Part Eight: Getting The Help You Need

David Frees:    That brings me to eight, and I’m very proud of this because it rhymes.  Number eight is getting help too late. This is a complicated process that thankfully most of us don’t go through very often in our lives.  A lot of times if you’ve been an executor you may discover to your chagrin, that if you do a good job you end up being executor for lots of people in your family.  But those of you who have never been an executor probably think this is a pretty simple job and what’s the big deal, and those of you who have been an executor know that it can be a very, very time consuming and difficult and emotional job. 

 

One of the ways of making it less time consuming, less difficult and less emotionally draining is to get help, the main reason to have legal and accounting help in a trust and estate administration, is to limit your liability exposure.  There are lots of minefields out there and it is the role of your legal and accounting advisors to make sure you don’t step on any of those mines.  The law is pretty clear that if you just use due common sense and due diligence and you hire somebody who’s competent on the face of it to assist you, that really does significantly limits your liability exposure.  If on the other hand and you decide to go without and you, you do step on one of those mines, then you’re kind of on your own. 

 

You are liable rather than the bank or the trust company or the law firm.  This isn’t directly on point, but it’s a related topic, if you’re a trustee, rather than an executor, I’ll give you an example of this, it’s little known by individuals that Pennsylvania is what’s called a prudent investor ruled state.  And what that means is that trustees whether they’re Uncle Joe or a bank, are expected to invest the assets of the trust in a well diversified portfolio, consistent with modern portfolio management theory, so in other words they’re meant to invest like professional managers, and if they fail to, they can be held liable for that, and that liability can be quite significant. 

 

But just by hiring a bank, or trust company or an investment manager, as long as you use due diligence in hiring them, you don’t have that liability exposure anymore, and that is something important to keep in mind because a lot of time the cost, especially the after tax cost, of having counsel for an executor or investment advisor for a trustee are fairly small, and you, you know, you want to protect yourself from that liability exposure, and of course you want to protect your nieces and nephews, you don’t want to spend money wildly that doesn’t need to be spent.  You want to be cautious and you want to be prudent and you want to make sure you’re never overpaying for these services. 

 

You want to know the right questions to ask there, and we can spend an entire hour long conference call and maybe we will, talking about how to hire and what the questions are to ask, and how to make sure you’re exercising your due diligence.  But, I believe that most people who are picked as executors or trustees have the common sense to size up and ask the questions. So that was eight, failure to get help until it’s too late, and again, it also comes under the theory sort of, don’t be pennywise and pound foolish. 

 

Kurt Kunsch:     Ok, that will bring us to number nine Dave.

David M. Frees III Esq.

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David M. Frees, III
Attorney, Speaker and Author