How do you inherit money?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do consult an estates attorney. There is a ton of very bad advice here. It shouldn’t cost a lot, because you’ll do a lot of the work yourself. However, they can make sure you cross all your t’s and dot your i’s. There are specific deadlines for filing various things and they can tell you if you need to do an inventory, what needs to be appraised, etc.

Get a credit report for your father. That will list all open accounts. There are probably some that you wouldn’t otherwise know about. Don’t pay anything other than things that you need to keep current like mortgages, insurance and the power bill. If you spend anything out of pocket, keep records, and you can be reimbursed by the estate later. It varies by state, but during probate, you will file a notice with all potential debtors and they will have a set period to file a claim against the estate. If they don’t file a claim, the estate doesn’t have to pay. You’d be surprised how many creditors just don’t file.

Generally, after the executor is appointed by the court and has letters testamentary (or whatever they ‘re called in your jurisdiction) you’ll move all the money into an estate account that the executor has signatory authority for.

The estate will usually settle all debts, including taxes, before distributions are made. If the executor makes distributions and there isn’t enough $$ left to pay, the executor is personally liable.

You’ll need to file personal tax returns for the partial year of the decedent’s death and then estate tax returns while the estate is active. Unless the estate lingers for a while and has income, or it’s a very large estate, you are unlikely to owe estate tax, but estate returns are complicated. I recommend hiring an accountant to do them. There are benefits you can miss — e.g., if you sell the house quickly, you will often get a stepped up basis for the entire sale price *and* be able to carry over a deduction for the costs of sale (realtor’s fees, etc) to your personal taxes.

I’m a lawyer, and I’ve handled several estates, and I wouldn’t handle one without the advice of an expert, unless it was a very small estate (which by definition, this is not, if it includes a house).

PP here who suggested a trust. Both my parents have one (divorced). They each have a home and some money in retirement accounts (not rich but not nothing). I assumed a trust was pretty standard for older people with some substantive holdings. I guess I assumed incorrectly. Can you say why you think it's not necessary in this situation?

If their money is in their retirement accounts, all they need to do is designate a beneficiary. No trust needed for this.

See if you state allows a deed on death transfer. It allows the deedholder to pass the deed onto a beneficiary without going thru probate.

Everything else can be settled among siblings: car, property, etc. There's no need to involve a lawyer or the probate court in cases like this.

Thanks!! I've worked to make it simple over the years and was not sure if we can legally just split the bank accounts since we're already on it. Seems too easy!

What someone said about about the executor being personally responsible for outstanding bills made me feel exposed. So, I'll keep a side account that only Dad and I are on and use that for any unexpected expenses before I disperse 50% of the remainder to sibling.

I'm not sure how fast sibling will want to split the bank accounts, and they can be unpredictable and immature, so I have to plan for that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do consult an estates attorney. There is a ton of very bad advice here. It shouldn’t cost a lot, because you’ll do a lot of the work yourself. However, they can make sure you cross all your t’s and dot your i’s. There are specific deadlines for filing various things and they can tell you if you need to do an inventory, what needs to be appraised, etc.

Get a credit report for your father. That will list all open accounts. There are probably some that you wouldn’t otherwise know about. Don’t pay anything other than things that you need to keep current like mortgages, insurance and the power bill. If you spend anything out of pocket, keep records, and you can be reimbursed by the estate later. It varies by state, but during probate, you will file a notice with all potential debtors and they will have a set period to file a claim against the estate. If they don’t file a claim, the estate doesn’t have to pay. You’d be surprised how many creditors just don’t file.

Generally, after the executor is appointed by the court and has letters testamentary (or whatever they ‘re called in your jurisdiction) you’ll move all the money into an estate account that the executor has signatory authority for.

The estate will usually settle all debts, including taxes, before distributions are made. If the executor makes distributions and there isn’t enough $$ left to pay, the executor is personally liable.

You’ll need to file personal tax returns for the partial year of the decedent’s death and then estate tax returns while the estate is active. Unless the estate lingers for a while and has income, or it’s a very large estate, you are unlikely to owe estate tax, but estate returns are complicated. I recommend hiring an accountant to do them. There are benefits you can miss — e.g., if you sell the house quickly, you will often get a stepped up basis for the entire sale price *and* be able to carry over a deduction for the costs of sale (realtor’s fees, etc) to your personal taxes.

