Executor and Beneficiary, now what?

[harley]

My mom/aunt who raised me died last week. TIA for condolences. She has a small estate, way under $1M, so no tax issues. A small house, a car, some CDs, and that's about it. She named me as the Executor, and also left pretty much everything to me with a few small exceptions. I've been dealing with the immediate issues of her death, like funeral arrangements, securing the home and paperwork, things like that. Now I need to start dealing with the actual inheritance, and I don't have a clue what to do.

She lived in VA, and I reside in FL. So no state tax issues either. I guess I should call the lawyer that wrote the will for her. But other than that, what will happen? Do I just sort of take over everything and move it to my name once I get the death certificates? Or do I need to do something in court? Hopefully there won't be any probate to deal with.

If any of you have any good links or advice, I would appreciate it. It's easy to get advice on how to invest an inheritance, but not so much on how to process it. Thanks.

[MichaelB]

Condolences on your loss, harley.

Here's a link to Nolo and a short summary of what needs to happen. Virginia Probate: An Overview | Nolo.com You'll need to probate, and because you're not a resident you'll need a local attorney.

[Meadbh]

Sincere condolences on the loss of your aunt. Getting over her loss will take time. She obviously had a high regard for you.

IANAL and I do not live in the US, so any suggestions I have are general and based on my own experience as a sole beneficiary and executor for my mother's will.

First, I do expect there will be probate, because any substantial assets require it. The only ways around that are trusts and joint accounts, neither of which you mention. You can't distribute any assets before probate has been obtained.

Second, the lawyer (who needs to practice in VA) will know all the ropes and can guide you through what should be a relatively simple process. However, there are lots of details to take care of, and it's a lot cheaper for you to cancel utilities than for the lawyer to do it, so you need a To Do list. There are hundreds of these on the Internet. I have linked one below. Make sure that whatever list you choose is valid in your state and the deceased's state of residence. The lawyer will probably have one, too. The first document you will need is the death certificate. Get at least 10 copies as you will need them to close accounts.

Duties of an executor – an executor’s checklist

My third suggestion would be not to assume that the lawyer's interest coincides completely with yours. You want to complete the process simply and efficiently. This is especially important when real estate is involved as insurance will not be valid for long on an unoccupied house. Some lawyers want to drag the process out to maximize their fees. This was the case with my mother's lawyer. I learnt about his notorious tardiness from bankers and real estate agents as well as friends who happened to be lawyers. My approach to this was to be very well informed and to present the lawyer with a project schedule. I took on as many activities as I could do myself and I contacted the lawyer's office once or twice a week with updates. The squeaky wheel approach got rapid results and probate was obtained within three weeks, despite the fact that I lived abroad.

The job of executor is a lot of work but if the will is simple and clear, it can be accomplished painlessly and in a timely way using a logical approach. Good luck!

[gauss]

Sorry to hear about your Aunt. My Dad passed away earlier this year, and the folks on this board were very useful and supportive.

If any of the accounts have beneficiaries, TOD (transfer on death) or POD (pay on death) registrations, then these assets are able to be transferred without probate. This is in addition to the jointly owned accounts and trust owned accounts described above.

Your first task would be to try to inventory the financial assets along with the ownership. Then you can determine which would be part of the probate vs. which would not be part of the probate. Titled physical assets would also be part of this list (ie real-estate, vehicles etc.)
Many states have expedited probate procedures for "small-estates". In my state, the value of the mortgage on the home was subtracted from the value determined by the taxing authority, so I probably could have qualified for this. Anything that is not part of the formal probate list of assets is not included when figuring the value of the probate estate value for this purpose (at least in many states this is the case). I was able to find out about the various procedures by visiting the various county probate court web sites in my state.

I am not convinced yet of the requirement to use a lawyer even if you are out of state. I assume that you will be spending time instate to deal with the physical residence etc. I had a free consultation with a lawyer when my father died earlier this year, but he kept suggesting that he could do everything. I was only interested in retaining him for if legal questions arose. I figured I would return to him only if there were questions that I could not answer. (I was the sole legal heir, only beneficiary of the will, and the executor) so mine was probably a fairly simple case.

What helped me make the decision was when the Treasurer of a local organization that I belong expressed to me that he had high degree of confidence that I could handle the probate myself. He knows that I am detail oriented and has recruited me on multiple times to serve as his successor as Treasurer. After 5 months into it, I am glad that I took his advice.

I am ER'd so I did have the time to deal with this.

-gauss

[38Chevy454]

First sorry to hear, the first week is rather hectic and can be very confusing. Been there before with both my parents.

I think the previous answers pretty much gave you a good idea what you need to do. If she has a trust it makes your life easier, but a will is just going to need probate. Most of the rest of the actions are similar.

