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Old 10-04-2011, 11:42 AM   #121
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Not sure he can do this. Not sure he can take something that is his, titled to him and route it to the estate. It legally does not belong to the estate.
Any accountant....probably would not include this in the final tax filing.

I'm couching my statements with "not sure" because utrecht...I'd rather you get a professional opinion on this rather than take our words for it. (but I'm 100% sure )
I'm sure if you did this, it's not likely anyone would complain since it benefits the other heirs. If it hurt the other heirs, you'd hear about it quickly. My attorney made an accounting mistake, the only person it hurt was me, as the executor and heir. This mistake passed by 4 separate legal groups (my attorney, my mom's guardian bank legal team, brother's attorney and an accountant and the judge) who all approved of the mistake. If I didn't catch it, it never would've raised a red flag.
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Old 10-04-2011, 12:18 PM   #122
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Not sure he can do this. Not sure he can take something that is his, titled to him and route it to the estate. It legally does not belong to the estate. Or perhaps it does with him as beneficiary. I would think, however, the money slid to him at Date Of Death since it was a "right of survivorship" situation.
Any accountant, probably would not include this in the final tax filing.

I'm couching my statements with "not sure" because utrecht, I'd rather you get a professional opinion on this rather than take our words for it. (but I'm 99.9% sure )

Believe it or not,utrecht, if you do by chance route it to the estate, technically you may be "gifting" to the estate and you may get hit with a gift tax return and gift taxes. Please be careful so you know all ramifications for any step you take.

Just to clairfy, you do not have to take ownership of something if you do not want to.... so if he believes that it should be in the estate he can put it there by refusing the right of survivorship rule (IOW, disclaim that inheritence).... it then becomes part of her estate since he did not take ownership of the asset... (that is of course if there was not a secondary beneficiary named)...

I used to do estate taxes (more than 30 years ago) and we did this a few times...
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Old 10-04-2011, 12:38 PM   #123
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Just to clairfy, you do not have to take ownership of something if you do not want to.... so if he believes that it should be in the estate he can put it there by refusing the right of survivorship rule (IOW, disclaim that inheritence).... it then becomes part of her estate since he did not take ownership of the asset... (that is of course if there was not a secondary beneficiary named)...

I used to do estate taxes (more than 30 years ago) and we did this a few times...
Thanks for reminding me about this possibility Texas Proud. You are right. Beneficiaries may "disclaim" an inheritance. But if they do, it may result in them giving up all rights depending on the timing of disclaiming and what, if any, instrument is in affect after disclaiming. It may bypass them altogether resulting in the distribution going to the beneficiaries heirs (children).
Is this what you are talking about?

Examples:
We "disclaimed" an IRA beneficiary designation of my mothers with the specific purpose of routing it back to the estate so her estate could pay the income tax. We knew when we "disclaimed", it would force it into her estate. At that point in time, it hit her will and the proceeds were governed by her will which ultimately poured it over to her trust. This resulted in more net Unified Tax Credit dollars going to her heirs...which is what everyone wanted.

I also disclaimed my percentage of stock held in my mothers trust with the specific purpose of putting it in the hands of my daughter mainly to get it out of my future estate (psuedo generation skipping) and so that my daughter was not the only family member without stock.

Disclaiming works if you are a beneficiary depending on the circumstances and how it is done. Not sure it works or how it works if you are "the owner". Utrecht may already own this money. How can one disclaim something they already own.?

For Utretch: There are deadlines for disclaiming property.

Texas Proud...just reread your post. I did not realize one could disclaim a "right of survivorship" titling. Does he not already own it at the Date Of Death?
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Old 10-04-2011, 12:48 PM   #124
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I think that the least important thing is what your mother might or might not have wanted. She could have made this clear, but evidently she did not.

Wahoo is right, if you keep the bank account money, many but not all sibs will be resentful. Perhaps some mumbo jumbo about taxes, etc will lessen this effect. And some sibs will realize that you deserve the money, and be gracious.

