Walk me through settling an estate

[ARW44]

When my father passed away in Mich in '91, he had a box of certificates for his stocks and mutual fund shares. His attorney sent me, as sole heir and personal representative, to the local Merrill Lynch office foro them to transfer the shares into a brokerage account set up for me. This was done at no expense or effort on my part.

 

[RetMD21]

Vanguard took an uploaded scanned copy of the death certificate and transferred assets promptly. Florida has some simplified probate procedures. Link below.


https://www.nolo.com/legal-encyclopedia/florida-probate-shortcuts-32170.html

 

[samcat]

I haven't read all the responses but since my husband and I have done three estates, I'll put in my two cents. (He was the trustee/executor but I know how to do the paperwork!).

I'm not sure how Florida works but in California, all three people had trusts. With a trust, you get copies of the death certificate, go to a lawyer who creates a Certification of Trust. Depending on how the trust is set up, a new trust is created (kind of like a survivor trust) and you are the trustee of that trust. The new trust gets a tax ID number and all the assets can be moved into the new trust. You will have to send the death certificate and the Certification of Trust to the firms that hold the accounts who will then let you move the assets into the new trust (or sell them, etc.).

The house would remain in the old trust. It would be sold pretty much just like any other sale (with you as the successor trustee) and then the proceeds would go into the new trust.

With a trust, it is really quite simple. I am on couple forums with you and you seem financially savvy so I think you will be able to handle it pretty easily.

Of course, it was years ago that we did this so things could have changed. If he doesn't have a trust, it might be more difficult and things in Florida could be totally different.

In California, if you don't have a trust, selling a house has to go through probate and the sale has to be approved by a judge. That can take a while.

Re the stock certificates, does he have a brokerage account where he could deposit those now before he dies? That seems easiest to do.

Good luck and I'm sorry you are going to lose someone.

 

[disneysteve]

Florida has some simplified probate procedures. Link below.


https://www.nolo.com/legal-encyclopedia/florida-probate-shortcuts-32170.html

It looks like that wouldn't apply as there is real estate and the estate is well over 75K. Thanks for the link though.

 

[disneysteve]

Re the stock certificates, does he have a brokerage account where he could deposit those now before he dies? That seems easiest to do.

I asked him to look into that last week. I'm not sure if he's had a chance and I'm not going to push it if he hasn't. He is dying of cancer after all. If I have to jump through some hoops later, so be it. If he's up to doing it now, it'll save me a little hassle later.

 

[samcat]

I asked him to look into that last week. I'm not sure if he's had a chance and I'm not going to push it if he hasn't. He is dying of cancer after all. If I have to jump through some hoops later, so be it. If he's up to doing it now, it'll save me a little hassle later.

I totally get that. I'm sure if you have the death certificate and proper documents showing you are the heir, it won't be that big of deal.

 

[jayanu]

IRA in the inheritance?

OP mentioned that the estate is about $1.2 Million but did not break down the estate in its components.

If there is IRA/Roth IRA involved then one needs to be careful.
Better not to mix your IRA with this inherited IRA. There is a special naming convention for the inherited IRA something to the effect: Inherited IRA/Roth
account of the diseased xyz for the befit of ABC. The financial institution (Fidelity, Vanguard,..) should help.

Also, OP will have to take RMD. The amount and timing of when to start the RMD will vary. HOWEVER, under new law one does NOT have to take RMD and can let it grow for 10 years and at the end of the 10th year, these accounts MUST be emptied. Depending on the OP's tax bracket this can create an additional tax burden. Though no tax burden if it is ROTH.

That is why I converted my IRA to Roth so kids can leave it untouched and let it grow to double the value if the growth is 7% - rule of 72.


Though $1.2 Million may not have to worry about the Federal Estate Tax, there may be a state estate or inheritance tax or both. In PA there is no Estate tax but there is an inheritance tax of 4-4.5% for direct lineage otherwise 15%

 

[TrvlBug]

... ...
In California, if you don't have a trust, selling a house has to go through probate and the sale has to be approved by a judge. That can take a while.

As of 2016 this changed with CA now allowing TOD beneficiaries on (some) real estate. Was pleasantly surprised with this when I checked into it after MIL passed and had TOD beneficiary designations to her only son on both her homes (Midwest).

