Dave Frees: You have some questions here?
Ray Deering: The first one is, “I have heard the term, pour-over will, what does that mean?”
Dave Frees: Great question. And I don’t know who is asking it, so I’m not just blowing smoke, it’s a really good question. You have a pour-over will when you’ve created a revocable living trust during your lifetime. What happens is sometimes people create a trust but when they die they still have assets in their own name, maybe their house, or maybe some pension, or maybe some money that they received in a lawsuit or maybe an inheritance they never put into the trust. So even if you have a trust, you want something called a pour-over will that says if I die, and I still have some things in my own name, take them Mr. Executor, Mrs. Executor or Ms. Executor, take them and put them over into the trust and let the trustee administer them and distribute them, or hold them, or do whatever the trustee’s supposed to do. So, when you’re an executor over a pour-over will, you’re job is still the same as every other executor, but instead of giving money to individual beneficiaries in the end, you’re going to give it to a trustee. When you’re the executor in that case, you want the trustee to sign off and maybe even the beneficiaries of that trust, to say that they’re not going to come back and hold you liable or sue you or surcharge you. So same kind of process that you go through, that’s a very good question.
Ray Deering: Good. Here’s another question Dave. “If I am an executor and I have a will written in someone’s own handwriting, what steps do I need to take to verify the will as it’s, as to its authenticity?”
Dave Frees: Well, that’s again, man, these are very good questions. That is called a holographic will. In some states it’s simply not valid. However in Pennsylvania it is, as a general rule valid. There are some reasons why they might not be, but you’ll still have to go to the Registrar of Wills and you’ll still have to be appointed. There are some extra precautions that the exec, the Registrar of Wills will make you go through. If you are planning your estate, you want to have what’s called a self proving will. You don’t really want a will in your own handwriting because wills have hundreds of years of court interpretation of what they mean. And, so you don’t want to inadvertently say something in your own handwriting that isn’t, you know, that doesn’t have the same meaning to the court.
So generally speaking you want a will that has been prepared by somebody who really carefully listens to everything you say, and puts it down in a way that you understand and that the court would understand and that the beneficiaries would understand if they were ever have to compare notes. But where you have a holographic will already, you’ll go over and you’ll have to prove it’s authenticity with at least two witnesses that can identify the signature, and you’ll have to prepare what’s called a copy fair, which is that you’ll have to type up a transcript of that will, so that the Registrar is not relying on using, you know their own, reading, their own reading of the will. You’ll have to prepare a transcript essentially of what you think it says. So, you will go through steps that a person that has a self proving will won’t have to go through.
If you’re an executor on a self proving will, you just basically go over to the courthouse, with the will, which proves itself because it’s got witnesses and a notary public affidavit attached to it, and you pay your fee, which is as I said often times very small, and you take a death certificate, and you take proof of who you are you’re good to go. With a holographic will, a little bit more complex than that. I hope I’m answering your question.
Kurt Kunsch: These are some more questions Dave. There were some general questions that people had as to who could be named as executor. If they’re meeting with their attorney now, and they’re considering naming someone as an executor, you know, who is the best person to have for that, or the best persons, or entities to name as executor.
Dave Frees: Sure. A number of possibilities there. Obviously there are family members and in the vast majority of cases I probably, I think I have 7,000 clients through the years, and the vast majority of them name other family members as executors and I’m sure that doesn’t come to any surprise to anybody. Those family members need to be over 18 years of age, and really my advice is having seen what I’ve seen through the years is really they be over 25 years of age, because in our society, younger people just don’t get the experience dealing, for the most part with these kind of financial matters until they’re a little bit older. When we move away from immediate family members, then we get to friends. And it is perfectly appropriate in Pennsylvania, not in all states, to have somebody not directly related to you, as an executor or a trustee.
Then you get into various professional advisors, such as accountants and lawyers and financial advisors, and each of those have they own pros and cons, and the main thing to be wary of and aware of there is whether there’s any ethical restriction in the particular profession about serving, and then if, if there’s not, if it’s appropriate for them to serve, how would they charge, and what is their experience level again.
