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I’m an upper-middle-class ‘loner’ entering the ‘home stretch of my life’ — who will manage my last wishes?

I am entering the home stretch of my life. I am a loner with no close relatives and a few friends, but none really close. I will need to name an executor of my estate and will need a professional.

Can you guide me to any resources or publications that can assist me? As background, I am solidly upper middle class and comfortable; certainly not rich.

Thank you for any guidance or thoughts,

P.F.

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Dear P.F.,

Thanks so much for your question — choosing the right individual to manage your estate is such a crucial task when planning where and with whom to leave your assets, so it’s great you’re thinking about it.

An executor must be someone you trust, and there are a few ways to narrow down who you end up using for this role. You mention you have no close relatives and a few friends, but is there anyone within this group that you would feel comfortable to have managing your plans when you’re gone? If not, you can move on to a professional or institution for the job.

“Especially when there are no close relatives, you have to be careful with whom you chose to play those critical roles,” said Marianela Collado, chief executive officer and senior financial adviser at Tobias Financial.

There are various types of professionals who can serve as an executor of your estate. Banks, trust companies and estate attorneys could take on the job, advisers said. Even financial advisers and Certified Public Accountants could act as executor. “If you can trust the adviser with managing your money, you should also be able to trust them with the responsibility of acting as executor of an estate,” said Michael Simmons, director of financial planning at Transitions Wealth Management. “The same can also be said of other trusted advisers with whom someone may work, such as a banker, CPA or estate planning attorney.”

There are four key qualities to consider when choosing an executor, said Robert Pyle, founder of Diversified Asset Management. That person or entity should be: someone you can trust and know is willing to do the job; who understands your wishes and will see them through; who will be “around to do the job;” and who is in good financial health.

“Your executor is the CEO of your estate,” Pyle said. “This role of executor can mean handling everything from distributing assets to heirs to ensuring any taxes due are paid. In other words, your executor is a crucial player on your estate planning team, so choosing the person should not be taken lightly.”

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Financial advisers may not be able to provide legal advice, but they can walk clients through key concepts and how to navigate certain decisions, said Brett Holmes, a financial adviser at financial firm Berman McAleer. They could also potentially prevent a mistake from occurring, such as choosing the wrong individual to manage your last wishes. The consequences of the wrong person taking the job could be dire. “Some examples include choosing an incompetent executor or choosing someone who is too emotional to be able to handle the estate and lets it drag out for years before acting,” he said.

And the role of an executor, especially when that person is close, can be emotionally overwhelming, said Ben Simiskey, director of wealth management at Stegent Equity Advisors, who is also acting as an executor for two estates — his father’s and mother’s. You said you don’t have any close relatives to choose from, but other readers may want to consider the responsibilities they are leaving upon their loved ones.

“By naming someone you are very close to as executor, you are asking them to do perhaps the most difficult multitasking of their life,” he said. “Instead of being able to focus on mourning and processing and healing, they also must juggle extensive legal and financial commitments and may become the ‘bad guy’ or punching bag for other family members and heirs.”

Simiskey said he’s always included someone close to him as an executor of his will, but this experience has made him shift perspectives, and he now recommends his clients and others consider someone outside of the family circle. “You want someone who will be willing to serve and spend the time necessary to carry out their duties as executor,” he said. “We need to consider the full impact of our passing on those who are closest to us and whether the burden of serving as executor would be detrimental to their emotional or mental well-being.”

But there are other ways, outside of an executor, to get your assets where you want them to be. “The executor controls the administration of one’s probate estate, but many clients prefer to minimize the portion of their estate that goes through the probate process,” said Christopher White, vice president of trusts and financial planning at Peoples Bank. “In this individual’s situation, he may want to have the lion’s share of his estate outside of the probate process, which can significantly reduce (or even essentially eliminate) the importance of an executor as part of one’s estate plan.” The other benefits to avoiding probate: privacy, reduced administrative costs and a faster transfer of assets, White said.

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To do this, name and title beneficiaries to your assets, said Leslie Beck, owner and principal of Compass Wealth Management. Designate beneficiaries on investment accounts, life insurance policies, checking and savings accounts and other assets, which would reduce what of your estate goes through probate, she said. If you’ve already named beneficiaries on anything, now would be a good time to review it so that everything is up-to-date — otherwise, someone you did not intend to get your assets may still get them.

You can also register property to a trust, and add a “transfer on death” or “payable on death” provision, so that these items go to a beneficiary, White said. “Although a client should have a valid will naming an executor (and probably a successor executor if the primary person is unable or unwilling to sere, the importance of this role can be greatly minimized through proper estate planning,” he said. Different assets may have varying terminology — for example, bank accounts use the term “payable on death,” whereas brokerage accounts use “transfer on death,” said Mark Ziety, executive director of WisMed Financial. “Transfer on death deed” would be used for real estate.

Who you plan to give an inheritance to also matters. If you choose to leave money to a charity, for example, you can use a charitable remainder trust, which would provide you with an income stream during your retirement and give the rest to a charity upon death. The charity may also act as a trustee, similar to an executor, in this scenario, Ziety said.

Estate planning must be comprehensive, and a lot of that involves paperwork: wills, beneficiary designations, trusts and documents that dictate how you want your affairs handled if you become incapacitated (such as in the form of a durable power of attorney or health care proxy). Without an estate plan in place, the government and courts decide what happens to your belongings, said Belle Schneider, a financial adviser at VLP Financial Advisors. “Estate planning is really to help the people you care about, not just yourself,” she said.

Have a question about your own retirement savings? Email us at [email protected]


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