I’m a lawyer, and I’ve handled several estates, and I wouldn’t handle one without the advice of an expert, unless it was a very small estate (which by definition, this is not, if it includes a house).

PP here who suggested a trust. Both my parents have one (divorced). They each have a home and some money in retirement accounts (not rich but not nothing). I assumed a trust was pretty standard for older people with some substantive holdings. I guess I assumed incorrectly. Can you say why you think it's not necessary in this situation?

If their money is in their retirement accounts, all they need to do is designate a beneficiary. No trust needed for this.

See if you state allows a deed on death transfer. It allows the deedholder to pass the deed onto a beneficiary without going thru probate.

Everything else can be settled among siblings: car, property, etc. There's no need to involve a lawyer or the probate court in cases like this.

Thanks!! I've worked to make it simple over the years and was not sure if we can legally just split the bank accounts since we're already on it. Seems too easy!

What someone said about about the executor being personally responsible for outstanding bills made me feel exposed. So, I'll keep a side account that only Dad and I are on and use that for any unexpected expenses before I disperse 50% of the remainder to sibling.

I'm not sure how fast sibling will want to split the bank accounts, and they can be unpredictable and immature, so I have to plan for that.

If you and your dad are the only ones on the side account as joint then the account would go to you only after dad’s death.

[Anonymous]

Any accounts that you are on joint with your dad or have named beneficiaries do not go thru probate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do consult an estates attorney. There is a ton of very bad advice here. It shouldn’t cost a lot, because you’ll do a lot of the work yourself. However, they can make sure you cross all your t’s and dot your i’s. There are specific deadlines for filing various things and they can tell you if you need to do an inventory, what needs to be appraised, etc.

Get a credit report for your father. That will list all open accounts. There are probably some that you wouldn’t otherwise know about. Don’t pay anything other than things that you need to keep current like mortgages, insurance and the power bill. If you spend anything out of pocket, keep records, and you can be reimbursed by the estate later. It varies by state, but during probate, you will file a notice with all potential debtors and they will have a set period to file a claim against the estate. If they don’t file a claim, the estate doesn’t have to pay. You’d be surprised how many creditors just don’t file.

Generally, after the executor is appointed by the court and has letters testamentary (or whatever they ‘re called in your jurisdiction) you’ll move all the money into an estate account that the executor has signatory authority for.

The estate will usually settle all debts, including taxes, before distributions are made. If the executor makes distributions and there isn’t enough $$ left to pay, the executor is personally liable.

You’ll need to file personal tax returns for the partial year of the decedent’s death and then estate tax returns while the estate is active. Unless the estate lingers for a while and has income, or it’s a very large estate, you are unlikely to owe estate tax, but estate returns are complicated. I recommend hiring an accountant to do them. There are benefits you can miss — e.g., if you sell the house quickly, you will often get a stepped up basis for the entire sale price *and* be able to carry over a deduction for the costs of sale (realtor’s fees, etc) to your personal taxes.

I’m a lawyer, and I’ve handled several estates, and I wouldn’t handle one without the advice of an expert, unless it was a very small estate (which by definition, this is not, if it includes a house).

PP here who suggested a trust. Both my parents have one (divorced). They each have a home and some money in retirement accounts (not rich but not nothing). I assumed a trust was pretty standard for older people with some substantive holdings. I guess I assumed incorrectly. Can you say why you think it's not necessary in this situation?

Unless you live in a state like CA, where probate is expensive and slow, you just spend $$ and create a hassle for yourself to avoid probate, which isn’t that big of a deal. Many people end up not titling everything properly and end up having to go through probate, anyway. Simply establish beneficiaries on accounts that will allow it, and those assets will transfer automatically without probate. Trusts are also not a panacea. There are protections built into probate, which can be helpful if there are debts or you have a family dispute or end up with an untrustworthy trustee. If you have minor children, you can establish a testamentary trust in your will that will spring into being by operation of the will. Other than avoid probate, anything you can do with a revocable trust, you can do with a testamentary trust (you want to make sure the future stepmother doesn’t disinherit your kids? Set up a testamentary trust).

You don’t need a trust for tax purposes unless you have over $13.61 million in assets (or $27.22 m per couple). In that case, you’d need an irrevocable trust, which is a completely different animal from the revocable trust that less rich people set up.

