Very good tips. Thanks!