X2 on getting multiple certified copies of death certificate. Many financial institutions will not talk with you until they have death cert and copy of the will/trust that gives you legal authority to deal with the accounts. Selling house should be pretty easy, unless it has serious repairs needed it is less trouble to just sell cheaper as fixer-upper. Remodeling will not really give payback and only creates a lot more headaches for you.

[Throwdownmyaceinthehole]

Also you may need to file a final Fed and state tax return, so gathering up investment info, bank interest statements, etc.

[EastWest Gal]

Her last Fed and State income tax return will need to be filed, and an estate tax return will need to be done, but you have months for that. Multiple copies of the death certificate will indeed be needed, you can get them from the county recorders office where she lived. You need to file the will in probate court as soon as you can since probate can be a long process.

There are many great legal websites, legalzoom, Nolo press, and others that have given me lots of help over the years. Also google search "probate a will in VA". You can do a lot yourself, but sometimes a lawyer is very helpful, especially when you are far away.

Findlaw and Lawyers.com and local bar association helped me find a good lawyer in CA who didn't rip me off when my dad died in PA and I had to transfer farm property. We did everything by fax and Fedex or UPS.


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[harley]

Thanks for all the answers so far. I've got enough reading to keep me busy for a while.

On the tax returns, she hasn't had to file taxes for the last 5 years. Only SS and a small DoD payment as income, and a few bucks here and there from the CDs. Will I still have to file, do you think? I'll run it through TurboTax, see what they say. I'll definitely have to gather up all the paperwork, since I'll be in FL when tax time rolls around.

I was reading that VA has a probate tax, about $.10 for every $100 of estate. Since she set up a bunch of CDs and accounts that are POD to me and don't have to go through probate, will they be excluded from being taxed? I'm not talking big money here, more just curiosity.

I'm getting 25 copies of the death certificate, since she has so many small accounts in so many institutions. Plus there's the gov't to deal with.

Also, she was a member of USAA, and has all her insurance through them. Since I'm not going to be selling the house any time soon, can I just continue with them? Or will I need to move it to my insurance since I don't qualify to be with USAA?

[MooreBonds]

First step:

Obtain a Taxpayer Identification Number from the IRS for her estate for income earned after her date of passing. Her SSN is no longer valid for any earnings after date of passing. Her SSN should not be used on any new documentation from here on out.

Remember: just because no income taxes are owed, you could still be required to file a return.

On Income taxes:

You will need to file 2 tax returns:
1) Individual tax return for all income earned by her from January 1, 2014 through her date of passing.
2) Estate tax return for all income earned by her assets from date of passing through December 31, 2014 (note: if you really want to, you can set up a fiscal year for the estate to run until 364 days after date of passing, but many simply use a calendar year for simplicity). If you need to, find an accountant to fill out form K-1 to allocate all income earned by the estate and pass it through to you for you to declare as an individual on your Schedule B (interest) and Schedule D (capital gains).

Just tell whatever banks/brokers she has of her date of passing, and they should reallocate the interest between that earned while she was alive, and income earned after her date of passing. So you'll receive 2 1099s from most banks/brokers for 2014.

If you use turbotax, don't forget that the estate does not have any deductions. It simply accumulates all of the income and passes it on to you for you to declare on your own return. (but you have to file a tax form to the IRS for the estate for calendar 2014 and 2015)

Quote:

Originally Posted by harley Also, she was a member of USAA, and has all her insurance through them. Since I'm not going to be selling the house any time soon, can I just continue with them? Or will I need to move it to my insurance since I don't qualify to be with USAA?

You will need special "uninhabited dwelling" insurance. It is VERY expensive, even with USAA's low rates. In fact, some insurers won't even quote you a policy. Hopefully USAA will still let you get a quote from them since you aren't a policyholder. Definitely ask them if they will underwrite the one final policy, since USAA often has excellent low insurance costs.

As an example, my grandmother's home was vacant after her passing, and her homeowner's insurance cost went from roughly $1,500 (when she was alive) to $4,500 when it was a vacant house while we went through her estate settlement process and then put it on the market for it to sell. And we only had that as a policy from a subsidiary of Lloyd's of London because of a family business that used our insurance agent, who had contacts. Otherwise, it would have been even more.

[gauss]

Quote:

Originally Posted by EastWest Gal Her last Fed and State income tax return will need to be filed, and an estate tax return will need to be done, but you have months for that. Multiple copies of the death certificate will indeed be needed, you can get them from the county recorders office where she lived. You need to file the will in probate court as soon as you can since probate can be a long process.

To clarify:

An estate tax (form 706) will likely not be necessary if the value of the total estate is less than $5,340,000

An income tax return for the estate (form 1041) may be necessary if your aunt had more than $600 in income after her death.

A final 1040 form will likely be required for any income received by your aunt in 2014 prior to her death.

