The Quick Answer (TL;DR)

• The Problem: Setting up a trust is a great first step, but naming the wrong person to administer it can tear your family apart. Just look at the $95 million estate battle of rock legend Tom Petty.
• The Reality: Serving as an Executor or Trustee is not an “honor” to bestow on your favorite child; it is a demanding legal and financial job.
• The Solution: Before naming an administrator, you must evaluate whether they have the time, financial acumen, and emotional distance to manage asset liquidation, tax returns, and complex family dynamics.

 

When rock legend Tom Petty passed away at 66, he left behind a massive musical legacy and an estate estimated at $95 million. He also left behind a textbook example of why choosing the right estate administrator is the most critical decision in your estate plan.

Petty had the foresight to create a Living Trust—a highly recommended tool for avoiding probate and keeping estate matters private. However, he appointed his second wife, Dana, as the sole Trustee. Almost immediately following his death, deep, bitter conflicts erupted between Dana and Petty’s two daughters from a previous marriage (who were also named beneficiaries). The family dispute ultimately spiraled into multiple public court proceedings, draining the estate’s resources and destroying family relationships.

The Petty family’s “free fall“ into legal chaos highlights a crucial lesson for families right here in Utah: having a trust isn’t enough. You have to put the right person in the driver’s seat.

It’s a Job, Not an Honorary Title

One of the most common mistakes people make is treating the appointment of a Trustee or Executor like a gold star of affection. Parents often name their oldest child simply because it feels like the “fair“ or “traditional“ thing to do.

However, administering a trust or estate at death or disability is an incredibly demanding job. The person you name will be legally responsible for navigating the sale or liquidation of your assets, filing complex income and estate tax returns, and making detailed financial reports to the beneficiaries.

If they mishandle these duties, they can be held personally liable. Before you name someone to this role, you need to ask some hard questions.

The Trustee Checklist: 6 Questions to Ask

When sitting down to choose your administrator, objectively evaluate your candidates against this checklist. Can the person you are considering truly do the following?

1. Separate Personal Feelings from Business: Can they completely separate their personal feelings and interests from those of the other beneficiaries?
2. Exercise Sound Judgment: Do they have a proven track record of good financial judgment? Can they be trusted with managing large sums of your assets at all times?
3. Remain Impartial: Will they treat all beneficiaries completely equally, without playing favorites?
4. Commit the Time: Administering an estate takes hundreds of hours over many months (or even years). Do they actually have the time to do this job while balancing their own family and career demands?
5. Understand Individual Needs: Are they cognizant of, and sympathetic to, the unique needs of the various beneficiaries?
6. Act as a Peacemaker: When emotions run high—as they always do after a death—can this person step in to de-escalate tension and act as a peacemaker amongst your family members?

The Blended Family Dilemma and Third-Party Solutions

The Tom Petty estate perfectly illustrates the unique dangers blended families face. If you have children from a previous relationship and are currently remarried, naming your current spouse as the sole Trustee over your children’s inheritance is often a recipe for disaster.

If you look at your family dynamic and realize that none of your family members can answer “yes“ to the checklist above, don’t force it. You can choose an independent, third-party professional (such as a bank, trust company, or specialized fiduciary) to act as your administrator.

Furthermore, a well-drafted trust should always include specific, legally binding methods for resolving disputes outside of the courtroom.

Secure Your Family’s Future in Bountiful

While the Petty family dispute will likely languish for years, there are valuable lessons to be learned from their tragedy. When setting up or reviewing your trust or will, you must carefully consider and discuss the options for your administrator with an experienced attorney.

At Rowe & Walton PC, we understand that every family dynamic is unique. We will talk candidly with you about your specific family situation and help you structure your documents so you can have absolute confidence that you have made the best choice possible to avoid conflict among your loved ones.

Don’t leave a legacy of stress and litigation. Get your affairs in order today.

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There are various non-profit organizations, ranging from small local charities to large international NGOs. Some well-known examples include the Red Cross, Amnesty International, and Habitat for Humanity. NPOs often rely on donations and volunteers to function, but some also generate income through the sale of goods or services.

NPOs play an important role in society by providing much-needed services and assistance to those who may not otherwise have access to them. They often fill the gaps left by government agencies and other for-profit organizations and, as such, can be a vital part of any community.

What Are Common Issues Non-Profits Face?

There are a few common legal problems that non-profit organizations often face. One of these is the issue of taxes. Non-profit organizations are typically exempt from paying federal income taxes. However, they may still be required to pay other taxes, such as property taxes and sales taxes. Additionally, non-profit organizations may also have to file annual tax returns with the IRS.

Another common legal issue faced by non-profit organizations is the issue of compliance with state and federal laws. Non-profit organizations must ensure that they comply with all applicable laws, including those related to fundraising, lobbying, and accounting. Failure to comply with these laws can result in significant penalties, including the loss of tax-exempt status.

