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Legal Matters

Q&A: What does a successor trustee do?

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Dear Liz: My older brother and his wife recently told me they made me the executor of their living trust. I have no experience with this. They live in Maryland and I’m in California. Can you please let me know what I can do now to make the process simpler when the time comes?

Answer: Your brother and his wife should have asked you if you would be willing to take this role, which is called “successor trustee” rather than executor when a living trust is involved. Just because they put your name in their document doesn’t mean you are required to serve. Their trust should name other people who can serve. If not, the court can step in to name someone.

Being either a successor trustee or an executor is often a big commitment that may last for years. You’ll be required to manage the trust assets, pay final bills and creditors and communicate with beneficiaries. Successor trustees may have added responsibilities, since they typically have to step in if the trust creators become incapacitated.

If you’re willing, though, agreeing to this role can be a way to honor the people you love by making sure their wishes are followed. Being asked to be a successor trustee or executor is an honor, since the trust creators believe you are honest, trustworthy and diligent enough to handle this enormous responsibility.

You’re allowed to, and probably should, hire legal and tax help using estate funds. The estate should also pay for your travel to fulfill your duties.

You can do some research before deciding. Ask for a copy of the trust so you can start to familiarize yourself with the trust assets and what will be involved in settling the estate.

Q&A: Are automatic renewals legal?

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Dear Liz: I paid for several magazine subscriptions online. At the end of the transaction, I received notice that I had also been signed up for automatic renewal. While I will be notified prior to the end of the current subscription period and given the opportunity to cancel the subscription, this seems like an underhanded way of subscriptions being renewed.

Answer: Many companies in recent years have adopted automatic renewal as a way to take advantage of customers’ inertia. Some companies have even made it difficult to cancel subscriptions as a way of further boosting profits.

Research led by the Stanford Graduate School of Business has found that this may be a short-sighted strategy. The researchers found that subscriptions that automatically cancel attract more customers than those that auto-renew. Many potential customers understand inertia as well and are more willing to try a subscription if they don’t feel locked in.

New York and California now have laws requiring businesses to get affirmative consumer consent before renewing subscriptions. Businesses must also provide an easy cancellation method.

If you’re not in one of those states, consider researching cancellation methods before you sign up for any new subscription. Avoid any company that makes it much harder to cancel than to subscribe. If you can sign up online, for example, you should be able to cancel online and not have to call in during limited business hours or visit a physical location. If you do subscribe, add a note to your calendar when the subscription or trial period ends, so you can evaluate whether you’re getting enough value to continue subscribing.

Q&A: Coping when dementia causes reckless spending

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Dear Liz: Our son-in-law has been diagnosed with early Alzheimer’s disease and sometimes makes reckless purchases. Our daughter has appealed to their bank to close their account or cancel his credit and debit cards. They refuse because the accounts are in his name. What can she do?

Answer: What your daughter can do may depend on how advanced his Alzheimer’s is, says Carolyn McClanahan, a physician and fee-only financial planner in Jacksonville, Fla.

If your son-in-law has enough capacity to understand the situation, McClanahan suggests the couple go to his doctor and have the doctor explain why it is important for the wife to manage the finances going forward. If your son-in-law agrees, a power of attorney document can be created giving your daughter the legal power to manage their finances.

They should visit an elder law attorney to help her with the situation, McClanahan says. If the bank balks at accepting the power of attorney, as banks sometimes do, she can have the attorney send it a strongly-worded letter to force them to honor the document, McClanahan says. Having this kind of backup is an important reason why people should use an attorney to draft these documents, rather than using a form or software, she notes.

Even if your son-in-law lacks capacity, as a joint account holder your daughter should be able to withdraw all the money in the bank account to protect it. She also can cut up the credit and debit cards.

If all else fails, she can go to court to be appointed his conservator, but that option is an expensive and intrusive one, McClanahan warns. Involving an elder law attorney as early as possible may help her avoid court intervention.