I am a fairly well to do lawyer and I have multiple friends who are excellent estate lawyers who have assured me I don’t need a revocable trust. Like I said, the only exception is if you live in CA. Probate court there is a mess. Estate lawyers set up trusts because most clients like having a trust because it sounds good — like they’re rich and maybe getting away with something — and the lawyers get to bill the time to set them up. Like I said, about half the time, all of the assets don’t get titled properly and the estate ends up being probated anyway. But people like to say “I have a trust,” so they get one.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do consult an estates attorney. There is a ton of very bad advice here. It shouldn’t cost a lot, because you’ll do a lot of the work yourself. However, they can make sure you cross all your t’s and dot your i’s. There are specific deadlines for filing various things and they can tell you if you need to do an inventory, what needs to be appraised, etc.

Get a credit report for your father. That will list all open accounts. There are probably some that you wouldn’t otherwise know about. Don’t pay anything other than things that you need to keep current like mortgages, insurance and the power bill. If you spend anything out of pocket, keep records, and you can be reimbursed by the estate later. It varies by state, but during probate, you will file a notice with all potential debtors and they will have a set period to file a claim against the estate. If they don’t file a claim, the estate doesn’t have to pay. You’d be surprised how many creditors just don’t file.

Generally, after the executor is appointed by the court and has letters testamentary (or whatever they ‘re called in your jurisdiction) you’ll move all the money into an estate account that the executor has signatory authority for.

The estate will usually settle all debts, including taxes, before distributions are made. If the executor makes distributions and there isn’t enough $$ left to pay, the executor is personally liable.

You’ll need to file personal tax returns for the partial year of the decedent’s death and then estate tax returns while the estate is active. Unless the estate lingers for a while and has income, or it’s a very large estate, you are unlikely to owe estate tax, but estate returns are complicated. I recommend hiring an accountant to do them. There are benefits you can miss — e.g., if you sell the house quickly, you will often get a stepped up basis for the entire sale price *and* be able to carry over a deduction for the costs of sale (realtor’s fees, etc) to your personal taxes.

I’m a lawyer, and I’ve handled several estates, and I wouldn’t handle one without the advice of an expert, unless it was a very small estate (which by definition, this is not, if it includes a house).

PP here who suggested a trust. Both my parents have one (divorced). They each have a home and some money in retirement accounts (not rich but not nothing). I assumed a trust was pretty standard for older people with some substantive holdings. I guess I assumed incorrectly. Can you say why you think it's not necessary in this situation?

If their money is in their retirement accounts, all they need to do is designate a beneficiary. No trust needed for this.

See if you state allows a deed on death transfer. It allows the deedholder to pass the deed onto a beneficiary without going thru probate.

Everything else can be settled among siblings: car, property, etc. There's no need to involve a lawyer or the probate court in cases like this.

Thanks!! I've worked to make it simple over the years and was not sure if we can legally just split the bank accounts since we're already on it. Seems too easy!

What someone said about about the executor being personally responsible for outstanding bills made me feel exposed. So, I'll keep a side account that only Dad and I are on and use that for any unexpected expenses before I disperse 50% of the remainder to sibling.

I'm not sure how fast sibling will want to split the bank accounts, and they can be unpredictable and immature, so I have to plan for that.

Just to be clear: the executor is only liable if there *was* money and the executor distributed it before paying the debts. So if you distribute the money to your sibling and the IRS audits you and presents you with a bill, the executor has to pay it out of personal funds if the sibling refuses to return the $$. It can take a year or more to get everything settled with the IRS (and technically longer — a CPA can file a “request for prompt assessment” with the IRS that can limit the statute of limitations, but at a minimum you’ll want to at least have the estate returns done and all debts paid before you start distributing $$). It’s very common for beneficiaries to start spending their inheritance before they get it and get upset when the process takes time, but hold fast! This is when it is good to have a lawyer, because you can have the lawyer explain the process to the heirs and make it clear that you’re not just dragging your feet or doing anything shady. (And having a trust wouldn’t fix any of this — you still need to pay debts and file tax returns).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do consult an estates attorney. There is a ton of very bad advice here. It shouldn’t cost a lot, because you’ll do a lot of the work yourself. However, they can make sure you cross all your t’s and dot your i’s. There are specific deadlines for filing various things and they can tell you if you need to do an inventory, what needs to be appraised, etc.

