By Claudia Buck, McClatchy Newspapers –
From unpaid debts to power of attorney forms, this week’s questions on financial affairs run the gamut. Here with the answers is Michelle Goff, a Sacramento, Calif., estate planning attorney with the Goff, Conway-Spatola law firm.
QUESTION: Who is responsible for paying a Visa bill when the cardholder passes away? This is a single account, with no one else named as a cardholder. There is $10,000 due. Thank you.
ANSWER: The answer depends on whether there are assets in the estate. If there are assets, they should be used to pay the bill, and whatever is left over can be distributed to beneficiaries. But if there are insufficient assets to pay the bill, then it is only repaid up to the amount of available funds.
Q: As executor, do you automatically get 10 percent for doing executive planning at the end of someone’s life?
A: No. And just to clarify: If a person has a will, he or she usually names an executor to handle their affairs after death. If they have a living trust, they name a trustee to handle their affairs.
For an executor, if the estate is subject to probate, the court will approve fees of: 4 percent of the first $100,000 of the estate’s value, 3 percent of the next $100,000, 2 percent of the next $800,000, and so forth. This includes property, as well as bank accounts, stocks, etc.
If the estate is not subject to probate, then the executor did not have much, if any, work to do and should not take much compensation.
Generally, we tell clients that 1 percent of the estate’s value should be the maximum fee taken, but recently I became aware of cases where the Sacramento Superior Court is questioning this value. So, the safest approach is to keep a list of what you did and how much time it took, then multiply that by an hourly rate.
Hmm its to bad some executors I knew didn’t take note of this. What a DIRTY shame!