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REvocable Trust
Old 12-06-2014, 10:59 AM   #1
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REvocable Trust

My mother recently passed away and left besides an IRA (which I discussed in another thread) but a revocable trust where my sister and brother are now co-trustees with me. She never gave anyone POA but DB handled her finances after DF passed away 14 years ago. We have an appointment with an accountant next week and I am wondering what questions besides the handling of the inherited IRA (which I think I understand now thanks to all of you )

DB has never been above board on where he has DM funds. In 2013 he gave us a spreadsheet that wasn't quite up to date. I don't think he was stealing from DM but it never sat well with us. Now I'm not sure how to approach this. He wanted us to go to a CU and split up a bunch of cds she had there but I said I wanted to go to the accountant first. DB spent $1000s of his own money when DM got sick and still needs to be reimbursed for that..

On another note, his wife wouldn't let him even talk to us (DS and me) for the last 3 years except when DM got sick. That is another long story. Just wanted to mention it to show not a lot of trust here.

So if you were me, what questions would you have at the meeting with the accountant? Keep in mind, DB will try to take over everything like he normally does.

Thanks!!!
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Old 12-06-2014, 11:42 AM   #2
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DB has never been above board on where he has DM funds. In 2013 he gave us a spreadsheet that wasn't quite up to date. I don't think he was stealing from DM but it never sat well with us. Now I'm not sure how to approach this. He wanted us to go to a CU and split up a bunch of cds she had there but I said I wanted to go to the accountant first. DB spent $1000s of his own money when DM got sick and still needs to be reimbursed for that..
Thanks!!!
Well, when it comes to things like this, either you ask for a detailed account of your DM's expenses in the final months and since (which you ARE rightfully owed), or you don't say anything and potentially get bamboozled.

Note that you AND your sister are CO-TRUSTEES (which I find a little odd to name 3 trustees - are you sure you aren't alternate/backup trustees?) If you are indeed CO-trustees, then you are damn well obligated to have ALL of the same info as your brother. You have just as much legal authority and power as him, so don't you dare let him say that you or your sister don't have authority to see copies of checking accounts, etc..

Legally, you have to make sure all debts are paid off by your mother's expenses, whether it's utility bills, medical expenses, etc.. So even if your brother hadn't paid for things out of his own pocket, you still have every right to see all movement of funds for several months before your mother's passing to see what has/had been paid, and what might still be outstanding, and to verify that bills that come in are paid off.

As a Co-trustee, you need to know where all of her assets are at to know how to divide up the assets. Perhaps you might want to take over ownership of a CD she had, rather than cash them all in?

Also, as a BIG check, ask the accountant for prior years' tax returns. That will show you her 1099s/Schedule B, and where she received interest/dividends/capital gains from, and help verify where she had her accounts held at. If you really want to test your brother's integrity, ask the accountant for the prior year's tax return without your brother knowing. Then, compare your brother's list of where she had accounts at to where her 1099 shows she received interest/divs/cap gains from.

This may sound sneaky - but it sounds like you have some reasonable suspicion of his honesty. And this simple test would be a very good way to verify this.

Also, as co-trustee, you have every right to see her previous statements from where she had accounts at. So ask your brother for these as well as a summary list of her assets (CD values, interest rates, maturity dates, etc.) from him...and them compare this to the prior year's 1099/Schedule Bs from the accountant.

Don't underestimate how people can be tempted to steal from others, even their own family. It could be your DB, or could be his wife, but don't assume that everyone else is as honest as you are. It's sad, but that's how some people are in the world.
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Old 12-06-2014, 12:24 PM   #3
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[QUOTE=MooreBonds;1526304]

Also, as a BIG check, ask the accountant for prior years' tax returns. That will show you her 1099s/Schedule B, and where she received interest/dividends/capital gains from, and help verify where she had her accounts held at. If you really want to test your brother's integrity, ask the accountant for the prior year's tax return without your brother knowing. Then, compare your brother's list of where she had accounts at to where her 1099 shows she received interest/divs/cap gains from.

This may sound sneaky - but it sounds like you have some reasonable suspicion of his honesty. And this simple test would be a very good way to verify this.

QUOTE]
I never thought of the old tax returns... That is a very good place to see exactly where her money is.

In 2013 about half were in CDs and the rest in stock and mutual funds. He had her spread out. Too complicated in my opinion.

We are definitely all three equal in the trust as successor trustees. The CU told him he had to bring us in person to do anything with the cds. LOL Now he needs our cooperation.

