Issue 28: 2014

Wealth Management

Settling the Estate

In today’s world, the seen — and unseen — roles and responsibilities of executors, and their agents, are changing.

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Being named an executor by a family member or close friend is an expression of the highest regard and trust, and it is generally regarded as an honor.1 But, like many honors, it brings with it significant responsibilities and, often, unexpected challenges.

Serving as executor is one of the most complex financial roles anyone can undertake. The responsibilities are extensive and often highly technical, and the commitment of time and energy can be daunting. The role demands custody, investment, fiduciary, administrative, accounting, legal and tax expertise and capabilities. Emerging issues related to digital property, not to mention increasingly intricate family structures, add challenges for the executor.

Emerging trends,
additional complexities

While the executor’s core responsibilities have changed little over the past century, fulfilling those responsibilities has grown more complicated. For one thing, until just a few years ago, an executor on the hunt for important documents might find them in a filing cabinet or in a safety deposit box. But today, important papers may have been sent and stored solely in digital forms, which can muddle the search for important information. And, even if all of these digital locations are known, does the executor have current usernames and passwords to access the information?

There are also potential legal issues, since most state laws are unclear as to an executor’s ability to gain access to a deceased individual’s digital property. User agreements for online services tend to be equally murky. What about access to email accounts? Can an executor access these accounts without violating the provider’s terms of use agreement? All this is really just the tip of the iceberg when it comes to grappling with digital assets as an executor.

Beyond the new difficulties brought by the digital era, ongoing demographic and societal changes can make the job of executor more involved than ever before. Higher divorce and remarriage rates, more families bringing together children from prior relationships and marriages, advances in reproductive technology and longer life expectancies — these trends and many more are transforming the American family, making for more multigenerational families and ever-more complex family arrangements. These changes can add new layers of complexity when it comes to both creating and executing an estate plan.

According to the results of the 2014 U.S. Trust Insights on Wealth and Worth® survey of wealthy Americans, one in four responding families say they have had disagreements about money. And disagreements over inheritance or distribution of family assets are among the top five circumstances that represent the greatest risk to family wealth.

Easing the burden while
fulfilling your responsibilities

Few individuals have the time, knowledge or wide-ranging expertise to assume all the responsibilities and liability that administering an estate requires. But you don’t have to shoulder the responsibilities alone. If you’ve been named executor, you may have the option to appoint co-executors who can serve alongside you, providing the required technical and investment expertise.

Like many honors, being named an executor brings with it significant responsibilities and, often, unexpected challenges.

However, if you’d prefer to retain full control, you may be able to select an “agent” — an agent for executor — to provide expertise, support and guidance to help you make the difficult decisions that executors face. The agent can help you to balance diverse and conflicting interests, make distributions and tax filings, and can also assist with an executor’s numerous administrative duties to help alleviate the burden.

U.S. Trust, as one of the nation’s largest and most experienced fiduciaries, provides estate settlement services for thousands of wealth management clients. Whether you engage U.S. Trust to serve as an executor or an agent for executor, we draw on our considerable experience in this field to help settle estates professionally and efficiently. We are also skilled at working with a client’s existing advisors to coordinate services and advice.

Our flexible offering allows us to provide you with comprehensive services that can be tailored to fit your needs.

An Executor’s Responsibilities

An executor has a wide range of responsibilities. Here’s a broad overview.

  • Beneficiaries. Balance diverse and possibly conflicting interests among beneficiaries; address concerns; and make difficult decisions.
  • Paperwork. Prepare extensive paperwork. This can include simple or more complicated tasks.
  • The will. Review and probate the will and adhere to its terms.
  • Assets. Identify, collect, value, safeguard and manage all estate assets. This includes cash in bank accounts, contents of safety deposit boxes, household and personal effects, out-of-state property, real estate, digital assets and miscellaneous items, such as the interest of the decedent in other estates, trusts and any pending litigation.
  • Taxes. Prepare and file all necessary estate and other tax returns and reports.
  • Debts and expenses. Determine and pay the deceased’s legitimate debts and estate expenses.
  • Distribution. Distribute the estate’s assets in accordance with the terms of the will.
  • Planning. Develop tax, investment and other planning strategies for the estate.

Complicating matters further, errors and delays can be costly. For example, missed deadlines may disqualify the estate from certain tax-minimization strategies and expose it to interest charges and penalties. These losses can even result in personal financial liability for the executor.

Agent for Executor
and Family Wealth Services

U.S. Trust’s Agent for Executor services are a part of our Agent for Fiduciary offering, which includes agent services for both trustees and executors and is, in turn, a component of a more comprehensive offering that we call Family Wealth Services. Our goal with Family Wealth Services is to help meet the broad range of wealth management needs of our clients and their families. This includes:

  • Next-generation education
  • Eldercare planning
  • Wealth planning for women, as well as lesbian, gay, bisexual and transgender domestic partners
  • Philanthropic, estate and trust services

1In some states, the term “personal representative” is used in lieu of “executor.”

IMPORTANT INFORMATION

Any information presented about tax considerations affecting client financial transactions or arrangements is not intended as tax advice and should not be relied upon for the purpose of avoiding any tax penalties. Neither U.S. Trust and its representatives nor its advisors provide tax, accounting or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.

Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION

The 2014 U.S. Trust Insights on Wealth and Worth® survey is based on a nationwide survey of 680 high-net-worth and ultra-high-net-worth adults with at least $3 million in investable assets, not including the value of their primary residence. Respondents were equally divided among those who have between $3 million and $5 million, $5 million and $10 million, and $10 million or more in investable assets. The survey was conducted online by the independent research firm Phoenix Marketing International in February and March of 2014. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95% confidence level.

Bank of America, N.A., and U.S. Trust Company of Delaware (collectively the “Bank”) do not serve in a fiduciary capacity with respect to all products or services. Fiduciary standards or fiduciary duties do not apply, for example, when the Bank is offering or providing credit solutions, banking, custody or brokerage products/services or referrals to other affiliates of the Bank.