When my brother died he passed almost all his assets to one brother, outside of probate by POD provisions. Otherwise, he died intestate and pretty much broke. If there is anything left, it will be about $8000, to be split by us 3 remaining sibs, including the brother who already got a nice hunk. My sister, who is (very inexpertly) handling the estate and who also was a huge help to dying brother in his last few months, in spite of the fact that he had been pretty much a jerk to her for years, asked brother #2, who already bagged ~$200K by POD, if he would disclaim the 1/3 share after probate ( about $2500) that legally he could claim. Oh no, saith he, "Dear Dead Brother wanted me to share in his estate...." Needless to say, these two have spoken to one another for the last time, and actually I don't really care if he falls into an open manhole and is never heard from again.

He has always been a thin skinned, selfish, self absorbed jerk, and he has run out his string with the two of us.

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Old 10-04-2011, 02:29 PM   #125
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Texas Proud...just reread your post. I did not realize one could disclaim a "right of survivorship" titling. Does he not already own it at the Date Of Death?

Well, I am not sure legally if you can... maybe one of our lawyers can chime in here... but when I did estate taxes there were a lot of things that happened that might not have been by the letter of the law, but was the intent of the deceased...
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Old 10-04-2011, 02:37 PM   #126
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No, bank account rights of survivorship bypasses will and probate. Ownership is transferred at time of death. The only time they're included is if there's no will and/or no beneficiary designation. I should add there were several accounts left to me, joint tenancy w/rights of survivorship, POD and no beneficiaries listed. The one w/no beneficiaries was the only one that was included in the estate.
Except that if estate taxes are due the total has to be included in the estate tax filing. Just like insurance proceeds from policies that the deceased owned have to be included in the total. (Form 712 is the form for this from the insurance company)
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Old 10-04-2011, 02:53 PM   #127
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Except that if estate taxes are due the total has to be included in the estate tax filing. Just like insurance proceeds from policies that the deceased owned have to be included in the total. (Form 712 is the form for this from the insurance company)
I'm not sure why it would be included for estate tax purposes since it's not even an estate asset. As far as probate, the attorney wasn't interested in beneficiary assets or life insurance in our situation.
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Old 10-04-2011, 03:22 PM   #128
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Can someone explain all this talk of estate tax? There are no Federal or State inheritance taxes in this case. Is the estate tax something different?
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Old 10-04-2011, 03:28 PM   #129
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Can someone explain all this talk of estate tax? There are no Federal or State inheritance taxes in this case. Is the estate tax something different?
The estate tax is paid on the estate as a whole, by the executor.

Inheritance taxes are different and paid by the heir and calculated separately for each beneficiary.

There is no federal inheritance tax, and I think the federal estate tax is only on estates over around $5 million. States can impose either but I think inheritance taxes are disappearing in most states.
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Old 10-04-2011, 03:48 PM   #130
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Are the bank account and IRA that are not subject to
probate still considered part of the estate for estate tax purposes?
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Old 10-04-2011, 03:54 PM   #131
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Are the bank account and IRA that are not subject to
probate still considered part of the estate for estate tax purposes?
Yes
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Old 10-04-2011, 04:09 PM   #132
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The estate tax is paid on the estate as a whole, by the executor.

Inheritance taxes are different and paid by the heir and calculated separately for each beneficiary.