Then you get to banks and institutional fiduciaries, and again, I, I’m happy to say this, and I would say this whether Kurt and Ray were on the phone, I have privilege of working with Kurt and Ray and many other trust officers and with many of our finer regional and local institutions.
Most corporate fiduciaries that you meet and talk with will be happy to share with you their fee schedule in advance, so you’ll know what it is, and they’ll also be happy to describe to you what services they provide. Lawyers tend to sort of break down along these lines, where there are lawyers that tell everyone to go to banks and trust companies and there are lawyers that say oh don’t go to banks and trust companies.
I feel that banks and trust companies should be used, corporate fiduciaries we call them, when it’s appropriate, which is when you either don’t have a family member who is knowledgeable about this, or where you don’t want to put a family member in the hot seat, you know, or where you maybe want to have a family member who is going to give guidance about distribution of things, but you want to have a disinterested, sort of neutral third party who will write the checks, then there are also legal situations where you’re trying to protect your children maybe from divorce or creditor’s claims, where you should not have a family member or you should have an independent corporate fiduciary. Unlike most old documents, most of my documents give someone the power to fire a bank or trust company. So if the bank or trust company is acting and they’re doing a great job, great. If they’re not doing a great job, or if their fees are excessive or something like that, it is my practice to draft documents to allow someone to have the power to fire them. And I’m sure Ray or Kurt, I don’t know if I’ve ever asked you this or not, but I’m sure you won’t mind seeing that in a document, because you want to work for people where you’re doing a good job and they acknowledge that I suspect.
Kurt Kunsch: That’s correct.
Ray Deering: That’s correct.
Dave Frees: If I said to you I was going to put in the power to fire you, you wouldn’t be worried by that?
Kurt Kunsch: No not at all.
Ray Deering: Not in the least David.
Dave Frees: And that folks, that’s the appropriate answer is that banks and trust companies have a role to play, either because it’s legally desirable, you know, in certain cases it prevents there from being a tax to have a neutral and independent third party. And in other cases it can give some protection from divorce and other things. One of the areas where I do suggest having both a family member and non-family member is in what are called special needs trusts, or an estate where one of the beneficiaries may have a special need because there, the need for the disabled child may go on for longer than the life of their siblings, and again, there where we need continuity, or we have trust for grandchildren until they are quite old, we might need, you know, an institution that’s going to be there even when the individuals we name pass on. So there’s lots of reason to pick one or the other and there’s no right or wrong answer to these things. Like I said I have 7 or 8,000 clients and if you polled them, you’ll get probably 2 or 3,000 different views on who was appropriate and who wasn’t. But, that basically covers it. You’ve got the friends, you’ve got the family members, you’ve got professional advisors, and then you’ve got professional corporate fiduciaries.
Kurt Kunsch: Thanks Dave.
Dave Frees: Sure.
Kurt Kunsch: We’ll wrap up here this evening. I’d just like to thank David Frees, partner in Unruh, Turner, Burke and Frees, who joined us this evening to give us some insight on actually the 10 most common mistakes executors make and how to avoid them. David you mentioned earlier in the program that there was a packet they could receive from you, from the law office there, the executive white paper, and I’d like it, could you give your contact information again for those clients to receive that.
Dave Frees: Sure and they’re welcome to contact you guys and you can just pass that onto me, but you’re also welcome to email me at dfrees, f r e e s at utbf that’s the letter u, the letter t as in tom, the letter b as in boy, f as in frees, utbf.com. and just request in the re: line or in the body, the executor white paper, and we’ll send that out to you so you’ll have it, and or otherwise send a self-addressed stamped envelope or give us your address somehow and we’ll try to get you a hard copy of that out. It has been, gentlemen thank you very much, it has been my pleasure.
Ray Deering: David, thank you.
Dave Frees: Ladies and gentlemen, thank you for all your great questions. Also, if you have questions, or you have another topic that you’d like us to address, please feel free to let us know that. My phone number again, if anybody needs to get in touch with me is 610-933-8069 and you can learn more about the firm at www.utbf.com. You can also get up to date information by following me on Twitter. Just go to www.twitter.com/davefrees and hit follow. You can also email me at [email protected]