ACCREDITED OVER NIGHT

From Executor to Fledgling Investor

We are entering the greatest wealth transfer of all time. This site aims to start an important dialogue: how can young people manage their new wealth and make impactful investments moving forward? Let's appreciate the legacy our loved ones have passed on to us and work towards changing the status quo.

 
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MOTIVATION BEHIND THIS BLOG

As baby boomers start to pass away, the wealth accumulation for my generation will be enormous. As SheEO™ points out "we are on the brink of the largest intergenerational wealth transfer in history. In the United States alone, $30 trillion will pass from baby boomers to their heirs – 75% of whom are women – over the next 30 to 40 years."


I am part of this future wave. I want to create space for young people to start discussing wealth transfer with their loved ones and to begin envisioning the influence they can have on the world moving forward. 

Focus Areas​

  1. Discuss the importance of speaking to our loved ones about estate planning 

  2. Tell my story as the executor of my father's estate and to offer guidance for others going through this process

  3. Address the conversation of wealth transfer so that young people can better manage their new wealth and make impactful investments moving forward

 
 
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  • Chelsea Burns

Selecting Executors and Naming Beneficiaries

Executor and Beneficiary are not the same. I like to think of the executor as the operator responsible for closing the estate. This person can also be the beneficiary, but it doesn’t have to be. Depending on the complexity of the estate, this appointment could require very little work or an overwhelming amount of work. Therefore, it is my opinion that you should choose your executor wisely. It is also important that your executor is aware of the responsibility behind this job.


A beneficiary refers to the person receiving the assets from your estate. If the beneficiary is not also the executor, then there is very little work required on their behalf in the administrative estate closing process. As a beneficiary, your responsibility starts when the assets are under your control.


Executor’s Role in Closing the Estate


There are estates that can afford to hire professionals to handle closing the estate 100% and there are estates that cannot. The more complex one’s estate is, the more money one should set aside for accountants and lawyers. This is a judgement call and requires true understanding of your assets. In the first instance, the executor has the fortune to hire professionals to take care of the estate closing. In the second instance, there are two options in my opinion:


1. You appoint someone that you trust but who will not be a beneficiary. You will be very grateful for them for doing a good portion of the leg work in exchange for a small % of the estate.

2. The executor and beneficiary are the same person (though there could be many other beneficiaries). The more money this executor spends closing the estate, the less inheritance they will have. Therefore, the executor may choose to be as frugal as possible and do as much of the leg work themselves.


Estates That Can


Honestly, if you can afford to pay accountants and lawyers to handle everything, then please do this for your loved ones. This option will require forward thinking and planning on your part before you pass away. It will also require a significant amount of capital that should be as liquid as possible. I can’t guess the number in terms of net worth to be able to afford this option. I think that is very subjective and will depend on the circumstances. However, based on my knowledge on how much lawyers and accountants charge by the hour, it will not be cheap.


The Leaner Estate


I would guess a majority of estates do not have enough money to pay professionals to close the entire estate. More likely it will be a combination of the executor putting time into managing its closing and paying accountants and lawyers when needed most. In my circumstance, hiring people to close 100% of the estate was not feasible. I was very fortunate to be able to pay an accountant to take care of my father’s personal, business, and estate taxes and a lawyer to go over everything in my father’s trust and will. Like I mentioned above, paying these fees requires access to quite a bit of capital. My accounting bill the first year alone was $30,000. Thankfully, my father held a CD in a local bank under his trust’s name. Once I had access to his accounts, I was able to liquidate it to pay back funeral expenses, put it towards lawyer and accountant fees, and pay the company’s employees.


While I hired accountants and lawyers to prepare my father’s taxes and review all appropriate legal documents with me, I handled 100% of the paperwork for the Commissioner of Accounts. I spent a year and a half on the phone with credit card companies, banks, and state and local business administrators. I kept meticulous book keeping across the different accounts and tracked every dollar that came in and went out of the estate from the day of death until the estate was closed a year and a half later. The day of the estate’s closure I printed out the excel sheet along with hundreds of pages of supplemental documents and over nighted them to the Commissioner’s office. My accountant mentioned to me once that he had just finished the book keeping for the Commissioner’s portion of an estate closing process and that the excel sheet was approximately 2000 lines long. I cannot imagine how much those 2000 lines cost that estate, but I can guarantee that it was not free.


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