There is no federal inheritance tax, and I think the federal estate tax is only on estates over around $5 million. States can impose either but I think inheritance taxes are disappearing in most states.
The estate is well under $5 million. There is no inheritance tax in Texas. Does that mean there is no tax at all to worry about?
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Old 10-04-2011, 04:11 PM   #133
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The estate is well under $5 million. There is no inheritance tax in Texas. Does that mean there is no tax at all to worry about?
Check and see if there is an estate tax in Texas. Even better, maybe you should seriously consider getting a CPA to help you and doublecheck what you do. This stuff gets pretty complicated.
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Old 10-04-2011, 04:14 PM   #134
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This money is legally mine, but morally I don't know if it is or not. Did she purposely leave it there to repay my wife and I for everything we did for her? I don't know. This bank account is a bit over half of her total assets and my brother and sister know about it. They just don't know any details.
I struggle with how to handle this. I really want to do what my mother would have wanted. Do I think I deserve more than they do? Well, I did 50 times more than they did for my mother, but I wasn't expecting to be paid for it.
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I know I am the legal owner of the bank account but I don't know if that's what my mother wanted or not. She was a very savvy person so I think she may have done it on purpose. If she did, it was a very nice thing to do for me, but not a very nice thing to do TO me. I'm also fairly certain that she didnt tell my brother he was excluded from the will which is another not very nice thing to do to me since now I am going to be the one stuck with telling him.
Well, now it looks like you can put a dollar value on your family relationships.

Legally the money is yours. However if there's an ethical question in your mind then it's certainly more than a "question" in the minds of your siblings.

If you're not comfortable taking the money then don't take it. Simple as that. It's just money.

If you treat the money as part of the estate's assets then you'll have the moral high ground for any other controversies that arise.

If you torture yourself (and your siblings) with what your mother "meant" to do then you'll rationalize your way into a bad decision that will dog you the rest of your life...
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Old 10-04-2011, 04:14 PM   #135
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The estate is well under $5 million. There is no inheritance tax in Texas. Does that mean there is no tax at all to worry about?
The IRAs will be subject to income tax when the funds are withdrawn, and withdrawals are subject to RMD.
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Old 10-04-2011, 04:18 PM   #136
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I guess inheritance tax and estate tax are two different things? There is neither in Texas and the estate is not big enough to trigger Federal taxes so I guess there are no taxes at all to worry about.
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Old 10-04-2011, 04:31 PM   #137
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The IRAs will be subject to income tax when the funds are withdrawn, and withdrawals are subject to RMD.
To add to the above, the IRA's will be considered "Inherited IRA's" and typically there are 3 choices.
1. Lump Sum - all income tax due immediately
2. Five Year Payout - income tax stretched over 5 years
3. Annuitize it based on the beneficiaries life expectancy which will be subject to the yearly RMD.
(but now that I think about it, we had these choices because my moms IRA's were sitting with Annuity type companies - like ING). If your Moms is sitting at a bank, there may be different choices).
You will have to find out if it is qualified or unqualified money. Meaning, was it before tax or after tax money that originally went in. And don't take their word for it. Make sure you know the original source of the money. I say this because one company I dealt with, had the account coded wrong. It happens.

Companies may have developed other choices in the last few years. You have to speak to the company that holds the IRA. The IRA will be split into as many parts as there are beneficiaries. Each beneficiary can make their own independent decision.

It's not too early to get to work on this. It took me a long time to get the two companies my mom had IRA's with ...just to divide it into "parts".

If this IRA is invested in potentially risky assets, you might consider moving it to cash to protect the value. Or not. I depends on how you view where things are going. As Executor it is up to you to protect all assets. No one can fault you if you move it 'to cash".
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Old 10-04-2011, 04:50 PM   #138
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Check and see if there is an estate tax in Texas. Even better, maybe you should seriously consider getting a CPA to help you and doublecheck what you do. This stuff gets pretty complicated.
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Old 10-04-2011, 04:54 PM   #139
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If the IRA is considered an inherited IRA, can a beneficiary leave it as an IRA and not withdraw any money until they retire and pay taxes at that point?
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Old 10-04-2011, 04:58 PM   #140
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If the IRA is considered an inherited IRA, can a beneficiary leave it as an IRA and not withdraw any money until they retire and pay taxes at that point?
No. Beneficiary IRA rules have a number of options, but if the original owner had already begun making distributions the beneficiary will need to do so as well, only based on his/her age. If distributions had not begun the rules are different but basically the funds will be distributed and taxes paid. You cannot roll over an inherited IRA into your own IRA.
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