The 50 Biggest Estate Planning Mistakes...and How to Avoid Them

hiring an agent

In Mistake #40, we discussed the option of hiring a trust company to act as your agent in a wide-ranging way, updating you regularly and bringing decisions to you that need to be made. For example, once the trust company’s professionals have cleaned out and prepared the deceased’s house for sale, the actual process of reviewing and accepting an offer to buy is something that you will do together with them. But even here, they will give you their guidance and advice on the best offer and why.

Before making the decision to hire a trust company as your agent, meet the trust officer, as you will be working with this person, often by email or phone, for months or even a couple of years. That initial meeting should provide you with a sense of the corporate culture and the attention to client service. Even if the trust officer you meet in the first meeting moves on to a new position before the estate is completed, the successor trust officer will most likely have similar experience and expertise. Go to this introductory meeting well prepared so that the officer can give you as much information as possible about what will be involved in the estate. Take the will and all other documents that you have found at this point in the estate.

And here is a nugget of advice for working well with a trust company acting as your agent: follow the trust officer’s advice most of the time. One of the reasons you’ve hired an experienced trust company is because its professionals know what to do in a variety of situations. One trust officer mentioned a situation in which the trust company was hired as agent for the executor. In this estate, the deceased’s adult child was living in the deceased’s house and the executor (the trust company’s client) was resisting the trust company’s suggestion to either sell the home or collect rent from the child. But the child living in the house was only one of the beneficiaries of the estate and after the death, the house is no longer “Dad’s house,” it is an asset of the estate. Over time, the other beneficiaries of the estate will begin to have valid concerns about it being in limbo. In preventing the trust company from acting, the executor was making a mistake. If the executor had followed this experienced advice, he would have been authorizing the trust company to take actions in the best interest of the estate and for the benefit of all of the estate’s beneficiaries.

hiring other professionals

In Mistake #40, we discussed taking on the estate administration without appointing an agent, and if you decide to take this approach, the adage “Hire well, and the rest falls into place” applies in spades. In this scenario, you are not only the ultimate decision maker, but you are in charge of making sure that every step gets done—and that it gets done in a timely way.

Some of the professionals you may be hiring include a:

• lawyer

• accountant

• real estate agent

• valuator

• cleaning service

• property manager/interim business manager

In each of these situations, resist hiring the first firm that is referred to you. It doesn’t take long to have a conversation outlining what you need and to request an estimate of the fees, process involved and time required. If a firm resists giving you an estimate of the fees or it takes a long time to get an estimate, move on.

Similarly, don’t take a fee estimate as gospel. A lawyer who advises you that getting a court order to appoint you as the executor (sometimes called probate) will cost $5,000 in legal fees simply is letting you know the fee that his or her firm will charge. Maybe it is an appropriate estimate, maybe it is high—you will never know unless you seek out at least two fee estimates for each professional that you need to hire.

The other important advice is to stay on top of the timeline for each of the professionals you are working with on the estate. Unless you are the sole beneficiary of the estate, managing the expectations of the beneficiaries will be one of your most important and time-consuming tasks, so you will want to know who is doing what and when it will be completed.

There are a number of terrific time management and organizational systems available; even if you usually keep everything “in your head,” as the executor of an estate, consider investing in a timeline-focused system that you can refer to when speaking with either the estate’s professional advisors or its beneficiaries.

points to take away

• As an executor, when working with the professionals and advisors to the estate, treat the relationship in a professional, organized way, and both you and the estate will reap the rewards.

• Before appointing a trust company as your agent, meet with the trust officer and learn as much as you can from him or her about what will be involved in this particular estate as well as gaining a sense as to whether you would work well together.

• Be clear with everyone about your expectations in regard to timing and share these timelines with the beneficiaries. Try to stay a step ahead of everyone else in your timeline management so that the advisors are not waiting on you to make crucial decisions and the beneficiaries are not left in the dark as to what is going on in the estate.

• Avoid making the mistake of hiring great professionals and then not taking their advice. They have seen more estates than you have and although you are the executor and the deceased chose you for a reason, if you’ve hired people that you trust, follow their advice most of the time.