Happy Holidays from the Common Executor

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happy holidays 2018Thank you to all the followers and visitors of The Common Executor for contributing to a phenomenal year. In 2017, the blog reached all goals. In 2018, the blog tripled all goals and set the bar high for 2019. Since I like a good challenge, I will continue to post for a fourth year.

The Year in Review

In 2018, the traffic tripled from the previous year. In addition to the momentum from 2017, traffic exploded as a result of adding security to the blog.

Additionally, because of the growth in traffic, revenues from my Amazon Affiliation increased enough to cover some expenses to run the blog.

Although I didn’t post as often, improvements were made to allow for additional features in the coming year. Basically, 2018 was spent on the business side of the blog than solely on content creation. The good news, even though there were fewer articles, the traffic continued to grow.  

Finally, the poll this year asked, ”Do you have concerns about estate planning?” The results were as follows:

  • 90% answered that they have no concerns. They know what they want to do.
  • 5% replied that they plan to spend everything and leave nothing.
  • 5% admitted that they don’t know where to begin.

The poll resulted in a good cross section of replies. Although most respondents know what they want to do, they still visit this blog. So, hopefully this blog provided a benefit to them. The remaining respondents proved that apathy still exists because of not caring or confused about the planning process. Either way, there is still a need for The Common Executor.

Plans for Next Year

In 2019, I plan to continue posting based on visitor interaction. Last year, search terms and questions from visitors determined the topic for the articles and the amount of posts. I will employ the same process this year.

As promised last year, the blog articles will always remain free. However, the costs of running this blog keep growing. Therefore, my goal this year is to raise enough money to cover the expenses. I will try to accomplish this in the following ways:

  • Through increased sales with my affiliation with Amazon.
  • Provide PDF’s at a low cost. These PDF’s will help estate planners avoid the pitfalls of estate planning and will help executors plan for a smooth estate administration.

Basically, the goals remain the same: Boost visitor engagement and raise money to keep this blog running.

Top Posts in 2018

In 2018, there was a good mix of interest in the articles that makes me hopeful that people are looking at all aspects of estate planning and estate administration. The top 5 posts for 2018:

  1. How to Handle a Belligerent Beneficiary

  2. Inherited Traditional IRA | Distribution Rules for Estate as Beneficiary

  3. Closing an Estate in a Formal Probate Process

  4. Communicating with Beneficiaries: Executors Should Use Common Sense

  5. Good Record Keeping: Crucial for an Executor

That’s it. Have a Happy Holiday Season!!!

 

 

 

Distribution Rules for Inherited Roth IRA’s when the Estate is the Beneficiary

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inherited roth ira

When the estate is the beneficiary of an inherited Roth IRA, the executor must handle the distribution of the account. How the executor handles the distribution process depends on IRS regulations. Essentially, the IRS requires distribution of the account using rules based on the age of the IRA owner at death. Aside from the age based rules, other regulations that apply to the inherited Roth IRA provide the IRA with diverse characteristics. Accordingly, the executor must understand these rules to handle the account competently. Particularly,when the estate is the beneficiary of an inherited Roth IRA.

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Executor Obligation beyond the Closing of the Estate

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executor obligation

In common estates going through a formal probate process, executor obligation may extend beyond the estate closing. Essentially, the core obligations an executor must achieve are the following:

  1. Pay the debts of the estate.
  2. File and pay all taxes of the estate.
  3. Distribute remaining property of the decedent.

Normally, completing the core obligations is necessary to close an estate. Then again, there is always an exception to the rule. One exception is that tax filing deadlines may carry over beyond the estate closing. In essence, since the estate closed, the former executor becomes an acting executor until completing all obligations of the estate.

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The Life Estate Agreement and Your Estate Plan

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life estate agreementIn estate planning, utilizing the life estate agreement is rare, but can be effective in transferring property. Accordingly, the key reasons why people implement the life estate in their estate plans are as follows:   

  • Avoid putting the property through probate.
  • Impose controls such as passing property to your children.

In reality, the motivation to use the life estate is to impose controls on the property. As mentioned in the article The Life Estate and Personal Possessions, my Uncle lived in the home of his deceased spouse under a life estate agreement. In simple terms, the agreement allowed my Uncle to remain in the home until death. After the death of my Uncle, home ownership transferred to the children of his deceased spouse. Although the life estate worked well in my Uncle’s estate, this is not always the case. There are also disadvantages to the life estate agreement that could make using the agreement in any estate plan questionable.

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Suspicious Beneficiaries and the Appearance of Legal Bias in an Estate

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suspicious beneficiariesIn common estates, suspect executor behavior will create suspicious beneficiaries. Although the beneficiary may view the executor behavior as suspect, the behavior may not be suspect at all. As described in the article Executor Rights to an Estate, the executor has rights granted by the probate court in which most beneficiaries are unaware. Furthermore, if the executor ignores the beneficiaries, the beneficiaries may become suspicious of the executor’s activities. In common estates, this type of miscommunication usually leads to costly conflicts.

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Life Insurance Proceeds and Taxes

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life insurance proceedsIn general, life insurance proceeds paid to a beneficiary are tax free. However, there are circumstances where the IRS will tax life insurance proceeds. Some of these circumstances include interest income received, estate taxes, and transfers. Therefore, in addition to listing beneficiaries properly on life insurance policies as discussed in the article The Need to Properly List Beneficiaries on a Life Insurance Policy, a policy owner must also understand the tax implications of their policy.

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The Need to Properly List Beneficiaries on a Life Insurance Policy

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life insurance policyTypically, people who need to provide for others after death will purchase a life insurance policy. Although there are many types of life insurance policies, the common thread between them are beneficiary designations. In simple terms, once the policy owner perishes, the listed beneficiary will receive the proceeds from the policy. However, listing beneficiaries on a life insurance policy needs careful attention for reasons mentioned in the article List Your Beneficiaries Wisely in Your Estate Plan. Otherwise, after death, unintended consequences may occur. So, to avoid unintended consequences, properly listing beneficiaries on a life insurance policy is essential.

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Can I Serve as an Out-of-State Executor?

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out-of-state executorIn general, all states will allow you to serve as an out-of-state executor. In fact, probate courts would rarely refuse the choice of a decedent simply because they live out-of-state. With that said, many states have misgivings about out-of-state executors for the following reasons:

  • If an executor misuses estate property, the probate court would have a hard time dealing with them in another jurisdiction.
  • An out-of-state executor would have a hard time taking care of a house or assessing property values.

Consequently, because of these misgivings, many states place restrictions on out-of-state executors.

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Considerations Before Engaging in DIY Estate Planning

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DIY estate planningToday, there are several opinions for and against DIY (do-it-yourself) estate planning. Usually, the opinions against are prevalent due to the fact that estates are legal entities. Even if you have a straightforward common estate, misunderstood legal details can lead to unintended consequences. Therefore, it’s best to hire an estate attorney to craft a solid estate plan. Conversely, opinions for DIY estate planning focus on high-quality estate planning software. The opinion maintains that the planning software will provide guidance through all the intricate details to craft a solid estate plan for those with straightforward, common estates. Although both arguments are rational, you must consider a few important factors before engaging in DIY estate planning.

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