I’m in the process of doing my estate plan and I would like to get a second opinion. Here is my situation. I am in my mid 50s and I am single. I have never married nor have I had kids. I have a significant other whom I live with. We have no plans to marry but we are committed to each other. It is her house and we split the expenses. The only family I have is a brother and a sister and some nieces and nephews. Basically, upon my death I want to leave everything to my significant other. My first question is in my situation who do you think should be the executor of my estate? Is it appropriate to have a non-family member? My second question is I want to leave something to charity. Is it best to give a percentage of the estate or a set dollar amount?
A Dear L.G.:
First, there is no requirement that you have to have a family member be your personal representative. A personal representative is the individual in charge of handling your estate. In the past, the person in charge of an estate was known as the executor, but today it is officially known as the personal representative. I think in most situations a family member is the appropriate choice; however, in your situation, I see no problem whatsoever in naming your significant other. In fact, I think it will make it easier in handling your estate. After all, other than the charity she is your sole beneficiary. Therefore, it is natural that she should be in charge of the estate.
With regard to the personal representative and the beneficiary, I would recommend that you also name alternatives. After all, if your significant other predeceases you or is unable to be your personal representative, you should have alternatives in place.
In most situations, I am not a fan of naming a bank or lawyer as the personal representative of an estate. I believe the best personal representative is the person you trust the most to follow your wishes. That person may not have the legal expertise to handle an estate; however, they can always hire an attorney. An attorney that they can fire if they are not pleased with the services provided. I find that in many situations, if you have a professional personal representative, the fees go through the roof. In addition, there is no problem naming co-personal representatives in certain situations.
With regard to giving to charity, I do like the idea of giving a set dollar amount. My reasoning is that it would make administering the estate as easy as possible. One of the problems that you run into with estates is how you value things. Stocks, bonds and other financial assets are relatively easy to value because there is a ready market for them. On the other hand, collectibles, artwork and other such items can be difficult and expensive to value. Therefore, particularly in the situation at hand where other than the charity there is one beneficiary, I think it is much easier to leave the charity a set dollar amount. Of course, as your financial situation changes you can always make a short amendment to increase or decrease the amount you wish to leave to charity.
One last note about leaving money to a charity, once again, it pays to name an alternative. Just like businesses come and go, the same can be said about charities. Therefore, you may want to name an alternative charity, just in case.
Rick is a fee-only financial advisor. His website is www.bloomassetmanagement.com. If you would like Rick to respond to your questions, please email Rick at firstname.lastname@example.org