-gauss

[gauss]

Quote:

Originally Posted by harley Thanks for all the answers so far. I've got enough reading to keep me busy for a while. .... I was reading that VA has a probate tax, about $.10 for every $100 of estate. Since she set up a bunch of CDs and accounts that are POD to me and don't have to go through probate, will they be excluded from being taxed? I'm not talking big money here, more just curiosity.

I would expect the POD accounts could be directly distributed to you with the death certificate - these would not go through probate. The states that I have seen would not levy the probate fee on non-probate assets, but confirm with the documentation at your probate court. They typically will have forms that will walk you through this.

-gauss

[gauss]

Quote:

Originally Posted by harley On the tax returns, she hasn't had to file taxes for the last 5 years. Only SS and a small DoD payment as income, and a few bucks here and there from the CDs. Will I still have to file, do you think? I'll run it through TurboTax, see what they say. I'll definitely have to gather up all the paperwork, since I'll be in FL when tax time rolls around.

I would plan on filing the final return even if no money changes hands. I believe that the IRS will properly close out her account upon receiving her final tax return where you label it as Deceased. Check form 1040 instructions for details. There is also an IRS publication that deals with Estates and Trusts. It is a bit difficult to read in that there is much info about various Trusts within it that will likely not apply.

-gauss

[Meadbh]

Quote:

Originally Posted by MooreBonds You will need special "uninhabited dwelling" insurance. It is VERY expensive, even with USAA's low rates. In fact, some insurers won't even quote you a policy. Hopefully USAA will still let you get a quote from them since you aren't a policyholder. Definitely ask them if they will underwrite the one final policy, since USAA often has excellent low insurance costs. As an example, my grandmother's home was vacant after her passing, and her homeowner's insurance cost went from roughly $1,500 (when she was alive) to $4,500 when it was a vacant house while we went through her estate settlement process and then put it on the market for it to sell. And we only had that as a policy from a subsidiary of Lloyd's of London because of a family business that used our insurance agent, who had contacts. Otherwise, it would have been even more.

I could not renew the insurance on the family home unless it was lived in. I had to ask a relative to stay there intermittently so that it would be "inhabited" while I put it on the market. It was a stressful time, for sure.

[EastWest Gal]

Just because there is no estate tax doesn't mean the estate itself doesn't need an income tax return filed. I had to do an estate income tax return on my dad's estate because the estate as an entity had taxable income, and the estate paid income tax on that income, prior to the distribution of assets to me and my sister.

I also opened an estate checking account (I needed the will, the death certificate and the estate EIN) to do it. All estate related expenses are paid by the estate, not by you. All expenses you incur as executor including legal fees should be paid from the estate, not by you. If you incur expenses, you may reimburse yourself from the estate. The bank branch manager was very helpful with this. The estate account can be at any bank. It paid no interest and charged no fees.




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[Hermit]

When my LW died, I called the county clerk office in the Virginia county where we resided. They told me what forms and and papers to get from their web site. As I recall, one of them was instructions for an executor. I think a call to the county clerk would be worth your time.

[RE2Boys]

Unless your going to use the house as your residence, it may be a good idea to have an appraisal done soon to establish your basis in the real estate. Your basis is the value of the property on the day of her passing. You will need this if you sell it or use it as a rental.

When I was the executor of my Mom's and my sister's estates, I found a local lawyer that would advise me on the steps to take and charge by the hour. He would do as much or as little of the paperwork as requested. I was largely the doer as I am semi-retired. In legal notices, his name wasn't even mentioned. For each estate, legal bills were each less than $1200.

You may need to check with VA's Medicaid office, in PA they have first dibs on any estate assets if they provided any support to the deceased. One more piece of paper for the files.

[harley]

Thanks for all the information, I guess. It's a lot! More complicated than I realized. In the link that Meadbh supplied it stated that being an executor is not an honor, it's a job. Definitely accurate.

I'm going to pick up the death certificates tomorrow. I suspect I'll be able to start making headway after I get them. I talked to the lawyer who wrote the will, as well as the Circuit Court Clerk. Got good information from them, most of which is also in this thread.

One thing I'm going to check is how to go about defining the house as a vacation home. Hopefully the insurance will be cheaper than for a "vacant" house. I think we're going to keep it, at least for a few years. It's on the Shenandoah River, and could be decent if 90% of the stuff is moved out of it and we slap on some paint. I'll see what we have to use as the basis, and put it in the records for later.

Especially thanks for all the tax return information. It's probably not going to be that hard, I'll just have to make sure to haul all the paperwork down to Florida when I go.

I'm going down to her house tomorrow for a few days, partially to do paperwork and partially to start shutting the house down for the winter. It feels odd to be rooting through her stuff, but it's a good reminder to try not to put my DD through the same thing when I shuffle off.