Walk me through settling an estate

[SecondCor521]

No need to have a NJ estate attorney as far as I can tell, unless you want to revise your estate plan after your relative passes away.

If you file the proper notices (usually in a paper of record, which is usually just a large local newspaper), then creditor claims are barred after a certain time frame - in my state 4 months. There would be no need to wait 18 months.

It's an EIN for an estate, not a TIN. Yes, estate tax rates are higher than regular tax rates. See IRS Form 1041 Schedule G (page 30 here https://www.irs.gov/pub/irs-pdf/i1041.pdf).

For any account that you are named beneficiary or TOD or POD, all you need is a copy of the death certificate. Well, and your ID of course. The institutions holding the asset or account should be able to transfer the assets for you with those two things.

For pretty much anything else, that will have to go through probate. You'll have to open probate, which means getting the original of his will, taking it to the local probate court, getting nominated as executor, and then getting what are called "letters testamentary", which gives you the power and authority to take care of the probate assets.

The requirements for probate are based only on the probate assets, so they exclude any assets already in trust (like a living trust), and all the beneficiary/POD/TOD stuff. So even if the total estate is $1.2M, the probate estate may only be household belongings. Most states have streamlined processes for small estates which are faster / easier / cheaper that full probate. Check FL statutes or ask the FL lawyer for the requirements.

Yet another vote for getting the Nolo book - your local library can get it for you. You've gotten a lot of mostly correct information on this thread, but the Nolo book is probably very good. Between that book and the FL lawyer you should be able to handle the estate well.

I'll add, it's nice of you to do the executor job for this person.

 

[EastWest Gal]

Get the death certificates from the funeral home. It is a lot less expensive than getting copies later.

I stand corrected. I now remember that’s what I did. It’s been 12 years.

 

[HarveyS]

I don't know if you need a NJ atty. But for an estate this size, I'd call one and ask about it. Hopefully you already have a relationship with an atty in NJ. Who did you will/trust/etc? If they are not the right specialization, they should be able to refer you.

 

[audreyh1]

I got 10 death certificates when Mom died, and I ran out, and had to get more. ...

Wow, I didn’t use nearly that many. Most places accepted a scanned copy uploaded. I think I only surrendered two certified copies.

DF had already made arrangements at the funeral home including 12 certified copies of the death certificate.

 

[audreyh1]

No need to have a NJ estate attorney as far as I can tell, unless you want to revise your estate plan after your relative passes away.

If you file the proper notices (usually in a paper of record, which is usually just a large local newspaper), then creditor claims are barred after a certain time frame - in my state 4 months. There would be no need to wait 18 months.

It's an EIN for an estate, not a TIN. Yes, estate tax rates are higher than regular tax rates. See IRS Form 1041 Schedule G (page 30 here https://www.irs.gov/pub/irs-pdf/i1041.pdf).

For any account that you are named beneficiary or TOD or POD, all you need is a copy of the death certificate. Well, and your ID of course. The institutions holding the asset or account should be able to transfer the assets for you with those two things.

For pretty much anything else, that will have to go through probate. You'll have to open probate, which means getting the original of his will, taking it to the local probate court, getting nominated as executor, and then getting what are called "letters testamentary", which gives you the power and authority to take care of the probate assets.

The requirements for probate are based only on the probate assets, so they exclude any assets already in trust (like a living trust), and all the beneficiary/POD/TOD stuff. So even if the total estate is $1.2M, the probate estate may only be household belongings. Most states have streamlined processes for small estates which are faster / easier / cheaper that full probate. Check FL statutes or ask the FL lawyer for the requirements.

Yet another vote for getting the Nolo book - your local library can get it for you. You've gotten a lot of mostly correct information on this thread, but the Nolo book is probably very good. Between that book and the FL lawyer you should be able to handle the estate well.

I'll add, it's nice of you to do the executor job for this person.

Pretty much what I did for DF. I already knew his lawyer well, and he took care of everything with the local probate court. Once the heirs had signed their paperwork, it was a quick process and a very short visit with the probate judge to get my letters testamentary.