 

[disneysteve]

If there is IRA/Roth IRA involved then one needs to be careful.
Better not to mix your IRA with this inherited IRA. There is a special naming convention for the inherited IRA something to the effect: Inherited IRA/Roth
account of the diseased xyz for the befit of ABC. The financial institution (Fidelity, Vanguard,..) should help.

Yes, I am aware of that. And there are IRAs involved.

Also, OP will have to take RMD. The amount and timing of when to start the RMD will vary. HOWEVER, under new law one does NOT have to take RMD and can let it grow for 10 years and at the end of the 10th year, these accounts MUST be emptied.

There are actually a couple of exceptions to the 10-year rule and I meet one of them: I am less than 10 years younger than the person leaving me the money. Because of that, I get to draw it down over my life expectancy, not 10 years, so that's very helpful from a tax standpoint.


From Fidelity: Eligible designated beneficiaries include a surviving spouse, a minor child of the deceased owner, disabled or chronically ill individual or any other person who is not more than 10 years younger than the deceased account holder. Eligible designated beneficiaries have the option to take Required Minimum Distributions based on their life expectancy.

 

[ncbill]

I haven't read all the responses but since my husband and I have done three estates, I'll put in my two cents. (He was the trustee/executor but I know how to do the paperwork!).

I'm not sure how Florida works but in California, all three people had trusts. With a trust, you get copies of the death certificate, go to a lawyer who creates a Certification of Trust. Depending on how the trust is set up, a new trust is created (kind of like a survivor trust) and you are the trustee of that trust. The new trust gets a tax ID number and all the assets can be moved into the new trust. You will have to send the death certificate and the Certification of Trust to the firms that hold the accounts who will then let you move the assets into the new trust (or sell them, etc.).

The house would remain in the old trust. It would be sold pretty much just like any other sale (with you as the successor trustee) and then the proceeds would go into the new trust.

With a trust, it is really quite simple. I am on couple forums with you and you seem financially savvy so I think you will be able to handle it pretty easily.

Of course, it was years ago that we did this so things could have changed. If he doesn't have a trust, it might be more difficult and things in Florida could be totally different.

In California, if you don't have a trust, selling a house has to go through probate and the sale has to be approved by a judge. That can take a while.

Re the stock certificates, does he have a brokerage account where he could deposit those now before he dies? That seems easiest to do.

Good luck and I'm sorry you are going to lose someone.

Here with a standard revocable trust all you have to do is get a new tax ID (easily done online) from the IRS when the grantor dies and the trust becomes irrevocable.

The name even stays the same, e.g. "J.R. 'Bob' Dobbs Revocable Trust" keeps the same name even when it becomes irrevocable.

 

[ERD50]

Here with a standard revocable trust all you have to do is get a new tax ID (easily done online) from the IRS when the grantor dies and the trust becomes irrevocable.

The name even stays the same, e.g. "J.R. 'Bob' Dobbs Revocable Trust" keeps the same name even when it becomes irrevocable.

That was my experience as well (in Illinois). It sure seems confusing that the revocable trust becomes irrevocable on death, and is actually irrevocable, they just call it "revocable".

I actually had a sibling think we could modify the trust (in his favor of course!), since it was "revocable", like the whole process of documenting what to do could just be changed - what's the point?

Oh well, I've tried to come to accept that when it comes to the Govt and taxes, throw logic out the window, and just accept there are "rules", logic may not apply to those rules. Just follow the rules.

And while I did find it easy to get an EIN assigned, I have to admit that the questions are confusing. I have no idea if I did it right or now, but I'm pretty sure it doesn't matter - as long a the IRS has a number to use, you are good.

What makes the EIN process confusing (at least for me), is that an EIN is used for so many different things, I had trouble figuring which questions/answers applied to the simple situation of assigning an EIN to an individual at their death. Maybe I was over-thinking it. At any rate, I got a number, and the IRS cashed the check for that EIN/1041, so I guess all is good.

-ERD50

 

[38Chevy454]

Fidelity labeled my inherited 403b as "BDA". No idea what the acronym stands for, but that's the designation indicating it was inherited.

