by jenrchapmanNavigating Co-Fiduciaries in Estate Planning: Common Issues and Solutions
When setting up your estate plan, choosing the right individuals to serve as your fiduciaries is one of the most critical decisions you’ll make. Fiduciaries are responsible for carrying out your wishes, managing your assets, and ensuring your loved ones are cared for according to your instructions. These roles can include executors for a will, trustees for a trust, or agents under a power of attorney or healthcare directive. Sometimes, you might consider appointing two or more individuals to share these responsibilities. This can be a wise choice, but it also comes with its own set of challenges. Let’s explore the common issues raised by having co-fiduciaries and some recommendations on how to resolve them.
What Are Co-Fiduciaries?
Co-fiduciaries are two or more individuals appointed to serve in the same fiduciary role. For example:
- Co-Executors: Two or more people managing the execution of a will.
- Co-Trustees: Multiple individuals overseeing a trust.
- Co-Agents: More than one person handling power of attorney duties or healthcare decisions.
Having co-fiduciaries can provide checks and balances, distribute the workload, and combine different skill sets. However, it can also lead to conflicts and complications.
Common Issues with Co-Fiduciaries
Decision-Making Conflicts
- Problem: Co-fiduciaries may disagree on decisions regarding asset management, healthcare choices, or distribution of assets.
- Solution: Clearly define how decisions should be made. This can be done by specifying in your documents whether decisions need to be unanimous or if they can be made by majority vote.
Geographical Challenges
- Problem: If co-fiduciaries live in different locations, coordinating meetings and decisions can be difficult.
- Solution: Use technology such as video conferencing, and ensure all parties have access to the same documents and information. Specify in your estate plan how to handle logistical challenges.
Unequal Participation
- Problem: One fiduciary may take on more responsibility than the other(s), leading to resentment or burnout.
- Solution: Clearly outline each fiduciary’s duties and encourage regular communication. Consider appointing a primary fiduciary who has the final say, with the co-fiduciary(s) acting as backups or advisors.
Potential for Conflicts of Interest
- Problem: Co-fiduciaries might have personal interests that conflict with their duties.
- Solution: Choose individuals who are impartial and trustworthy. Include conflict-of-interest clauses in your documents to guide fiduciaries on how to handle potential issues.
Increased Complexity and Costs
- Problem: Managing multiple fiduciaries can complicate the administration process and increase legal costs.
- Solution: Weigh the benefits against the potential costs and complexity. Simplify the process where possible by limiting the number of fiduciaries.
Recommendations for Appointing Co-Fiduciaries
Assess Compatibility
- Choose individuals who have a good working relationship and complementary skills. Consider their ability to communicate and collaborate effectively.
Clearly Define Roles
- Specify the responsibilities of each fiduciary in your estate planning documents. This helps prevent misunderstandings and ensures that all duties are covered.
Provide Clear Instructions
- Leave detailed instructions on how you want your affairs managed. This can include guidelines on how decisions should be made, how disputes should be resolved, and what steps to take in various scenarios.
Consider an Odd Number of Fiduciaries
- If possible, appoint an odd number of fiduciaries to avoid tie votes. This can be particularly useful for decision-making purposes.
Regular Reviews
- Regularly review your estate plan and update it as needed. Changes in relationships, health, or other circumstances can impact your choice of fiduciaries.
Professional Assistance
- Consider appointing a professional fiduciary, such as a trust company or an attorney, to serve alongside or instead of family members. Professionals bring expertise and impartiality to the role.
Choosing the right fiduciaries is crucial to ensuring your estate plan is executed smoothly and according to your wishes. While co-fiduciaries can provide valuable support and oversight, they also bring potential challenges that need careful consideration. By understanding these common issues and following the recommended solutions, you can make informed decisions that will benefit you and your loved ones.
Need help with your estate planning? Contact Edwards Law today to schedule a consultation and ensure your estate plan is comprehensive and effective.
by jenrchapmanHow the Corporate Transparency Act and the Beneficial Ownership Information Rule Could Affect You
Are you thinking of forming a business entity or already own one? If so, it’s essential to be aware of the Corporate Transparency Act (CTA) and the Beneficial Ownership Information (BOI) Rule. These new regulations aim to enhance transparency and prevent illicit activities like money laundering and fraud. Here’s what you need to know about the Act and the Rule, who they apply to, and important deadlines you shouldn’t miss.
What is the Corporate Transparency Act?
The Corporate Transparency Act is a federal law enacted to combat illegal activities such as money laundering, terrorism financing, and other financial crimes. The Act requires certain business entities to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The goal is to increase transparency and make it harder for individuals to hide their ownership of companies for illicit purposes.
What is the Beneficial Ownership Information Rule?
The Beneficial Ownership Information Rule, issued under the CTA, specifies the reporting requirements for beneficial ownership. A beneficial owner is defined as an individual who, directly or indirectly, owns or controls at least 25% of a company or has substantial control over it. The Rule outlines who must report this information, what information must be reported, and how to submit it to FinCEN.