 

[RunningBum]

As said, if no trust, then you have to go through probate.

What if one has beneficiaries named or POD on all accounts, including house? I think in Virginia if you can get other assets below $50K you can avoid probate. I might be over with cars, furnishings, etc but it'll be close.

The other key about the trust is that assets need to be titled with the trust. Apparently some people forget about this step.

 

[audreyh1]

What if one has beneficiaries named or POD on all accounts, including house? I think in Virginia if you can get other assets below $50K you can avoid probate. I might be over with cars, furnishings, etc but it'll be close.

The other key about the trust is that assets need to be titled with the trust. Apparently some people forget about this step.

If even the property is TOD then I don’t see the point of a trust.

In DF’s case probating the will was simple and quick. I don’t get the big deal. I guess it depends on the state.

 

[Montecfo]

Agree on the checking account as it would make it easy to pay the bills.

OP needs to remember that the stocks will probably have a step up in basis upon death of the owner. A tax advantage that would be lost by transferring or possibly lost by sharing ownership.

Transferring shares to his friend's account as i suggested would not have that effect.

But i agree he should not use POA to transfer shares to himself predeath.

 

[disneysteve]

Transferring shares to his friend's account as i suggested would not have that effect.

But i agree he should not use POA to transfer shares to himself predeath.

Oh I absolutely didn't mean to transfer them to myself pre-death. I was asking about how I handle it after death.

 

[rk911]

Ah. That makes sense.

I’m also going to have to notify SS and his pension plan of his death so they stop paying.

the funeral home should do that for you. ours did.

 

[Walt34]

I handled my mother's estate when she died. It did have to go through probate but really, I didn't find it that much of a burden. This was in Maryland, it must vary wildly in other states to create so much resistance to probate. The estate had to be open for a year to give any creditors time to file a claim with the court.

I'll echo others on the need for multiple original copies of the death certificate, and to order those from the funeral home. I ordered a dozen, I think I needed about ten. Some places, like the credit card companies when I closed those accounts, would accept photocopies, but many others insisted on originals, the USPS was one when I wanted to have her mail redirected to my address. They also wanted a copy of the Letter of Administration, which in Maryland is the document issued by the Orphan's Court identifying me as the person responsible for administering the estate. (In MD that's who got stuck with handling estates I suppose.)

The hardest part was learning the vocabulary but after that it all pretty much was common sense. Taxes get paid first, then outstanding creditors, last is beneficiaries. DO NOT pay beneficiaries before all the other stuff is paid, otherwise the administrator(s) are personally liable because there is a fiduciary responsibility to the estate. Beneficiaries may squawk and complain but let them lest you get stuck with the tab. In my case my sisters were fine with that, they were not in a hurry.

I did have to get an EIN from the IRS for the tax return for a little bit of income generated by the estate. No taxes were actually due since the amounts were low but the return had to be filed anyway. I did not try to do that (it was pretty complicated) so for a one-off it was better to hire that out. It didn't cost much since they knew the drill.

 

[SecondCor521]

I guess it depends on the state.

Yes it does. I think my state is not a big deal, but others (who shall remain nameless) have large fees, complicated requirements, and required delays and hassles.

I like the strategy of having almost all of the assets beneficiary/TOD/POD, then do a simplified probate or probate by affidavit or small estate probate for the rest of the stuff. But I probably like it because it works for the situations I'm familiar with. There are reasons to do it differently for sure.

 

[ERD50]

...

He also owns two individual stocks for which he holds the certificates - they aren't with a brokerage. What do I need to do to get them into my name and be able to sell them?

....

Sorry that you are in this situation. Hopefully, your friend is still lucid and capable of signing paperwork. If so, I would absolutely get those paper stocks converted to a brokerage account now.

I went through this with my FIL's estate. The problem you will have is that the stock certificates are in your friend's name, under his/her Soc Sec Number. After death, that SSN dies with your friend. After death, before you can do anything with those stocks, you need to get that EIN and then go through the process of getting the ownership changed from SSN to EIN. And if the two stocks happen to be held under two different "transfer agents", the process will be slightly different. No one can do anything with them while they are under your friend's SSN after death. It involves a lot of hoops, which is good to ensure no one is getting scammed, but it is a pain. It is so much easier while the owner is still alive, and is the one making the requests.

