Can Siblings Amicably Alter a Will/Trust?

[gauss]

^ Is this true? Speaking of the federal returns, I thought if no estate tax was due then there was no requirement to file an estate tax return (form 706).

Perhaps you were referring to an estate income tax return (1041) or the decedents final income tax return (1040)?

-gauss

 

[ivinsfan]

State's very often have estate taxes, my cousins estate was in the neighborhood of 600K and the estate cut a big check to PA...in fact since we were 3rd degree relatives we payed a higher %.. the federal tax is not an issue for most people.

 

[sheehs1]

gauss...I will let others weigh in but I WAS referring to the 706 Estate and Generation Skipping Tax Return and the State Estate Return for the applicable state. It makes sense that it is required if for no other reason than to prove no estate tax is due at the Federal Level. Many states have not adopted the higher ceilings for Estate Tax that the Federal government has adopted.

I know for a friend who passed at age 99 with few assets other than a house, some CD's, some SSN income, etc., her son, instructed by his cousin who is a lawyer, had to file both the Federal and State estate returns.

Yes, the typical Federal and State income tax returns are due as well on income up to the decedents Date of Death.

 

[Midpack]

Again, I don't know how this all works. Apologies for not describing the situation more clearly at the outset, or knowing estate tax laws. To make this easier I should be more forthcoming- the estate consists primarily of large $ savings (2/3rds) and the house itself (1/3rd). Even if we go to the trouble of selling the contents of the house for top dollar, I am guessing it would be worth a trivial amount by comparison, maybe $5K (WAG)? Everything is in trust, there's no one with any legal authority beyond my sister and I once my Dad passes away. The estate is probably worth about $2M in total, it's in TX. We've had copies of the trust documents all along, so unless our Dad made revisions recently without telling us, it says 50:50 for the entire estate. I just wanted to tilt the distribution to leave more to my sister, and just giving her the house seemed straightforward, and she'll be living in it until it's empty and sold so that gives her the freedom (and incentive) to stay or leave when she wants to (but she'd prefer sooner rather than later).

I do appreciate the comments I've gotten so far, it has been helpful. Sorry to put an uncomfortable subject up for discussion, but I assume many here of my generation have regrettably been through this already. We haven't.

 

[marko]

You only need to talk about "disclaimers" if people have taxable estates (over $10m).

Not sure if we're talking about the same thing but at least in Mass disclaiming is necessary in order to not receive the asset regardless of value.
If you receive an asset and then distribute it, one is subject to "look back" and tax issues. Disclaiming has it as never having been yours.
It may vary state to state.

For example, an elderly person receives an inherited property but then gives it to her daughter. Four years later mom needs a nursing home. That gift to daughter is considered an asset. Gets messy.

 

[Alan]

When my MIL's father died his will specifically cut out completely his son, leaving his estate split 3 ways equally between the daughters. As executors the sisters ignored this instruction in the will and split it 4 ways. As executors of the will can you and your sister simply split it the way you wish? (I know that English law applied in the case of MIL so may not be relevant)

 

[TrvlBug]

It is possible that this a regional thing or a amount of wealth thing. In my location and my upper-middle class circle of friends, I have only heard of estate sales.

I believe it is a regional thing. In my area, SF Bay Area, estate sales are the norm. There are auction houses, but most likely used for really high end stuff, sold on consignment. In MIL's midwest somewhat rural area, auctions are the norm...no such thing as estate sales until you get to the big cities. When MIL passed recently, we not only auctioned her stuff, but also her house.

 

[gauss]

gauss...I will let others weigh in but I WAS referring to the 706 Estate and Generation Skipping Tax Return and the State Estate Return for the applicable state. It makes sense that it is required if for no other reason than to prove no estate tax is due at the Federal Level. Many states have not adopted the higher ceilings for Estate Tax that the Federal government has adopted.

I know for a friend who passed at age 99 with few assets other than a house, some CD's, some SSN income, etc., her son, instructed by his cousin who is a lawyer, had to file both the Federal and State estate returns.

sheehs1 Thanks for the clarification.

In my case I probated my Father's estate and had to file an "inventory form" with the Probate court to document the value of the estate. As such I never considered filing a IRS 706 form.

If this were all handled privately with trusts instead, then I could see the value of an official form being filed with the value of the estate. Thanks again. -gauss

 

[gauss]

Again, I don't know how this all works. Apologies for not describing the situation more clearly at the outset, or knowing estate tax laws. To make this easier I should be more forthcoming-

No problem at all Midpack. I enjoy these types of discussions when I am able to bring something of value to other people.

I was hoping to narrow the discussion to make it more digestible for you instead of commenting on all possible scenarios simultaneously.

 

[sheehs1]

sheehs1 Thanks for the clarification.

In my case I probated my Father's estate and had to file an "inventory form" with the Probate court to document the value of the estate. As such I never considered filing a IRS 706 form.

If this were all handled privately with trusts instead, then I could see the value of an official form being filed with the value of the estate. Thanks again. -gauss

Good point gauss. It could be that for estates that are probated or even for those with trusts, that the determination whether to file a 760 or not is made at the inventory level with the courts, depending on the state.

 

[Texas Proud]

Forgive my stupidity but I've never been through this. If there are no tax consequences for me, I'd be happy to do that. The estate is large enough that I'd rather not pay taxes on 1/6th the estate (my half of the house) that should go with the house, or to my sister. I want her to get the entire proceeds from the sale of the house after associated taxes. Again, I may be completely wrong.

You keep talking about an estate and a trust... if there is a separate trust then assets in it are not part of the estate (or should I say will)...


If the only thing in the trust is the house then just do not take the money from the trust and it will flow to her...



If you are using the terms as the same, then that is confusing...

 

[Midpack]

Obviously I am not using the correct terms so I should probably stop wasting your time.

The doc title is "Living Trust" and it specifies revocable within. It says all assets are included in the trust, house, money and the entire contents of the house. Sister and I are successor co-trustees. I've given other details already.

I'll just wait and talk to the attorney and hope I am able to give the house to my sister (contrary to the trust instructions) and the rest of the estate will be split 50:50 as directed in the trust document.

 

[ERD50]

Obviously I am not using the correct terms so I should probably stop wasting your time.

The doc title is "Living Trust" and it specifies revocable within. It says all assets are included in the trust, house, money and the entire contents of the house. Sister and I are successor co-trustees. I've given other details already.

I'll just wait and talk to the attorney and hope I am able to give the house to my sister (contrary to the trust instructions) and the rest of the estate will be split 50:50 as directed in the trust document.

The nolo.com company has some good books that can help you get up to speed on terms and process. I'd recommend them, as it helps to understand what the lawyer is telling you.

"It says all assets are included in the trust, " ... be careful here. Regardless what the trust says, each of those assets must specifically be titled as being part of that trust. If a financial account isn't in the name of the trust, then it does not matter what the trust says. Check the title for the house. Hopefully, your Dad & lawyer did all this, but best to check now.

I think the trust is OK for naming the contents of the house, or other incidentals that can be identified by description.

-ERD50