Who Must Comply?
The CTA and the BOI Rule apply to a broad range of entities, including:
- Corporations
- Limited Liability Companies (LLCs)
- Other similar entities created by filing a document with a Secretary of State or similar office
However, there are exemptions. Entities such as publicly traded companies, financial institutions, and entities already heavily regulated under federal law, like insurance companies and registered investment companies, are typically exempt from these requirements.
Key Reporting Requirements
If your business is subject to the CTA, you must report the following information about each beneficial owner:
- Full legal name
- Date of birth
- Current residential or business street address
- Unique identifying number from an acceptable identification document (such as a passport or driver’s license)
This information must be reported to FinCEN, which will store it securely and make it available only to authorized government authorities and financial institutions for specified purposes.
Filing Deadlines
The deadlines for filing beneficial ownership information vary based on when the entity was created:
- Existing Entities: If your business was formed or registered before January 1, 2022, you must file the required information by January 1, 2024.
- New Entities: If your business is formed or registered after January 1, 2022, you must file the required information within 14 days of formation or registration.
Failure to comply with these reporting requirements can result in significant penalties, including fines and imprisonment.
How to File
Filing your beneficial ownership information with FinCEN involves:
- Gathering Information: Collect the required information for each beneficial owner of your entity.
- Submitting Information: Use FinCEN’s online reporting system to submit your information securely.
- Maintaining Records: Keep records of your submission and any updates. If there are changes in beneficial ownership, you must report these changes within 30 days.
Why It Matters
Understanding and complying with the CTA and the BOI Rule is crucial for business owners. These regulations promote a fair and transparent business environment, helping to prevent financial crimes and protect the integrity of the financial system.
Navigating new regulations like the Corporate Transparency Act and the Beneficial Ownership Information Rule can be daunting, but it’s essential for protecting your business and staying compliant with the law. By understanding who these rules apply to, what’s required, and the filing deadlines, you can ensure your business is on the right track.
Need help with your business compliance? Contact Edwards Law today to ensure your business meets all legal requirements and to get personalized advice tailored to your needs.
by jenrchapmanUnderstanding and Preventing Seller Impersonation Fraud in Real Estate
Seller impersonation fraud is a growing concern in real estate, especially for property owners and real estate brokers. This type of fraud involves criminals posing as property owners to sell real estate they do not own, often leaving the true owner and the unwitting buyer to deal with the fallout. Here’s a guide on how to identify and prevent seller impersonation fraud to protect your assets and your transactions.
What is Seller Impersonation Fraud?
Seller impersonation fraud typically occurs when fraudsters identify properties that are free of mortgages or other liens—such as vacant land, rental properties, or vacation homes. They then pose as the owners to sell these properties quickly, often at below-market prices. The fraud is usually conducted remotely, with all communications happening via email or text, and fake documents are used to complete the transaction.
Red Flags to Watch Out For
Both property owners and real estate brokers should be aware of the following red flags that may indicate seller impersonation fraud:
- Remote Seller: The seller resides out of state or out of the country, only communicates via email or text, and refuses to meet in person or via video call.
- Urgent Sale: The seller insists on a quick sale, often pricing the property below market value.
- Digital Presence: The seller has a limited or exclusively digital presence, such as using a P.O. box for an address.
- Unknown Notary: The notary chosen by the seller is unknown or not located in the same state as the property or seller.
- Unusual Payment Requests: The seller demands that proceeds be wired to an account in a different location than the property, or provides wiring instructions that seem suspicious.
Steps to Prevent Seller Impersonation Fraud
Verify Seller Identity:
- Use independently discovered phone numbers to contact the seller directly.
- Ask for government-issued identification and review it for signs of tampering.
- Use identity verification platforms like CertifID to validate the seller’s credentials.
- Compare the seller’s signature with previously recorded documents.
- If dealing with an entity, verify the details of the officers or registered agents against official records.
Verify or Select Notary:
- Confirm the notary’s credentials with the commissioning authority.
- Require notarization by a vetted and approved notary, possibly using Remote Online Notarization (RON) if authorized by the state.
- Avoid using a notary chosen by the seller without proper vetting.
Control Disbursement:
- Refuse to send funds to anyone other than the name on the title.
- Require that seller proceeds be paid by check rather than wire transfer.
- Confirm wire instructions match the account details on the seller’s disbursement authorization form.
Investigate Property:
- Search the property address online for any existing listings or advertisements.
- Talk to neighbors, relatives, or tenants to verify ownership.
- Ask the seller property-specific questions that only the true owner would know.
By being vigilant and following these best practices, property owners and real estate brokers can significantly reduce the risk of falling victim to seller impersonation fraud. Always verify the identity of all parties involved, scrutinize documentation thoroughly, and trust your instincts if something feels off.
Contact Edwards Law today to learn more about how we can help protect your real estate transactions and ensure a secure and seamless process.