This is all far more difficult to do after death. Fidelity helped us a great deal, but we had to go into a brick and mortar office after getting the ownership changed over to EIN. It involved medallion signatures, and that puts the firm on the hook for the whole transaction, not just verifying your ID. No one is going to do that w/o skin in the game, so having the accounts at Fidelity meant Fidelity was in a better position to take this on (other well respected houses with a B&M office near you would likely do the same).

I'll add the chorus for the Nolo book "THe Executer's Guide", but be aware that since it has to cover so many situations, it can be a bit overwhelming at first. You just need to whittle it down to what s applicable to your situation. And realize that state laws can vary quite a bit, so be careful about advice that may not apply to the states involved.

Hope all goes well for you, and that your friend has as easy a transition as is possible,

-ERD50

 

[MarieIG]

I have a terminally ill relative for whom I am the executor and sole beneficiary. I have a full breakdown of all of his financial accounts, where they're held, how to access them, who to contact, how much is in each one, etc.

Get a family tree. There may be relative who, even if not in the will, may have to be notified as part of the probate process. The requirements of course, vary from state to state.


What I don't know is what do I actually do after he dies? Can I just walk into his bank, for example, with a copy of the death certificate and close out his account? What about his Vanguard retirement account?

Bank - if you are joint or TOD on the account a death certificate will do

Vanguard Retirement Account - If you are named on the account as the beneficiary. Make sure you are.


He also owns two individual stocks for which he holds the certificates - they aren't with a brokerage. What do I need to do to get them into my name and be able to sell them?

Contact the company which owns the stocks. They will provide you with the instructions. Yes, it may require a Medallion. One of my local banks had a Medallion.


He does have another retirement account held with a money manager and I've already been in touch with that person. Once my relative dies, I'll call that guy and I'm sure he'll walk me through what I need there.

No. Don't wait. You want to be a listed beneficiary on the retirement account. It may cost you more in taxes as a result of losing what is left of the stretch if you are not.

I am named as beneficiary on all accounts that can have a beneficiary. (Hopefully that includes the retirement accounts.)

Everything else is left to me in the will. Good, but you may still need to check out the relative situation. (As a sole beneficiary, I was required to obtain an "Affidavit of Heirship." )

And what about the will? Do I call the lawyer who prepared it?

Probably, although you don't have to use him. If he is charging $500 per hour walk. Also, are there witnesses listed on the will. Do you know where they are? (You may or may not need to track them down for example if there is a self executing affidavit, it may not be necessary.) The more you do yourself, the last you pay in legal fees. Most likely, you can get some information as to the probate process and forms by looking on you local Surrogate Court's website. (That is not a recommendation to handle probate yourself; but it gives you some idea as to what will be required.)

Some states probate is relatively simple.

Is there a deed for a cemetery plot/ prepaid funeral arrangements? Save receipts for any funeral related expenses, including funeral home, cemetery and headstone, etc.

But the probate estate is not necessarily the taxable estate: be very cognizant of income and estate taxes.

Get an idea of what will pass inside the estate. If there are only a few dollars in there, there may be a venue for a small estate which will not require a lawyer.


My condolences on the illness of your relative.

 

[Sunset]

I have a related question about the POD/TOD accounts.

I'm wondering does the executor/executrix have full control over disbursement or can it be short circuited.

Example: Person dies, has an account with POD/TOD on it with 50% to Person1, and 50% to Person2.

Can either of those people simply walk into the bank with a death certificate and get their share before everything is settled, meaning taxes may not even be paid yet ?

 

[MarieIG]

Yep ^ but I'm not a tax person - had an estate tax-attorney CPA/ former IRS agent on speed dial for larger estates.

 

[Walt34]

I have a related question about the POD/TOD accounts.

I'm wondering does the executor/executrix have full control over disbursement or can it be short circuited.

