More Father in Law Drama

[flyfishnevada]

As all the regulars know, my father in law become ill last winter and died in March. His estate is a mess. He hadn't paid federal income taxes in three years. His life insurance was in many different people's names, mainly old girlfriends. It sucked to find the paperwork to change one into my DW's name sitting in a pile of papers. He never sent it in and his old girlfriend said she would give it to us to help with the funeral expenses we had to pick up cause he never paid for that either, but she changed her mind and kept it.

We thought we were just about home free. His estate wasn't large, but we stood to get a mid 5-figure inheritance and after cleaning up his incredibly messy home, trying to get his affairs in order, etc., we figured we'd actually kind of earned it.

Then, last week my DW wondered about Oregon state income tax. She thought she'd seen something, but wanted to make sure. It turns out the paperwork was for property taxes so she called the Oregon Dept of Revenue and they informed her he hadn't filed since 1997!

Some quick figuring told us that with interest and penalties, that would wipe his estate out. Luckily, we finally talked to the enforcement division and by policy they only go back 4 years. That's still about $20,000, but better than what we were thinking.

Just venting. My DW's dad left the family when she was a kid and then when she was about 25 he found religion (literately) and wanted to get to know here. He was a nice guy, but sustained a head injury as a firefighter and developed dementia. He wasn't all to blame, but he and DW weren't close. She had no idea. She didn't take care of him hoping to get a big inheritance, she just felt it was the right thing to do. She feels a little dumped on now.

If anything positive has come of this DW talked with her mom and made sure everything was in order. My mom and dad (divorced) are both good to go, so to speak. Plus, we've both learned to make sure this stuff is settled long before we get to old and feeble to let it go to hell.

 

[chris2008]

I feel for you.
Once I had to do 6 years of back income taxes for a deceased aunt as she has appointed me to be the executor of her will.
I felt that I have realls earned my share of her estate.

 

[chinaco]

Yes... it is a valuable lesson.

I am very surprised that they let the property tax go unpaid that long.

 

[aaronc879]

Yes... it is a valuable lesson.

I am very surprised that they let the property tax go unpaid that long.

Around here I believe they can take your house after just 2 years.

 

[W2R]

So sorry to hear that his estate is such a mess. Not only are you in mourning, but you have had a lot of problems related to his estate to straighten out. Also it sounds like there won't be much left for your efforts, once the taxes are paid.

I'm glad you talked to your parents and MIL about their estates. Hopefully you won't have to go through this again.

 

[lemming]

Are you sure about owing taxes? What was his source of income? What was his age-

By the time you take exemptions taxes should be lower then your estimates.

Good idea to think about asking about quarterly payments and tax filings for older relatives though.

 

[RunningBum]

Are you sure about owing taxes? What was his source of income? What was his age-

By the time you take exemptions taxes should be lower then your estimates.

Good idea to think about asking about quarterly payments and tax filings for older relatives though.

He said Oregon was property taxes, not income taxes, and gave no figure for fed income tax. I don't know how you can make any kind of statement about how his estimates should be lower with so little info, and not even reading what was given very well. Sounds to me like the OP was pretty thorough, and wants to be done with it.

 

[Bestwifeever]

What a mess, no matter what the cause. I hope it will all be settled soon.

Definitely a good reminder to keep one's affairs in order.

 

[HFWR]

He said Oregon was property taxes, not income taxes, and gave no figure for fed income tax. I don't know how you can make any kind of statement about how his estimates should be lower with so little info, and not even reading what was given very well. Sounds to me like the OP was pretty thorough, and wants to be done with it.

It could be, though, that property taxes would be lower for someone 65 or older, and possibly some allowance for disabilities, especially for a firemen. Then again, maybe not...

 

[LARS]

Looking on the positive side, I've learned that I can get away without filing my taxes when I get too old and too stupid. At least there's somethng to look forward to!! I wonder how you can handle this non-expense in Firecalc?

Seriously, makes me glad I've gotten my parents' situation under control. But I must admit it didn't feel that way when I was slugging through the mess.

 

[akck]

Around here I believe they can take your house after just 2 years.

I believe in Oregon you can defer property taxes as a senior if you request it. They take their share out of the proceeds from the sale of the house. It's probably why it slipped through the cracks for so long.

 

[Texas Proud]

never mind...

 

[flyfishnevada]

It is his Oregon state income tax that is in arrears. We have no idea why they let it go this long, but do know that Oregon's taxes are based on you're FIT. oregon told us that they get data from the IRS. It follows that if he wasn't paying his federal taxes regularly, Oregon wasn't getting any notification and therefore would probably assume he wasn't making enough to pay.

As for whether he really has to pay, he does. We did the forms, as torturous as they were. There are plenty of deductions, but he still owes and the penalties are up to 100% of the total, plus interest. By law they can't reduce or forgive the interest and they can only reduce the penalties of you file back for 7 years or more. Paying the extra taxes and interest on more years is probably a wash when compared to paying the penalties for only back to 2007. Makes sense. File back four years and pay the penalties or file further back an possibly get them dismissed, but wither way Oregon gets their money or at least a god chunk of it.

Either way, it's his money until probate is finished and he owes somebody some of it. We weren't counting on a certain amount due to his messy estate. We always knew something might come out of the woodwork. It's more the hassle and disappointment more than anything else.

By the way, Oregon income taxes make doing the federal taxes look easy. since it's based on you're federal taxes, Oregon forms and instruction refer back to the IRS forms and instructions. Its a nightmare. You get things like this:

"Transfer the amount from line 23 and multiply by .8 and enter on line 24. Refer to IRS 1040, line 57 and enter that amount on line 25 and subtract from line 24. If the result is less than the amount on IRS 1040 Schedule A line 9, input the amount on line 25. If the amount is more refer to page 19, instruction 25 and fill out the worksheet provided and enter that amount on line 25."