Finally, non-profit organizations may also face legal challenges regarding employee relations. For example, non-profit organizations may be required to follow specific employment laws related to wages and hours, discrimination, and safety. Additionally, non-profit organizations may also be subject to collective bargaining agreements between employees and management.

How To Protect Your Non-Profit Organization

There are a few key ways to protect your non-profit organization from legal issues. First, register your organization as a 501(c)(3) with the IRS. This will ensure that you are exempt from federal taxes and that donations made to your organization are tax-deductible. Second, create bylaws or articles of incorporation for your organization. This will establish the rules and regulations that your organization will operate under. Third, obtain the appropriate licenses and permits to work in your state or locality. Finally, purchase liability insurance to protect your organization from potential lawsuits. Following these simple steps can help keep your non-profit safe from legal troubles.

501(c)(3) registration with the IRS is the best way to ensure your non-profit organization’s tax-exempt status and make donations to your organization tax-deductible. To register, you will need to apply with the IRS. You can find more information on how to do this on the IRS website.

Creating bylaws or articles of incorporation for your organization will help to establish the rules and regulations under which it will operate. A lawyer or other legal professional can create this document.

Obtaining the appropriate licenses and permits required to operate in your state or locality is another important step in protecting your non-profit organization. These requirements vary from state to state, so it is important to check with your local government to see what is needed.

Finally, purchasing liability insurance is an excellent way to protect your non-profit organization from lawsuits. This type of insurance will cover damages caused by your organization and legal fees if you are sued. You can purchase liability insurance through various sources, including insurance companies and online providers.

Keep a few things in mind if you are interested in setting up or working for a non-profit organization. First, it is important to ensure that your goals are realistic and achievable and that you have a clear plan for achieving them. It is also essential to have a solid financial foundation in place and a team of dedicated and passionate individuals who share your vision. Finally, remember that running a successful NPO takes a lot of hard work, dedication, and commitment – but it can be a gratifying experience.

Disclaimer: Please note that rules and regulations are constantly changing. Contact our office if you have any questions regarding NPOs so we can update you with any relevant information or changes.

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When adults can no longer care for themselves, they may need a guardian or a caregiver. The need for a guardian can be due to many factors, such as a medical condition, mental illness, or physical disability. Guardianships can be temporary or permanent and can be put in place by a family member, friend, or legal Guardian.

There are three types of guardianships: general Guardianship, limited Guardianship, and plenary Guardianship. General Guardianship gives the guardian authority over the ward’s person and property. Limited Guardianship only gives the guardian authority over specific areas of the ward’s life, such as their medical care or finances. Plenary Guardianship gives the Guardian complete authority over the ward’s person and property.

What Is a Guardian?

The Guardian is legally responsible for caring for the ward and making decisions in their best interest. A guardian’s responsibilities include providing for their basic needs, such as food, shelter, and clothing. The Guardian must also protect the ward from harm and ensure their safety. In many states, the person who becomes responsible for handling finances is called a “conservator.” Guardianships vary from state to state, depending on different standards. A person must be considered incapacitated or incompetent to receive a guardian who will decide for them. Some states may require a doctor’s letter or physician’s certificate. Be sensitive and patient while obtaining the letter/certificate as the adult may have paranoia or an illness like dementia or Alzheimer’s and maybe nervous or resistant to meeting with a doctor. Guardianships are not up to opinion. If someone is irresponsible in life, with money, or even specific disabilities or illnesses, it is not always a reason for a guardian.

Who Can Become a Guardian?

Generally, anyone interested in the well-being of another person can request Guardianship. First, if possible, obtain a medical examination from a doctor. If unable to obtain an examination, request one for a later time. Next, file your application. Getting help from an experienced attorney or lawyer can help fill in any gaps. It is also a requirement that you notify the proposed ward of the application, including any other family members that may have the legal rights to know about this partition of Guardianship. The court will also do a background check on you or the person trying to become the Guardian to ensure they have the best intentions, are financially responsible, and do not have any serious criminal backgrounds. After that, the court will assign something called an Attorney Ad Litem/Guardian Ad Litem to your family member. An Attorney Ad Litem is there to do what the proposed ward, their clients, wants to do. If necessary, the Guardian Ad Litem will ensure recommendations are made in the ward’s best interest, not just what the person may want.

There are also a couple of alternatives to Guardianship. A Power of Attorney or Conservatorship can be granted if the ward requires less restrictive options. A power of attorney is voluntary for managing financial decisions once the person becomes incapacitated. A conservatorship is appointed by court order and can also be helpful when a person needs assistance with financial or medical needs.

Consult an Experienced Attorney

If you are considering becoming a guardian, it is vital to understand your rights and responsibilities. It would be best if you also spoke with an attorney to ensure that you take on the guardianship role correctly. With Rowe & Walton, PC, we can provide the best care for your loved ones. If you have any questions or concerns, please don’t hesitate to call us today.

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