Example: Person dies, has an account with POD/TOD on it with 50% to Person1, and 50% to Person2.

Can either of those people simply walk into the bank with a death certificate and get their share before everything is settled, meaning taxes may not even be paid yet ?

State laws vary of course, but in Maryland the executor had full control over those assets going through probate. And only those assets. The ones that are POD/TOD do not go through probate, and any taxes due are the responsibility of the recipient so it is not something that the executor needs to concern themselves with.

 

[audreyh1]

POD/TOD does bypass the executor.

If the estate is large enough that estate tax is owed, it would be taken out of the remainder of the estate.

 

[SecondCor521]

State laws vary of course, but in Maryland the executor had full control over those assets going through probate. And only those assets. The ones that are POD/TOD do not go through probate, and any taxes due are the responsibility of the recipient so it is not something that the executor needs to concern themselves with.

POD/TOD does bypass the executor.

If the estate is large enough that estate tax is owed, it would be taken out of the remainder of the estate.

The above are mostly correct, mostly in the first halves.

Estate taxes are due on the total taxable estate, regardless of which assets are probate assets (disposed of through a will) or non-probate assets (disposed of through POD/TOD/beneficiary).

The estate is responsible for the estate taxes due. Usually the probate assets are enough to pay the bill. In theory you could have an estate tax bill that is greater than the probate estate value ($10M IRA POD niece, household furnishings and a beat up car the only probate assets). In that case, the POD/TOD assets should properly be used to pay the rest of the estate taxes. I don't know how, and it's a rare situation anyway, but I'm sure there must be some provision for claw back of the POD/TOD assets.

Most of the time, of course, this situation doesn't occur, and when it does occur people hopefully do the right thing. But if it did happen and the person taking the POD/TOD assets is an idiot or a jerk, then the executor might need to concern themselves with the situation in some way. And the law and the recipient/idiot/jerk would have to address it somehow as well, either by fleeing to a non-extradition country or coughing up the money.

 

[MarieIG]

The above are mostly correct, mostly in the first halves.

Estate taxes are due on the total taxable estate, regardless of which assets are probate assets (disposed of through a will) or non-probate assets (disposed of through POD/TOD/beneficiary).

The estate is responsible for the estate taxes due. Usually the probate assets are enough to pay the bill. In theory you could have an estate tax bill that is greater than the probate estate value ($10M IRA POD niece, household furnishings and a beat up car the only probate assets). In that case, the POD/TOD assets should properly be used to pay the rest of the estate taxes. I don't know how, and it's a rare situation anyway, but I'm sure there must be some provision for claw back of the POD/TOD assets.

Most of the time, of course, this situation doesn't occur, and when it does occur people hopefully do the right thing. But if it did happen and the person taking the POD/TOD assets is an idiot or a jerk, then the executor might need to concern themselves with the situation in some way. And the law and the recipient/idiot/jerk would have to address it somehow as well, either by fleeing to a non-extradition country or coughing up the money.

State law may vary, and it is my understanding state law apportionment (again depending on the venue) may be over ridden by clear provisions in the will. Most of the wills we probated specifically required that taxes due be paid out of the residuary. (Not necessarily the best idea.) My (last) office never did handle estates where there was insufficient funds to pay taxes. As an aside, they tracked down every penny, and yes, they got the info. When monies are paid out to a non-probate beneficiary, there is a paper trail, and they can be tracked down. And, this info was provided to the estate tax attorney, as it is the responsibility of the executor/ administrator to file the returns for the gross taxable estate. I would also assume that when the non-probate beneficiary is paid, that info is turned over by the bank/ brokerage to the IRS (and state if they tax). At this point/ IDK/ can't recall, but I strongly suspect if the taxes were required to be apportioned to include the non-probate beneficiaries, the info as to the non-probate beneficiaries would be reflected on the tax returns. I defer to the tax professionals here.

 

[retire to nature]

I haven't gone thru all the thread thoroughly, so I will write what I have newly know for the second probate experience in my life.