DS really wants to "make up" with DB so she is willing to do most things he suggests (until I point out something "wrong" with it. DB talked about keeping the trust in our three names which NO WAY am I going to let that happen. I say dissolve it and divvy it out.

I want nothing to do with him and his family when this is over. Too much heartache dealing with SIL. She actually told me at DM memorial that she was ready to "have at it and take the gloves off." SHe complained about DM when Mom was still in her apartment and we were waiting for the funeral home to pick her up. It takes all kinds....
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Old 12-06-2014, 12:59 PM   #4
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Is the accountant new on the scene or has s/he been doing your DM's work for some time?

If the accountant is not new s/he should have tax returns and support from which you can get a sense as to what DM's assets and liabilities are.

What you really need is a balance sheet of DM's assets and liabilities, especially now. What I would suggest is that you engage the accountant to compile a balance sheet with DM's assets and liabilities as of her date of death and as of 12/31/13 (and perhaps also 12/31/12). It might cost you a bit but it will provide you and DS with some peace of mind and DB will likely be more cooperative in providing the accountant with any needed information than you or DS. And it will reduce the chances for conflict between the 3 of you.

I agree that given the situation it would be best for the trust to settle all of DM's liabilities, reimburse DB for any expenses he paid for (after he presents a statement of those expenses and receipts for at least the bigger ones) and then distribute the assets. Typically, the trust document will have provisions along these lines (I know my Dad's did).

These things can be so hard. we have some friends whose oldest brother was executor for the estate of their DM and misbehaved (gave things to his kids, changed the locks so they could not use the family summer home, etc). They finally had to go to court and get him removed as executor. I hope you have a much better result.

Do you have a copy of trust documents? I recall in the case of my parent's trust that it included a schedule of the trust's assets on the date the trust was formed. If it was a long time ago (as it was in my case) it will not be very helpful but if it was more recent it might be helpful.
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Old 12-06-2014, 05:25 PM   #5
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Is the accountant new on the scene or has s/he been doing your DM's work for some time?

If the accountant is not new s/he should have tax returns and support from which you can get a sense as to what DM's assets and liabilities are.

What you really need is a balance sheet of DM's assets and liabilities, especially now. What I would suggest is that you engage the accountant to compile a balance sheet with DM's assets and liabilities as of her date of death and as of 12/31/13 (and perhaps also 12/31/12). It might cost you a bit but it will provide you and DS with some peace of mind and DB will likely be more cooperative in providing the accountant with any needed information than you or DS. And it will reduce the chances for conflict between the 3 of you.

I agree that given the situation it would be best for the trust to settle all of DM's liabilities, reimburse DB for any expenses he paid for (after he presents a statement of those expenses and receipts for at least the bigger ones) and then distribute the assets. Typically, the trust document will have provisions along these lines (I know my Dad's did).

Do you have a copy of trust documents? I recall in the case of my parent's trust that it included a schedule of the trust's assets on the date the trust was formed. If it was a long time ago (as it was in my case) it will not be very helpful but if it was more recent it might be helpful.
I have a copy of the trust (only because we got a lawyer involved when DM
was still alive to try to get her to sign a POA.) This accountant was suggested by that lawyer. I guess I need to read the trust again but if I remember right, it says the trust will pay for anything needed to disburse the estate so the accountant would be paid by it and that the bills will be paid first.

I hate to spend the $s for an accountant just because DB is such a pill but I think it's the only way. I don't think he will listen to DS and I (or our spouses... if we bring ours in I fear he will bring the witch in.)
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Old 12-06-2014, 05:28 PM   #6
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Keep the spouses out of it. No upside and too many cooks...
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Old 12-06-2014, 05:43 PM   #7
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give all the power to the accountant, a cpa I hope, tell the accountant that you and DS want an accounting of the past 3 years expenses, a list of assets with approximate values and a list of existing debt and potential expenses. Then have all of this reviewed by a trusted lawyer. Reason? You want no future problems with IRS, debtors, asset value disputes between the 3 of you. Suggest that it remain the 3 of you, in laws can suggest solutions to spouses only. Make everything black and white and let the chips fall where they might. Now, if the estate isn't at least a $100,000, it might not be worth the expense .....goal should be twofold, 1. family unity with all but with DS at a minimum. 2. fair distrbution of assets........good luck.......I don't know any other way to suggest a solution. Frankly, you have to ask yourself......will winning make life better, is it worth the hassle?
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Old 12-06-2014, 06:09 PM   #8
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OMG, DejaVu

When my FIL passed away unexpectedly, it was clear someone needed to manage my MIL's financial affairs. One of my wife's bothers volunteered and the other two kids agreed. The brother that volunteered had said he would keep a spreadsheet of her income and expenses and send us a copy on a regular basis. Her mother lived a few more years and we never saw any spreadsheets or heard a word about her the condition of her estate.