Get a credit report for your father. That will list all open accounts. There are probably some that you wouldn’t otherwise know about. Don’t pay anything other than things that you need to keep current like mortgages, insurance and the power bill. If you spend anything out of pocket, keep records, and you can be reimbursed by the estate later. It varies by state, but during probate, you will file a notice with all potential debtors and they will have a set period to file a claim against the estate. If they don’t file a claim, the estate doesn’t have to pay. You’d be surprised how many creditors just don’t file.

Generally, after the executor is appointed by the court and has letters testamentary (or whatever they ‘re called in your jurisdiction) you’ll move all the money into an estate account that the executor has signatory authority for.

The estate will usually settle all debts, including taxes, before distributions are made. If the executor makes distributions and there isn’t enough $$ left to pay, the executor is personally liable.

You’ll need to file personal tax returns for the partial year of the decedent’s death and then estate tax returns while the estate is active. Unless the estate lingers for a while and has income, or it’s a very large estate, you are unlikely to owe estate tax, but estate returns are complicated. I recommend hiring an accountant to do them. There are benefits you can miss — e.g., if you sell the house quickly, you will often get a stepped up basis for the entire sale price *and* be able to carry over a deduction for the costs of sale (realtor’s fees, etc) to your personal taxes.

I’m a lawyer, and I’ve handled several estates, and I wouldn’t handle one without the advice of an expert, unless it was a very small estate (which by definition, this is not, if it includes a house).

PP here who suggested a trust. Both my parents have one (divorced). They each have a home and some money in retirement accounts (not rich but not nothing). I assumed a trust was pretty standard for older people with some substantive holdings. I guess I assumed incorrectly. Can you say why you think it's not necessary in this situation?

Unless you live in a state like CA, where probate is expensive and slow, you just spend $$ and create a hassle for yourself to avoid probate, which isn’t that big of a deal. Many people end up not titling everything properly and end up having to go through probate, anyway. Simply establish beneficiaries on accounts that will allow it, and those assets will transfer automatically without probate. Trusts are also not a panacea. There are protections built into probate, which can be helpful if there are debts or you have a family dispute or end up with an untrustworthy trustee. If you have minor children, you can establish a testamentary trust in your will that will spring into being by operation of the will. Other than avoid probate, anything you can do with a revocable trust, you can do with a testamentary trust (you want to make sure the future stepmother doesn’t disinherit your kids? Set up a testamentary trust).

You don’t need a trust for tax purposes unless you have over $13.61 million in assets (or $27.22 m per couple). In that case, you’d need an irrevocable trust, which is a completely different animal from the revocable trust that less rich people set up.

I am a fairly well to do lawyer and I have multiple friends who are excellent estate lawyers who have assured me I don’t need a revocable trust. Like I said, the only exception is if you live in CA. Probate court there is a mess. Estate lawyers set up trusts because most clients like having a trust because it sounds good — like they’re rich and maybe getting away with something — and the lawyers get to bill the time to set them up. Like I said, about half the time, all of the assets don’t get titled properly and the estate ends up being probated anyway. But people like to say “I have a trust,” so they get one.

This is a very helpful response, thank you. As it happens, one of my parents does live in CA.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Does he have a will? A wife?

There's no wife. We are the only heirs.

Yes, there's a will. One of us is the executor. Our names are on the bank accounts already.

Get an estate attorney. The documents are not complicated and very standard in the estate legal world. It will be probably $3-4k to draw it all up and register the trust.

You create a trust, and put everything into the trust. You and siblings are beneficiaries. You will be the trustee, one of your siblings is the backup trustee. The will becomes a 2 page document which says (essentially) "anything not in the Trust already, goes into the Trust, when I die, disburse the Trust"

The estate attorney should also create other docs, usually Medical Power of Attorney, Advanced Health Care Directive, HIPAA Authorization Form.

You will have to take the steps to move all the assets into the Trust. That will probably be the most time consuming part. You can leave the primary bank account for basic bills and such out of the Trust, since you are already named on it. That way.you will have access to it immediately upon death to pay basic bills before the Trust is disbursed.

You should have stopped at recommending an attorney’s office to do the probate. He didn’t give any more details.

[Anonymous]

My mom didn't own a home and every single bank account and pension listed me as a beneficiary so everything was easy. I distributed things equally between myself and my brothers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Does he have a will? A wife?

There's no wife. We are the only heirs.

Yes, there's a will. One of us is the executor. Our names are on the bank accounts already.

