Is it Time to Review Your Estate Administrator?

Some New York residents who have the foresight to prepare an estate planning document such as a trust, will or power of attorney never look at it again. However, as a person's life changes, so too should his or her estate planning documents. One of the key considerations when making those revisions is who to designate as the administrator.

People who have not reviewed their estate planning documents recently may be surprised who they appointed to administer their estate or to make health care decisions for them. For example, if the person made the document when they had young children, the appointed administrator may be dead or have moved out of the area. Those children may now be adults and the logical choice to administer their parent's estate.

Another issue arises when a person appoints an in-law. It may have made sense at the time, but times change. People get divorced and have disagreements. That in-law may now be the last person that the drafter wants to administer their estate.

If a drafter decides to appoint a child, they would be wise to take care. Sibling rivalries and other family dynamics need to be considered in advance. After all, one of the points behind estate planning is to minimize the grief families go through following the death of a loved one, not to exacerbate it.

To minimize the potential emotional aftermath, parents need to consider whether they want to appoint all of their children, just one or none as administrators. Appointing all of the children has the benefit of treating them all equally, but may cause strife if they cannot agree on how to administer the estate.

In contrast, the parent may tap a single child as the administrator because of special skills or other reasons. In that case, administration of the estate may go smoother, but frustrate the other children. This is possible for two reasons. One, the administrator can unilaterally make decisions about the estate. Second, an administrator gets paid a reasonable commission established by law, which would result in the administrator getting a larger share of the estate than other siblings.

The final option is to appoint a neutral third party as the administrator. This approach bypasses the hard feelings that could arise from favoritism while saving the children from needing to make difficult decisions while they are grieving.

Source: Winston-Salem Journal, " Choosing administrators key when planning your estate," Mike Wells, Aug. 5, 2012