Ask Liz Weston

Get smart with your money

Estate planning

Q&A: How to pursue money owed to heirs

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Dear Liz: My stepmother passed away in December 2006, and her executor, who was her financial planner, distributed the estate according to her trust. A while after this, I discovered that she had a life insurance policy that hadn’t been addressed. The executor pursued this and found that $80,000 was due to the three primary heirs. However, he kept saying things were “in process.” At least a couple of years later, he said he had the check but didn’t know how to proceed because the estate was settled and also the insurance company had been taken over by another company. I finally saw the actual check (in April 2016) that he had. He claims he’s pursuing this but keeps going silent on us for extended periods of time. What can we do?

Answer: One possibility is that he showed you a phony check after pocketing the money. The other possibility is that he’s stunningly incompetent. It’s not clear which option is more disturbing.

Any estate planning attorney, or financial planner who has taken an estate-planning class, could tell him that life insurance proceeds typically pass outside the probate process, which means the estate wouldn’t necessarily have to be reopened. (Even if the estate did need to be reopened, every state has procedures for doing so.)

“I would think that the executor could merely endorse the check over to the three heirs,” Los Angeles estate planning attorney Burton Mitchell said. “Or he could open an estate bank account, deposit the check, write a check to the beneficiaries and then close the account.”

At this point, of course, the check may too stale to cash, but that’s not an insurmountable problem either. The current insurer would be able to reissue the check if the assets haven’t been turned over to the state or “escheated.” If the money was escheated, the executor can file a claim with the state to get it back.

Blaming his inaction on the insurance company takeover is absurd. All he needed to do was to call the new insurer, which has all the records of the old one.

The heirs have a number of options. They can petition the probate court to order the executor to distribute the life insurance proceeds. They can hire an attorney to help them do so or to contact the executor to demand he act, or both. They also can file a complaint with the company that employs him (assuming he’s not self-employed), with the regulator that oversees him and with the entity that issued his credentials, assuming he has any.

What they shouldn’t do is wait any longer. The executor’s inaction has already cost them years of lost potential investment returns.

Q&A: Social Security survivor’s benefit

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Dear Liz: My husband will retire next spring but has wisely decided to not collect Social Security until he is 70. I have been retired for several years and have been collecting my Social Security benefits, which are significantly less than what his will be because he was the higher wage earner. Should he die before age 70, would I still be able to claim, as his surviving spouse, his larger benefit, even though he would not have started collecting it yet? The information I read only talks in terms of the higher wage earner already collecting Social Security benefits before his or her demise.

Answer: Even if your husband dies before starting Social Security, you can collect the larger benefit he’s earned, including any delayed retirement credits from putting off his application.

Those delayed retirement credits increase his benefit, and yours as the surviving spouse, by 8% each year between his full retirement age of 66 and age 70. That can make a huge difference in the quality of life of the surviving spouse, who has to get by on a single check after the other partner dies.

Q&A: Changing the executor of a will

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Dear Liz: You recently wrote about a stepmom who dismissed her deceased husband’s son as an executor. Sometimes a will provides that someone such as the surviving spouse can alter the executor pattern. This is done to keep the children in line.

Answer: That’s certainly a possibility. But if that’s the case, the stepmother could simply show at least that portion of the will to the other children to allay their fears. The fact that she hasn’t shared the will, which should be a public record at some point, is reason for concern.

Q&A: Stepmom alters terms of dad’s will

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Dear Liz: My father recently passed away and his will named my stepmom’s daughter as executor along with my brother. My stepmother just informed my brother that she removed him from that role, telling him it’s easier to just leave her daughter as the executor as she lives much closer. Is this legal to remove him after my father’s death? The rest of his five children have not been able to see that will.

Answer: Your stepmother doesn’t get to alter the terms of your dad’s will after his death. As mentioned in a previous column, a probate case should be opened in the county where your dad died and the will is among the paperwork that should be included in that case. It would become public record at that point so you would all be able to read it.

Your stepmother’s unwillingness to play by the rules indicates that you may need some legal help to make sure your dad’s wishes are carried out. The five of you should consult a probate attorney.

Q&A: Naming co-executers

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Dear Liz: Is it legal for my parents to appoint me co-executer of their estate, along with my sister, without asking me first if I was okay with this, and keeping me as co-executer after I told them I do not want the responsibility? My sister is more intelligent and competent than I am and would do a better job of this by herself.

Answer: Your parents can name pretty much anyone they want, but that doesn’t mean you’re legally obligated to accept the role when they die. You’ll have the right to decline.

If your parents don’t name an alternate, your sister may be allowed to serve on her own or another executor may be appointed by the court, depending on how the will is written.

Obviously, your parents are being short-sighted by trying to force you to serve when you’ve made your feelings clear. Being an executor can be a time-consuming, complex and often thankless task that shouldn’t be foisted on anyone who’s not willing. If they don’t trust your sister to function alone, they should name someone else—and get that person’s permission before they do. It’s smart to name an alternate or two besides, in case their choices also decide they don’t want to serve.

Q&A: Amending a living trust

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Dear Liz: My husband and I had a lawyer draw up a revocable living trust and a pour-over will six years ago. We need to amend a couple of areas, and I found it could be done with a form from a self-help legal site. Also, we need to add our home into the trust. My husband doesn’t want to use a lawyer. Can we legally do the amendment and addition of the home without a lawyer?

Answer: Sure. But your heirs may pay for any mistakes you make.

The big red flag is that you haven’t transferred your home to the living trust, even though you’ve had six years to do so. If it’s not in the trust, it will be subject to probate, the court process that the trust is meant to avoid. You need to be extremely diligent if you’re going to try to create a do-it-yourself estate plan, and you’ve already proved that you aren’t. All you’ve done is undermine the estate plan you paid for years ago.

Amending the trust, and having a lawyer help you transfer your home into it, probably will cost a fraction of what you paid originally. It also would give your attorney an opportunity a chance to review the documents in case other changes need to be addressed. A relatively small investment could pay off in peace of mind that the job has finally been done right.