Get an estate attorney. The documents are not complicated and very standard in the estate legal world. It will be probably $3-4k to draw it all up and register the trust.

You create a trust, and put everything into the trust. You and siblings are beneficiaries. You will be the trustee, one of your siblings is the backup trustee. The will becomes a 2 page document which says (essentially) "anything not in the Trust already, goes into the Trust, when I die, disburse the Trust"

The estate attorney should also create other docs, usually Medical Power of Attorney, Advanced Health Care Directive, HIPAA Authorization Form.

You will have to take the steps to move all the assets into the Trust. That will probably be the most time consuming part. You can leave the primary bank account for basic bills and such out of the Trust, since you are already named on it. That way.you will have access to it immediately upon death to pay basic bills before the Trust is disbursed.

Ignore this and get some advice from an expert not a stranger. Unless the assets are considerable there is no need to create a trust.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Do consult an estates attorney. There is a ton of very bad advice here. It shouldn’t cost a lot, because you’ll do a lot of the work yourself. However, they can make sure you cross all your t’s and dot your i’s. There are specific deadlines for filing various things and they can tell you if you need to do an inventory, what needs to be appraised, etc.

Get a credit report for your father. That will list all open accounts. There are probably some that you wouldn’t otherwise know about. Don’t pay anything other than things that you need to keep current like mortgages, insurance and the power bill. If you spend anything out of pocket, keep records, and you can be reimbursed by the estate later. It varies by state, but during probate, you will file a notice with all potential debtors and they will have a set period to file a claim against the estate. If they don’t file a claim, the estate doesn’t have to pay. You’d be surprised how many creditors just don’t file.

Generally, after the executor is appointed by the court and has letters testamentary (or whatever they ‘re called in your jurisdiction) you’ll move all the money into an estate account that the executor has signatory authority for.

The estate will usually settle all debts, including taxes, before distributions are made. If the executor makes distributions and there isn’t enough $$ left to pay, the executor is personally liable.

You’ll need to file personal tax returns for the partial year of the decedent’s death and then estate tax returns while the estate is active. Unless the estate lingers for a while and has income, or it’s a very large estate, you are unlikely to owe estate tax, but estate returns are complicated. I recommend hiring an accountant to do them. There are benefits you can miss — e.g., if you sell the house quickly, you will often get a stepped up basis for the entire sale price *and* be able to carry over a deduction for the costs of sale (realtor’s fees, etc) to your personal taxes.

I’m a lawyer, and I’ve handled several estates, and I wouldn’t handle one without the advice of an expert, unless it was a very small estate (which by definition, this is not, if it includes a house).

PP here who suggested a trust. Both my parents have one (divorced). They each have a home and some money in retirement accounts (not rich but not nothing). I assumed a trust was pretty standard for older people with some substantive holdings. I guess I assumed incorrectly. Can you say why you think it's not necessary in this situation?

If their money is in their retirement accounts, all they need to do is designate a beneficiary. No trust needed for this.

See if you state allows a deed on death transfer. It allows the deedholder to pass the deed onto a beneficiary without going thru probate.

Everything else can be settled among siblings: car, property, etc. There's no need to involve a lawyer or the probate court in cases like this.

In some states you do, it depends.

[Anonymous]

There is a book called “wills, probate and estate taxes for dummies” that I found very helpful. It was great to be able to look up the answers to all my dumb questions in one place and helped me not feel like an idiot. This stuff is complicated!

[Anonymous]

Anonymous wrote:Also, he should use any points on his credit cards. They will not be there after he passes away.

What ?
Who cares about this ?

[Anonymous]

Anonymous wrote:My mom didn't own a home and every single bank account and pension listed me as a beneficiary so everything was easy. I distributed things equally between myself and my brothers.

Wouldn't you have to pay taxes when you gifted money from you to your siblings?

OP

[Anonymous]

Anonymous wrote:There is a book called “wills, probate and estate taxes for dummies” that I found very helpful. It was great to be able to look up the answers to all my dumb questions in one place and helped me not feel like an idiot. This stuff is complicated!

Thank you! I'll take a look at it.

OP

[Anonymous]

Anonymous wrote:Any accounts that you are on joint with your dad or have named beneficiaries do not go thru probate.

Good to know! I didn't realize putting our names on the accounts would prevent probate. I guess that makes sense though.

The financial advisor suggested we put the accounts in the trust, but we had already put our names on the accounts by that point.

OP