First one was in CA used the nolo book. +1 I recommend. CA doesn't require to have an atty. My ex filed for his father's death.
Second one was in MO same as you, an executor and solo beneficiary. MO require an atty.

most of ppl covered. I will write ppl would not know. to have a probate or not probate is the asset amount, and it has % of asset for atty fee by state law. But by accident, I met a atty asking for cheap amount. He said my case is so easy since i am the only one there. I thought it was set rate, but he said it is still changeable. Mine was easy but he was not so good atty, but it was my second probate, so I was survived in his mislead. Somebody said, it there is beneficiary on bank account or etc, you can just ask to the bank with death certificate, so in that case, it may be right those asset is not included for the total asset for the %. I saved about $15-20k on atty fee. my asset was about $1.2 mil.

I didnt understand step up basis well at that time. I sold 4 houses during the second probate, and if I understand right now, I would be profit to wait to sell after probate was done. it was a sudden death, so I have too many thing to handle, I wanted to sell those 4. so now my sister tax has to pay the capital gain tax on those house(CPA misinformed about the capital gain tax (or I misspoke as capital tax as the estate tax) she doesnt pay gain part, so I sold it). But now he says I need to pay. So if I inherited first the house at the step up basis and sold, since i need to pay estate tax (which would be zero because up to 11million dollar is zero) and not capital gain much (gain from the death date to sold date).

my second case was w/o will, so it took 8month (3/2020-12/2020 in pandemic time) including 6month debt advertisement required period. mine even could have been shorter since I had ancillary case in IL. your case would be straight forward and short due to you have a will and solo.

 

[Sunset]

......

Most of the time, of course, this situation doesn't occur, and when it does occur people hopefully do the right thing. But if it did happen and the person taking the POD/TOD assets is an idiot or a jerk, then the executor might need to concern themselves with the situation in some way. And the law and the recipient/idiot/jerk would have to address it somehow as well, either by fleeing to a non-extradition country or coughing up the money.

I had to do some searching, and most sites do say it is rare.
However this site said for Iowa , the only real way is to sue the POD/TOD beneficiary and if they are outside the State, it gets more expensive.
https://beattymillerpc.com/wary-transfer-death-payable-death-accounts/

From this, I conclude it is actually a small possibility a jerk relative could collect all the POD/TOD money and leave the estate unable to pay the needed bills, depending upon the assets and POD/TOD declarations.

 

[SecondCor521]

I had to do some searching, and most sites do say it is rare.
However this site said for Iowa , the only real way is to sue the POD/TOD beneficiary and if they are outside the State, it gets more expensive.
https://beattymillerpc.com/wary-transfer-death-payable-death-accounts/

From this, I conclude it is actually a small possibility a jerk relative could collect all the POD/TOD money and leave the estate unable to pay the needed bills, depending upon the assets and POD/TOD declarations.

The other thing worth mentioning is that some states have laws that enforce waiting periods on POD/TOD transfers - "Yes, you can have the money but you have to wait 60 days after death" - probably partly to address this concern, rare as it may be. Presumably waiting 60 days to get one's money grubbing hands on Uncle Scrooge's checking account balance is a small price to pay in the interest of public policy.

 

[Deuce]

Just a thought, a POA is only good as long as the person is alive.

 

[frances]

executor's fee(s)

In my state (Georgia) the executor of a will is entitled to an amount of money for performing executor duties.
if will fails to mention the executor's commission, Georgia estate law mandates a 2.5% commission of all money brought into the estate and 2.5% percent of all money paid or distributed out of an estate.
https://law.justia.com/codes/georgia/2010/title-53/chapter-6/article-7/53-6-60

might be worth looking in to, as that fee will reduce the total amount in the estate and subsequently reduce the tax burden.

I'm in a similar boat - I'm my mom's sole heir and she had the forethought to put me as joint owner on everything she has save one piece of rental property. She does specify in her will other people who shall receive $x and what the distribution of per personal effects is to be to make things perfectly clear and help me avoid any argument(s) with family. For that I am eternally grateful to her. So when she goes I shouldn't have any issues with closing out her estate rather quickly and quietly.

Hopefully things will go smoothly for OP as well, and condolences in advance for your impending loss.