I won't go into the details but the circumstances really strained the family relationship. A simple high level spreadsheet (as he had promised) could have avoided a family breakup.
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Old 12-06-2014, 08:54 PM   #9
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My mother passed away suddenly, earlier this year. It wasn't unexpected because she was 89 and she'd made a will and organized here finances well. She wanted me to be an executor along with her lawyer, but I persuaded her to make the lawyer executor on his own as I have two brothers and I didn't want any tension. Things have worked out very well. My brothers and I knew the value of the estate and the lawyer has wound it up efficiently, selling the house, shares etc and dealing with all the bills. His fee is 1.5% of the estate's value which is well worth it because it took all the worry out of it at a difficult time.
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Old 12-07-2014, 09:26 AM   #10
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Is the accountant new on the scene or has s/he been doing your DM's work for some time?

If the accountant is not new s/he should have tax returns and support from which you can get a sense as to what DM's assets and liabilities are.

What you really need is a balance sheet of DM's assets and liabilities, especially now. What I would suggest is that you engage the accountant to compile a balance sheet with DM's assets and liabilities as of her date of death and as of 12/31/13 (and perhaps also 12/31/12). It might cost you a bit but it will provide you and DS with some peace of mind and DB will likely be more cooperative in providing the accountant with any needed information than you or DS. And it will reduce the chances for conflict between the 3 of you.

I agree that given the situation it would be best for the trust to settle all of DM's liabilities, reimburse DB for any expenses he paid for (after he presents a statement of those expenses and receipts for at least the bigger ones) and then distribute the assets. Typically, the trust document will have provisions along these lines (I know my Dad's did).

Do you have a copy of trust documents? I recall in the case of my parent's trust that it included a schedule of the trust's assets on the date the trust was formed. If it was a long time ago (as it was in my case) it will not be very helpful but if it was more recent it might be helpful.
These sound like good suggestions that I don't think DB will object to. Every time I asked him for it when DM was alive (in case, he got hit by a bus), he got all defensive and said "You can do her finances if that's what you want."

The trust is old. It was set up when DF was still alive and the assets listed no longer exist (condos, cd, etc.) We have split up everything but the money, which is enough that it's worth all the hassle but not enough to change our lives.

I have heard little from DB since we cleared out DM's apartment so I figure he will be back to the silent treatment once this is settled. Hopefully, DS won't change her mind and agree to continue the trust just so she can have contact with him.
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Old 12-07-2014, 06:58 PM   #11
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Your topic is just what I was looking for. While our situations are not the same, they are similar. Our mother is in failing health and her trust has her three children as successor trustees. Since we are headed to the inevitable, I have been reading her trust and trying to figure out what we need to do, so I have been looking for posts like yours.

DW and I were at our attorney this past week going over our own wills and I asked him how it works with co-trustees. Her trust says we, the successor trustees, must work in concert. He said that any decisions must be unanimous and if we could not agree on an issue we would have to go before a judge and he would settle it. Your mother's trust my be written different or there may be different state laws.

I have thought also about continuing the trust because of some of the long term investments, but If I should pass from the scene before the trust is completely dissolved, then my remaining share would go to our children. I can understand this, but we have been married over 40 years and DW has been just as much a daughter to my mother as I have been a son. We do not need the inheritance, but I am concerned about the unknown when I pass and I would feel better now knowing she has a little more cushion. Our children are all very responsible, but I also worry the temptation to spend the money at their ages will overcome their better judgment. The way our wills are set up the kids will eventually get it anyway.

I think you need a trusted attorney in addition to the accountant so you can get some clarity on what exactly the trust dictates. It appears you will need one to get the trust settled and ,after all, you have just as much say in what happens as your siblings.
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Old 12-07-2014, 07:11 PM   #12
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Another thing to remember.... with 3 trustees all it takes is for two of them to vote for something and as long as it is not illegal or against the trust it will happen...

SOOOO, if DB wants to play fast and loose you and DS can control the trust... however, if DB gets DS on your side you will have to do what they want unless you bring in a lawyer... as mentioned, this is not good with a small estate... I had a friend who's father's estate was drained by 50% fighting his second family (divorced and remarried and had more kids) by the lawyers....
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Old 12-08-2014, 10:50 AM   #13
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My DM passed passed away unexpectedly in August. I am the executor and thankfully had been helping her over the past few years with various things including her finances. Her will is going through probate and I hired an attorney. He advised that I keep siblings updated and thoroughly informed. There are five of us with two living elsewhere. I send out email updates with an updated spreadsheet to let them know about the status of the estate. Things have been going smoothly (there were 5 timeshares to deal with). It's possible it may all be wrapped up after completing her taxes next year.
I agree that you should have access to a information to prevent any questions/problems now or down the road. Don't feel bad about pushing for details - he should have offered it from the beginning if there is nothing to hide.


