Choosing the Right Executor for Estate Planning
Most individuals understand the fundamental importance of having a will, but few know that selecting the right executor to help manage their affairs is equally pressing. The executor, or personal representative, is tasked with various responsibilities including cataloging assets, paying debts and other bills, classifying your assets and allocating leftover finances to heirs. Picking the wrong person to manage your estate could result in tax problems, lengthy delays, and a will contest in the worst case scenario. To choose someone fit for the job, here are some of the factors to consider.
Trust is a Crucial Aspect
The executor named in your will is entitled to access your checkbook and service any unpaid debts when you pass. Often, people choose family members or close friends. But because of the complex nature of this job, you’ll want to choose someone who’s responsible, trustworthy, and honest. Even if your will is straightforward, the executor will still have a lot on their plate, and all the tasks will need to be completed in a timely manner.
Choose One Person to Handle Your Affairs
Some individuals are inclined to include two or more representatives, especially when they have several adult children or siblings. But this can result in fighting if the co-agents have different opinions, and many banks do not allow co-executors, so complexities might arise if there are checks requiring two signatures. As such, you’re better off naming a single executor to manage your estate. However if you must name co-agents, your will should indicate the individual who has the tie-breaking vote.
Understand the Residency Rules
In most parts of the country, you can choose an executor who does not live in the same state as you. The residency rules vary, however, and there are places that put limitations on non-residents. Some states require a bond to protect your heirs should mismanagement occur, some call for the appointment of an in-state agent, and some require an out-of-state executor to be a beneficiary or family member. So, if you are planning to choose an individual who lives in a different state, it would behoove you to check if there are any special requirements imposed by your state.
Get an Approval
Whomever you select to manage your assets when you pass, be sure to get approval before including them in your will. And after you’ve come to an agreement, go over the details of your finances with that individual to keep them informed on the location of your key documents.
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**Chronic Illness Rider (CIR
This is a life insurance benefit that also gives you the option to accelerate some of the death benefit in the event that you are certified with a chronic illness as described in the certificate.
IMPORTANT NOTICE: This rider is not intended to be a federally tax-qualified long-term care insurance contract under Internal Revenue Code (IRC) Section 7702B. Therefore, the premiums payable for this rider do not qualify as long-term care insurance premiums and are not deductible from gross income for federal income tax purposes. This rider, however, is subject to the federal per diem limits set forth in IRC Section 7702B. Under this rider, New York Life will not pay claimants more than the federal per diem limits. Assuming the amount you receive in the aggregate from all applicable policies does not exceed the federal per diem limits set forth in IRC Section 7702B, the benefits provided by the Chronic Illness Rider are intended to be excludable from federal gross income under Section 101 (g) of the IRC.
Receipt of an accelerated death benefit may affect eligibility for Medicaid or other government benefits or entitlements and may have income tax consequences. Accelerating benefits before applying for these programs, or while you are receiving government benefits, may affect your initial or continued eligibility. Clients can contact the appropriate social service agency (e.g., the Medicaid Unit of your local Department of Public Welfare or the Social Security Administration Office) for more information.
Must be under age 65 to apply for the Chronic Illness Rider.
The following states are not eligible for CIR: CT, ID, LA, MN, MT, NC, OH, SD, UT, WA
This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.