It bears repeating that every adult, no matter their age, should have powers of attorney that appoint someone else to make financial and health care decisions for them in case of incapacity. Trying to get these documents in place after a tragedy strikes can be difficult, if not impossible. Get them drafted now, while there is still time to avoid unnecessary hassle, stress and expense.

Q&A: Changing your married name? Expect a mound of paperwork

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Dear Liz: I use my first name, maiden name and married last name as my legal name. Just before we got married 46 years ago, I told my husband-to-be that I didn’t want to take his last name. I lost that argument. If he passes before me, I want to drop his last name. I know I would need to change my Social Security card but would I need to change everything else like my house deed?

Answer: Yes. Whenever you change your name, you can expect a mound of paperwork. You’ll start by changing the name on your identification cards, including Social Security, your driver’s license and your passport. Be sure to notify Social Security before filing your tax return, since the IRS uses Social Security records to verify your identity.

After your IDs are updated, you’ll change the name on other paperwork, such as voter registrations, property deeds, the U.S. Postal Service, banks, insurance companies, utilities and so on.

When you married, your marriage certificate and your previous identification cards were likely all you needed to update IDs. Had you divorced, you could have included the name change as part of the paperwork to help change your identification cards. In other situations, you typically need to get a court order to legally change your name. Filing fees depend on where you live. In California, for example, you can expect to pay between $435 to $450 and the process typically takes two or three months.

Q&A: Can stepmother prevent siblings from sharing their inheritance?

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Dear Liz: My father passed away in May of last year. In his trust, he intentionally left out one of my four children. The remaining three, who were to inherit a substantial sum, decided to pool their money and share it with their excluded sibling.

My stepmother, who is in charge of his trust, has told other recipients of his largess that she will not be distributing any money to my children. She claims that their decision to give money to their sibling is a violation of my father’s wishes. Can she do this legally and would there be any consequences to her for doing this?

Answer: That depends on the trust’s language. Your father may have granted your stepmother the power to make discretionary distributions, or may have explicitly stated that distributions could be withheld from your children if they planned to share with the disinherited grandchild.

That’s not the norm, however. If the trust requires her to distribute the money and she fails to do so, your children could sue her for breaching her fiduciary duties and ask a court to replace her as trustee, says Jennifer Sawday, an estate planning attorney in Long Beach. If your stepmother’s attorney hasn’t explained this to her already, your kids may need to hire one who will.

The unanswered question: Why did your kids make their plan known, rather than simply waiting close-mouthed until the money was distributed? Perhaps they wanted to make a show of solidarity with their sibling, but the smarter course would have been to keep their intentions under wraps until the money landed in their accounts and was theirs to spend however they saw fit.

Q&A: Hard copies, thumb drives and the cloud: How to handle vital records when it’s time to flee

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Dear Liz: We are assembling our important document to-go box with the typical things advised should we need to evacuate, such as birth and marriage certificates, passports, insurance documents, mortgage statements, etc. Many of the documents can be accessed online, so I wondered about pay-off statements from old loans and mortgages. Is it important to take copies of those? Also, what about grant deeds from previous properties that we no longer own?

Answer: In a disaster, you’ll need information to help you establish your identity and document what you currently own. Focus on safeguarding the most important paperwork and figure you can recreate the rest if necessary.

Start with documents that would be time-consuming or a hassle to replace, such as passports, birth and marriage certificates, immigration records, military records, vehicle titles, home inventories, appraisals, home plans or blueprints, recent tax returns and wills or other estate planning documents. The originals should be stored in a water- and fireproof place, such as a home safe or other secure location.

Consider storing copies of these documents, along with photos of your driver’s license and vehicle registration, on an encrypted thumb drive in your go bag or in a secure cloud-based storage service (Everplans is one option.) You could put physical copies in your evacuation bag, but much of the information could be helpful to an identity thief if stolen so you’ll have to weigh convenience against security.

Insurance policies are usually accessible online, but you may want to include your insurance companies’ contact information and policy numbers.

Also consider digitizing any family photos that aren’t already stored in the cloud. You may not have time to grab albums, and disaster victims often lament not having copied irreplaceable photos.