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Taxes??
Old 12-08-2014, 11:38 AM   #14
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Taxes??

I am under the impression that with a revocable trust, if it is under a certain amount then we don't have to pay taxes on it now that we are trustees. Is that the case? Anyone know where the IRS has that stated?

Also, I'm confused, don't all three of us have to agree? It can't be 2 against one since we are all three successor trustees?

THanks again!
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Old 12-08-2014, 01:30 PM   #15
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I am under the impression that with a revocable trust, if it is under a certain amount then we don't have to pay taxes on it now that we are trustees. Is that the case? Anyone know where the IRS has that stated?
There could be wording in the documents that would result in a different tax treatment....but, in nearly all revocable living trust (RLT) "standard" documents, the trust will distribute ALL income to each respective beneficiary, in accordance with their ownership shares of the trust. Your accountant will give each beneficiary a form K-1 to file with your individual income taxes. That Form K-1 will show your share of interest, dividends, capital gains, and any other income earned from the trust's assets. This is why you must act soon to change the SSN on your mother's assets from her old SSN to a new TIN that is associated with the RLT. That way, all income earned under the RLT is associated with the new TIN, and not with your mother's SSN.

So, the short of it is, each person will report their respective share of the trust income on their own individual income taxes for each tax year. Note that this is income earned AFTER your mother's date of death. All income earned by your mother from January 1, 2014, up to the date of her death will be declared on her final income tax return for 2014. All income earned AFTER her date of death is distributed by the revocable living trust to each heir.
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Old 12-08-2014, 04:25 PM   #16
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Also, I think the "continuing the trust" as you call it is legally different. Now that your mother passed away, it transfers over to a irrevocable trust. You need to get a tax ID for the trust. Your only option is to execute the trust's distributions per your mother's (and father's) wishes.

Now for the bigger question, being co-trustees. Basically you all 3 should have a mtg and lay out all of the financials so each person has the same understanding. Then once any bills are paid, the non-money items and financial balances can be distributed.
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Old 12-09-2014, 10:24 AM   #17
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Revocable become irrevocable at the death of the grantor. The trust document will determine how the co-trustees make decisions. Unless the $ figure is quite small, this is not a DIY project!
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Old 12-09-2014, 10:34 AM   #18
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My dad has a trust so I'll explain how his works, which I think is fairly typical.

He was the grantor and also the beneficiary of the trust (when he was alive). When he was alive, any income from the trust's assets was reflected in his tax return as if he owned them directly.

When he died, Mom, sis and I became co-trustees with 2/3 needed for any decisions and Mom became the beneficiary of the trust. I had to apply for a tax ID. I prepare tax returns for the trust and all income is distributed to Mom and reported on a K-1. Mind you, the income isn't physically distributed to her because between SS and her rental property she has sufficient income, but it is reported on her tax return through the K-1. We could physically distribute it to her but have chosen not to. It is as if it was distributed to her and she decided to reinvest it in the trust.

When Mom dies, the trust states that sis and I are the co-trustees and that the trust's assets shall be liquidated and distributed to the 5 of us kids.

We do DIY, but I am a CPA (albeit not a tax specialist) so I handle the investing, accounting and tax returns and bring in tax specialists as necessary. Once you set it out and figure it out, maintaining it is not that difficult. It is like doing an additional tax return but unfortunately by hand since it would not be cost effective to buy the specialized software to do just one 1035 and one K-1.
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Old 12-09-2014, 10:51 AM   #19
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It is like doing an additional tax return but unfortunately by hand since it would not be cost effective to buy the specialized software to do just one 1035 and one K-1.
Did you mean doing a 1041 Fiduciary Tax Return?

I was able to do my sister's trust tax return using Intuit Online Tax software, I think it cost about $40 last year. Trust terminates in 2015 so only two more returns.
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Old 12-09-2014, 11:08 AM   #20
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I am trustee for my parent's (now deceased, and therefore irrevocable) trust. I do it all myself DIY, and end up doing the 1041 tax form by hand also. This year is the end and final distributions completed, so 2104 tax year is the end of the process. I was fortunate that my parents had it set up good and also was not real complex. Also fortunate me and two sisters get along well and no family fighting over stuff.
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