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[quote=Anonymous][quote=Anonymous][quote=Anonymous]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). [/quote]

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?[/quote]

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. [/quote]

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