Wednesday, May 16, 2007

Choosing a Trustee/Executor

When you are drafting your estate plan, one of the items that you'll have to decide is who will be the executor or trustee. The person or entity you choose has several certain important decisions and obligations. For example, they will decide whether certain tax elections are made in your estate, whether an allowance is paid to the surviving spouse, where the funds are invested and when distributions are made.

Naming more than one individual as a personal representative may be a solution that avoids any potential deadlock, but it also creates some complexity in the administration of the estate. Naming only one child as the personal representative also creates a potential source of disgruntlement from the other kids. Meanwhile, naming a corporate trustee avoids many of the issues...at a cost.

If you have any potential concerns about how your kids will handle the administration issues, leave the power to a third party alone to decide these questions, or provide for a mechanism for the kids to handle the dispute (mediation, random, etc.

16 comments:

Donald said...

Does the executor need to be a resident of the State of Iowa?

Matthew Gardner said...

Good question. The statute provides that if a non-resident is an executor, that a resident must also be appointed to serve with them. However, it is not uncommon for a court to waive that requirement in the right situation.

colleen said...

I am a named executor of an Iowa will, I live in Florida. My cousin is also named executor. If he is unable to perform his duties, is there a problem for me being out of state? As a side, my aunt is in a nursing home until spring, she is being told by a "legal advisor" that she should sell her car and home that she will never be returning to her home. No medical doctor has told her that. I feel she is being coerced into drawing up a new will and appointing different executors. she is being told that I cannot be executor because I live in another state. Can you help?

Matthew Gardner said...

Colleen-

The fact that you live out of state does not prohibit you from serving as executor. There is a statute that says an out-of-state resident should have an in-state resident serve with them, but that is commonly waived by the court.

As to the aunt selling the car and house, there could be issues with medical expenses, but I would need to know more. Please feel free to contact me if you would like to discuss more specifics.

Anonymous said...

I am named executor of an Iowa will (person is still living) and there is no in-state resident serving as co-executor. Is this still legal?

Matthew Gardner said...

Still legal to name an out-of-state resident as an executor. May need to name an Iowa resident as co-executor, which is up to the court to determine at that point.

Anonymous said...

My father is named the executor of his parents estate, he has one sister. His father passed away, his mother is still living. My father is divorced from my mother, but planning to remarry later this year.

Once my father is married, does his new wife have any control over his exisiting executorship? What if something were to happen to my father and he could no longer carry out the duties of being an executor? Would his new wife be "next in line"?

Last question...he does not have a Will, how can I encourage him to write one?

Great site, thanks in advance for your help.

Matthew Gardner said...

Anonymous-

Anonymous is a frequent poster to this site. I should meet him/her someday. :-)

If a nominated executor is not available for some reason, the named successor is the next in line. If there is not a named successor, then it goes back to whoever applies to the court first. There is a priority on who can file an application and when. But, in short answer to your question, your stepmother would not be next in line automatically (unless she was named in the will).

Final question - getting your dad to do a will. Other than holding a gun to his head (I DON'T recommend that and that brings up a whole other issue on valid wills) encouraging him to do a will to (1) save on fees/costs and (2) help keep family harmony. Without a will, there can be more to fight about. Not that there isn't the potential for a fight otherwise, it just limits some of the potential "grenades".

Anonymous said...

Can you name more than 1 executor to your will? Someone told me that you can only have 1 executor in Iowa?

Matthew Gardner said...

No limit on how many executors you can name. The better question is do you want to name more than one. Their actions typically must be by unanimous, so each would have to sign all documents, agree on decisions, etc. Thus, yes you can, but it should be carefully evaluated.

Anonymous said...

Hi,

I just wandered upon this site from Google. In the above comment thread, Colleen was told that the statute for Iowa for out-of-state executors is often waved. The next comment after that, Anonymous was advised that they may need to name a resident also. So, which is it? Basically it's at the mercy of the court as to how they feel? I have been the sole beneficiary and executor named for many years on someone's (non blood relative) will. I recently moved just a couple hours across state lines. This person has no spouse or children. The will, I'm told, was not done by a lawyer but was notarized. There are distant family members that are state residents that are specifically named and excluded from the will. Based on other cases, would that scenario present challenges for me being upheld as sole executor? Or potential for the will to be challenged?

Thanks,

Diane

Matthew Gardner said...

Diane-

Like many issues in the legal system, there is no black and white. Here is the basic summary of the out-of-state executor issue:
(1) The Iowa Code requires that if an out-of-state executor is appointed, that an Iowa resident also be appointed to serve with them.
(2) HOWEVER, the Court has the flexibility to waive the requirement of an Iowa executor. So yes, it is entirely up to the discretion of the court/judge and perhaps the kind of day they are having. (For example, they may condition a non-Iowa resident as the appointment if they maintain the bank account in Iowa and don't remove funds out of the state.)

While I can't give you legal advice (although your comment about non-lawyer drafting and notarized to a non-family beneficiary caused a little anxiety for me see http://www.iowabar.org/default.asp?page=LegalInfoProbate), naming a non-Iowa resident doesn't invalidate the will in any way or subject it to challenge by itself. It just affects who the court appoints to handle the affairs.

Anonymous said...

Mr. Gardner,

Thank you for your reply. I was happy for the response because I assumed this thread might have expired. I understand that you cannot give legal advice, but what gave you pause regarding a non-lawyer drafted, notarized will to a non family member? I read the link you provided and it appears that a notarized will would meet the requirements of a will as outlined in the first paragraph.


Thanks,

Diane

Matthew Gardner said...

Diane-

Neither I nor the thread have expired, so all is good. :-)

"Non-lawyer drafted" generally gives me pause, as I have seen several wills that attorneys have drafted that have created nightmares. When families get along, some things can be smoothed out. But when there is potential turmoil/drama, an incorrectly worded will can just provide enough room for someone to attack the will on some ground of deficiency.

However, regardless of that concern, having a will notarized does not make it a valid will. In fact, if it just notarized, it is not a valid will. The key is that it needs to be witnessed by two individuals (at the same time as when it is signed). Thus, for example, if I have two wills and one is notarized and the other is not, but is witnessed by two individuals, which one is valid in Iowa?

Anonymous said...

Mr. Gardner,

I'm not sure if my last message ever sent. Since it doesn't post right away and it has to be approved before it posts, I'm not sure if it was never approved or never sent! I always have trouble proving I'm not a robot. I'm trying to not take that as an attack on my personality!

Anyway, back to the point here, I understand the point you're making about wills being signed by two witnesses. In your example, the valid will is the one with two witnesses' signatures. If I'm correct, I don't think I can be a witness because it has to be someone impartial who does not stand to benefit from the will.

It could, I assume, be signed by two notaries. Like, for instance, two people at a bank that both are notaries. Do they need to attach affidavits or are their signatures sufficient?

Thanks for what you do! Your blog is excellent!

Diane

Matthew Gardner said...

Diane a/k/a Robot-

Thanks for the comments. Your proposal of having two bank officials sign as witnesses is workable and sufficient. And yes, you as a beneficiary would not want to be a witness. That satisfies the signature requirements. (I won't get into other questions about a valid will as that entails legal advice.) The affidavit you referenced can be signed either (a) at the same as signing the will or (b) after the testator passes away. (The trick can be locating a witness 20 years later when they have moved, died, remarried, etc. There are options, but some hoops to jump.)