Holding Court: Where There is a Will . . .

Holding Court is a series by retired Rye City Court Judge Joe Latwin. Latwin retired from the court in December 2022 after thirteen years of service to the City.

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By Joe Latwin

Where there is a Will . . .

At some point, you may be incapable of managing your affairs, whether due to age, illness, death, or distance. Here are some of the things you should think about.

You will need to:

• Specify beneficiaries: Select the people who will receive your property after your death.
• Choose an executor: This person will carry out your wishes after your death.
• Select a health care proxy: Select someone to take make health care decision for you if you are unable to do so.
• Select a holder of your power of attorney: Select someone to take care of your property while you are alive.

Specifying Beneficiaries

The primary purpose for having an estate plan is to specify the beneficiaries who will receive your property after your death. Often the beneficiaries are family members and friends. They can also be charitable organizations or trusts.

Your will does not control the distribution of life insurance and some other types of assets that are paid in accordance with beneficiary designation forms, unless your designations of the life insurance proceeds are specifically designed to cause the proceeds to flow through your will.

Choosing an Executor

One reason for having a will is to name someone who will carry out your wishes after your death. The familiar term for this person is “executor”. The primary duties of an executor after your death are to collect your assets, pay your debts and expenses, and distribute your remaining assets to your beneficiaries in accordance with your will.

Ideally, your executor should be a person who is skilled in financial matters and who has a good understanding of your assets and your family situation. While the executor is often an individual, perhaps a family member or trusted friend, an executor also can be a bank that has a trust department.

You can choose two or more executors who will serve together as co-executors. To provide for the possibility that your first choice as executor will refuse or be unavailable to serve, you should also make a second choice.

Naming a Guardian

If you have minor children, it is important that you consider who will serve as the legal guardian for them until they reach majority age (18 years). If your children’s other parent (your spouse, or possibly an ex-spouse) survives your death, this person usually will serve as the guardian without the need for any special action. However, you need to provide for the possibility that the other parent will not be available as a natural guardian.

Executor/Guardian Bond Requirements

In most jurisdictions, an executor or guardian must obtain a bond to protect the assets of the estate. A bond is similar to an insurance policy and protects the assets of the estate from possible theft or malfeasance by the executor. Most states allow an executor to avoid obtaining a bond, if certain conditions are met. The most frequent exception to obtaining a bond is including a provision in your will that states that a bond will not be required. There are other conditions that states use to excuse the bond requirement including: consent by all interested parties, consent and waiver by all heirs or beneficiaries under the will, the status of the executor (e.g., a bank that already has insurance might not be required to obtain an additional bond), if the executor is an in-state resident, and whether the executor is the sole heir.

Powers of Attorney

Perhaps the most common way to address the issue of managing finances during a period of time when you are unable to do so is to sign a power of attorney.

You will need to select an agent and a successor agent. You can give the agent general or specific powers, depending on the power of attorney you use. In planning your estate, there are certain estate planning powers that may be important to include in the power of attorney. These estate planning powers include operating a business, making gifts, living trust transfers, disclaimer power, and managing a personal residence.

Some states will allow you to make your power of attorney document “durable.” A “durable” power of attorney is effective even if you become mentally incompetent.

You can revoke a signed power of attorney at any time, regardless of the reason. For example, you may change your mind about the agent you selected. The revocation should be made in writing, and you must provide notice to the agent under the power of attorney that you are revoking.

Health Care Proxy

In a health care proxy, you can designate another person (your agent) to make health care decisions on your behalf if you are unable to do so for yourself at some time in the future. There may be times, even if you are not in a terminal condition or permanently unconscious, that you are unable to make and communicate your health care decisions. In these circumstances, an agent can help make decisions for you.

In addition to the designation of an agent, these directives often provide an opportunity to give specific directions similar to those allowed in a living will.