 

[disneysteve]

Fidelity labeled my inherited 403b as "BDA". No idea what the acronym stands for

BDA = Beneficiary Distribution Account

 

[pb4uski]

Since he is terminally ill and you are joint beneficiary, it would be best for the both of you to have him add you as a joint owner of the accounts that you can do that will he is still living.... you can prepare the forms for his signature.

For other accounts, make sure that the beneficiary designations name you as beneficiary.

For the stock certificates, get them depsoited to a taxable brolerage account if he has one, otherwise set up a taxable brokerage account with one of his existing brokers to do that.

Also consider POD for any vehicles or even real estate if your state allows that or just have you named as a co-owner.

 

[pb4uski]

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

Transfer the shares to his taxable brokerage account where you are the named beneficiary... if he doesn't have one already, start one either with the brokerage that he has his tax deferred accounts with or who you have your accounts with. To be clear, this account is in his name, with you as beneficiary. Then that amount would avoid probate.

 

[pb4uski]

...It sure seems confusing that the revocable trust becomes irrevocable on death, and is actually irrevocable, they just call it "revocable". ...

I think the way it works is that it is revocable as long as the grantor is alive but that once the grantor dies it is irrevocable.

 

[Sunset]

What do folks think about becoming Joint on a checking account, using the Power of Attorney ?

Can this even be done ?

The issue is lots of things are on auto-pay for the house, and it will be a bunch of work switching over to a new account for the few months it takes (hopefully) to sell the house.

I do see the issue that it short circuits the beneficiary designations, which is not the intent.

 

[GTFan]

My cousin was Joint on my Mom's checking account (for, reasons) and it made life much easier when she unexpectedly passed away three years ago. We simply paid the bills that were left on the house from that account (I put in a small amount to take care of a few things) and then sold the house and settled the estate at her bank with proceeds. Never opened an estate account, we did all the probate ourselves with a little advice from a friend of the family lawyer. Whole thing only took a couple of months because the house sold quickly after we did a little work to get it ready.

This was a simple estate with a lower end house, car and few possessions/debts to take care of so take that with a grain of salt. She had a will with everything laid out which made probate easy for the judge's office to get the executor paperwork done, and nothing was contested.

 

[Walt34]

What do folks think about becoming Joint on a checking account, using the Power of Attorney ?

Can this even be done ?

Sure. I was joint on my mother's checking account when I started handling her finances. When she passed away I simply wrote a letter to the Court waiving my right to the money in the checking account so it went through probate as was intended.

Really, in hindsight handling the estate was pretty simple. The hard part is learning the new vocabulary, procedures, and required documentation needed to make things happen, and understanding the order in which things must be done. Pay the taxes first, then creditors, then beneficiaries.

It's no more difficult than nuclear physics.

 

[EastWest Gal]

I was not joint on my dad’s checking account, but invoked the Power of Attorney when he became to ill to manage his affairs. His P.O.A. did require a declaration of incompetence from two physicians, which wasn’t hard after a brain hemorrhage left him confused for the rest of his life.

The bank said I could just sign his check with my name and P.O.A. as a suffix. The bank needed a notarized copy of the document. They made a copy and I kept the original.

I paid all his bills and took over the family orchard account. Filed his taxes, etc. It wasn’t easy, but it was simple.

You don’t need it to be a joint account if you have full power of attorney.

DH have full P.O.A. documents as well as medical P.O.A. documents. If we invoke them, we don’t need a declaration of incompetence. We can act as P.O.A. for each other any time.

 

[WestUniversity]

I do have POA and there's no safe deposit box so we're good there.

With both of my parents I was informed that power of attorney ceases at the moment of death, of the person granting the power. In my case with both of my parents I needed “letters testamentary” and or a death certificate to act as executor on behalf of the estate. Any accounts that were set up as transfer upon death were not at issue.

Accounts for which I had no signing authority or for any titled assets, I needed the letters testamentary. Those were issued by the court. If you have to go that route, as a tip get more than you think you will need. In some instances I only needed to submit a copy. For other entities I had to give them one of the court issued originals. I also found that there were titled assets that I was unaware of which necessitated the need for more court issued originals.

Once all the assets were liquidated and all of the known debts of the estate were paid, then after some period of time I made final distributions from the estate to my sister and I. I can’t remember exactly how long that period of time was as my mom passed away over 10 years ago and my dad was about 25 years ago...

YMMV