Smart Money: Executor's job, fees depend on complexity of will

Bruce Williams is a national radio talk show host and syndicated columnist.

Dear Bruce: What are the duties of an executor probating a will? In an estate under $150,000 what will be the normal or usual attorney's fees? We are told that it will take four months or so to allow time for any debtors to come forward. Is this typical? F.W., via e-mail

Dear F.W.: Four months is the normal time to get a will probated. The duties of the executor are relatively simple: It is his or her job to carry out the wishes of the deceased according to the law and take into account the assets.

For example, you could say in your will that you leave a million dollars to each of your children, but if you don't have a million for each of them, then the executor can hardly conform to those wishes. Obligations that have been legally incurred by the decedent are paid.

Then it's required by the probate court, in many cases, to advertise or otherwise notify potential creditors that an estate is being settled.

Regarding the attorney: His fees will depend largely on what you expect of him. If he is only to handle straight legal matters, and you will do the running around, the fee will be rather small. But if you want him to do everything, he could charge an estate such as you have described as much as $4,000, possibly more.

The one thing to be avoided is paying on a percentage basis. Instead, when you discuss it with the attorney, you should find out what his hourly rate is, how many hours he expects to spend and make your decision based upon this information.

Dear Bruce: Will a life estate protect my property from being taken if I'm put into a nursing home? Do I need a lawyer? L.C., via e-mail

Dear L.C.: You'll definitely need an attorney to make the appropriate arrangements. Essentially, in a life-estate procedure, property is transferred to someone else (either by sale or gift) who, in turn, grants you unrestricted use of the property until you die.

Who pays the taxes, insurance, etc., should be spelled out in this life estate arrangement. However, once you are in the nursing home, and unless it's a temporary stay, the life estate won't matter very much since you won't be living in the home anymore.

But the procedure will prevent the person who purchased (or had been given) the property from being able to sell it during your lifetime, unless there are medical exclusions written into the arrangement.

Dear Bruce: My father had everything in order when died in 1985. He had around $90,000 plus a house. His will specified my brother and me as co-executors. It was not difficult to probate, yet the attorney charged us $5,000.

My brother has seven children, and a couple of them were in college at the time. Personally, I thought the fee was a bit much. My husband and I have no children. We have a revocable living trust, and it only cost us $400. I hope we did the right thing. D.H., via e-mail

Dear D.H.: I agree. Unless that house was worth a lot of money, $5,000 was a bit pricey, assuming there were no major glitches, such as liens to be satisfied. He may have charged you a percentage, and I'm not happy with that. You and your brother should have asked about fees prior to engaging the attorney. As for your living trust, I don't know where you got one done for so little.

However, a living trust does not negate the need for a will. The will may only need be filed and not probated, but you can't do it retrospectively after you die. I would want a competent attorney to look at your living trust. While a living trust does assure some privacy and has a value on decent-sized estates, they are not cost-effective unless the estate is very large. If, on the other hand, you actually got the job done properly for $400, you indeed have found a bargain.

Dear Bruce: My 90-year-old stepmother has always taken care of the finances in her marriage. She seems to be OK, except for an occasional memory lapse. She's started sending checks to charities, political groups, lotteries and, twice, she's given out her bank account number to unknown persons with bad results.

My brother, whose name is on her account, has tried to keep a handle on this, but she has become devious. We don't want to take all her independence away and have him co-sign everything. Is there another solution? My dad has been gone for many years and she lives alone. S.B., Garden Valley, Calif.

Dear S.B.: The time comes for many people when someone has to take over a portion of their lives. It's clear that this time has come for your stepmother. The fact that she is doing many irresponsible things with her money makes it clear that some help is needed, probably from an accountant.

It's not a question of taking away her independence, it's the reality that she is not able to do this on her own anymore. It may be that you will have to go to the courts if you do not already have a power of attorney. It might be necessary to get a statement from her physician stating that she is incapable of handling her own affairs. It is not charitable to ignore her irresponsible behavior.

Dear Bruce: I recently had a will drawn. With regard to my home, my attorney advised doing a quitclaim deed to my daughter.

My attorney also said that, because my home was being left to my daughter, there will be no tax if the property goes up in value. Please tell me what I should do to prevent giving her a tax problem upon my death. J.R., via e-mail

Dear J.R.: Perhaps I misunderstand, but I believe what your attorney is telling you is incorrect. When you quitclaim the home to your daughter, you in effect gave her the house.

If this is recorded, the home now belongs to her. You're not leaving it in your will, because you no longer own it. To accomplish this without a taxable event, it would be necessary to claim against your lifetime exemption.

Easily done, but if not done correctly, you could incur a gift tax. I don't know what your attorney was thinking of unless you misunderstood. Go back for a clarification.