And it just goes on and on like that. OMG! What a nightmare! If you're thinking about moving to Oregon, figure your state income taxes just for fun and if you still want to move there, more power to you. I prefer just paying 7.5% at the register, thank you.

 

[RunningBum]

Oops, so I was the one that misread it, but my main point was about making assumptions with little info. I should probably just butt out, which I'll do now. Good luck flyfish. Hope it's over with soon. Like others have said, it's a good lesson for us to learn.

 

[East Texas]

Either way, it's his money until probate is finished and he owes somebody some of it. We weren't counting on a certain amount due to his messy estate. We always knew something might come out of the woodwork. It's more the hassle and disappointment more than anything else.

Major kudos on you resolving his financial responsibilities. You get what we Texans refer to as a "good ol' pat on the back".

 

[LARS]

And it just goes on and on like that. OMG! What a nightmare! If you're thinking about moving to Oregon, figure your state income taxes just for fun and if you still want to move there, more power to you. I prefer just paying 7.5% at the register, thank you.

That's just the half of it. Top rate in OR is now 11%!!! Don't ask how I know...

 

[Purron]

Sorry to hear about your troubles. I'm sure this has weighed heavily on you and your wife. You two have my respect for handling this as best you can.

 

[Ally]

I'm so sorry. Settling estates, especially those of relatives with dementia, is often a nightmare. We are just finishing up our parents' estate.

 

[SteveR]

When my Dad died 11 years ago I sat down with my Mom and went through every piece of paper he had in his files. He was pretty organized so it was mostly sorting the out of date and inactive stuff from the current ones. Mom has no head for this and even less now at almost 90 with blindness so I have been taking care of her assets while my brother who lives much closer does her bills. He thinks a CD is a complicated investment so it is much better that I am watching over her small but necessary assets.

I remember when her father died and we all went to help go through the stuff in the house. She was an only child so and her mother had died 5 years before so it was all on her head (which meant my father's head). They eventually had and "estate" auction which brought a whopping $10,000 from the house, car and home contents we did not keep. Not much for a lifetime or working as a blue-color hand of all trades. My Dad took care of all the final taxes and other things.

I have nearly all our stuff pretty well documented and most is held in trust so it makes it easier to manage. The complex part is all the "stuff" we still have in the house....most of which was from either my late wife's propensity for collecting large volumes of everything to inheriting boxes of hand tools and my one collections of things acquired over a lifetime. We keep scratching at it but it never seems to diminish much. Stuff has a life of its own for sure. Too many memories or perceived value in some items to part with them and too little time to dispose of it. I kept telling myself I would get all that done after I retired....well most of it is still there waiting for me.

Do your kids a favor and get your stuff organized. Plan your funeral and pre-pay it if you can. Pick the music, the speakers and the coffin and the plot or the urn or what ever is your "final" resting place. Few things in life are harder than having to make tough expensive decisions about "final arrangements" right after losing a loved one. There are tons of details that have to be addressed and they all take place when you are at your worst emotionally and mentally. My parents pre-paid their funerals and listed all their desires for their funeral. I don't have such strong feelings about my own. Burn me, say nice things about me and scatter my ashes in the Rocky Mountains. Other than that I won't be around to care.

 

[DangerMouse]

Have to agree with you Steve, I think just as important as sorting out the financial aspect is having your funeral planned. Sometimes it amazes me that people don't have anything organised.

A friend of ours died last year after a 3 year battle with kidney cancer. I have to say it was not much fun once the questions started coming from the hospital who do you want to collect the body and then being presented with a list to choose from. Sitting at the mortuary picking out urns etc. is really not ideal when you lost a loved one 2 days previously.

Take care of it people, don't put that pain on others.

 

[Ed_The_Gypsy]

This is deja vu. You could be my brother-in-law. (Alan, is that you?)

 

[Purron]

Have to agree with you Steve, I think just as important as sorting out the financial aspect is having your funeral planned. Sometimes it amazes me that people don't have anything organised.

A friend of ours died last year after a 3 year battle with kidney cancer. I have to say it was not much fun once the questions started coming from the hospital who do you want to collect the body and then being presented with a list to choose from. Sitting at the mortuary picking out urns etc. is really not ideal when you lost a loved one 2 days previously.

Take care of it people, don't put that pain on others.

Well said DangerMouse.

 

[Nords]

Then, last week my DW wondered about Oregon state income tax. She thought she'd seen something, but wanted to make sure. It turns out the paperwork was for property taxes so she called the Oregon Dept of Revenue and they informed her he hadn't filed since 1997!
Some quick figuring told us that with interest and penalties, that would wipe his estate out. Luckily, we finally talked to the enforcement division and by policy they only go back 4 years. That's still about $20,000, but better than what we were thinking.

Sorry to read about all of this. It's hard to peacefully work through the grief when the financial issues keep popping up.

My grandfather did something similar, although he only skipped four years of tax returns. Another option would be to do the state returns on your own to see if there were any refunds or other unclaimed credits in the first decade of unfiled returns. The theory is that the state already benefited from the foregone refunds/credits and wouldn't have the right to pile on penalties for unfiled returns in later years.

Unfortunately this is a huge research/time effort (on your own) or expense (hiring a CPA). At the sums you're seeing, this forensic math might cost more than the amount at stake.

Here's hoping you're all done with the probate surprises.