An inheritance may be coming soon

[Throwdownmyaceinthehole]

IRA's should be distributed to the beneficiaries of record by the custodian.

And other accounts also. I have beneficiaries of record on all of my Vanguard accounts and my banking accounts. We previously had the beneficiaries as our trust, but changed all that to simplify. Only thing that goes thru our will is household goods and cars. House is in a Transfer on Death. OP needs to know who is listed as beneficiaries on MIL's accounts. Also my sister and I got life insurance proceeds as beneficiaries on my moms policies, and my brother did not. Insurance just required Death Certificate.
Also I can change the beneficiaries at any time, so OP needs to know if those have or can be changed by POA before MIL passing. Family issues can get messy.

 

[googily]

I just received the monthly statement of account as summarized by BB&T financial advisors for her investments. There is no indication in the paperwork that she has an IRA. I don't believe she ever worked in the past 30+ years to have one. I think all of her investments are in taxable accounts. It just indicates the value of the accounts as in equities.

It also indicates she has a revocable trust so does that mean this could possibly be distributed without a waiting period as you might for just a will? I'm thinking this might be an easy sale of equities and an easy distribution to the 2 children. There would be very little in debt other than the financial advisor bill. Each child should receive about $1M. Would there be any tax concerns for this size inheritance or would it be free and clear of taxes under these conditions?

Cheers!

If they are just taxable accounts, the trust could be bypassed altogether if the accounts have beneficiaries listed. Unless the trust is the owner of the taxable accounts.

 

[Yarnstormer]

My experience when my mother passed was the iras that had beneficiaries were simply inherited and as others have stated have yearly RMDs based on my age.
Taxable accounts that were all in equities were divided up - then we each did what we wanted to rebalance them in a way more appropriate for our goals (or did not then complained later)
The basis was the value of the stock on the day Mom passed and the stock market wasn't booming at the time so the gains were minimal.

One thing I'd warn you about. I inherited a house from my Mom. I did not want to live there anymore since she was gone - no reason to be in that area of town. I took a year to get it ready and sold. In that year, housing prices increased. Because I had NO appraisal when the house was inherited the only value I had to use was a tax assessors value which was of course low. So, it looked like I had gains when I did not. I did not "own" and live in the house for the number of years necessary to avoid being taxed on gains. If there is a house in question be sure and get a value on it asap.

 

[Newventurer]

My experience when my mother passed was the iras that had beneficiaries were simply inherited and as others have stated have yearly RMDs based on my age.
Taxable accounts that were all in equities were divided up - then we each did what we wanted to rebalance them in a way more appropriate for our goals (or did not then complained later)
The basis was the value of the stock on the day Mom passed and the stock market wasn't booming at the time so the gains were minimal.

One thing I'd warn you about. I inherited a house from my Mom. I did not want to live there anymore since she was gone - no reason to be in that area of town. I took a year to get it ready and sold. In that year, housing prices increased. Because I had NO appraisal when the house was inherited the only value I had to use was a tax assessors value which was of course low. So, it looked like I had gains when I did not. I did not "own" and live in the house for the number of years necessary to avoid being taxed on gains. If there is a house in question be sure and get a value on it asap.

Any danger of getting an appraisal in a falling market and having that used against you? I don’t know if an appraisal somehow becomes discoverable or prior knowledge gives one (perhaps and honest one) more exposure to possible downside?

 

[akck]

I just received the monthly statement of account as summarized by BB&T financial advisors for her investments. There is no indication in the paperwork that she has an IRA. I don't believe she ever worked in the past 30+ years to have one. I think all of her investments are in taxable accounts. It just indicates the value of the accounts as in equities.

It also indicates she has a revocable trust so does that mean this could possibly be distributed without a waiting period as you might for just a will? I'm thinking this might be an easy sale of equities and an easy distribution to the 2 children. There would be very little in debt other than the financial advisor bill. Each child should receive about $1M. Would there be any tax concerns for this size inheritance or would it be free and clear of taxes under these conditions?

Cheers!

First, check to see if beneficiaries/TOD have been placed on the accounts as I believe they’ll supersede any will/trust designations. If that’s the case, you can get the funds quickly. Also, she may have inherited an IRA. If this is not true, as mentioned, work to sell the equities ASAP to reduce taxes with the stepped up basis (not necessary with IRAs). I believe that the executor can make distributions once they are established. Distributions will be free at the federal level, but check at the state level.

 

[Badger]

MIL passed away last night.

 

[kaudrey]

I'm so sorry for your loss. Prayers to you and your family.

 

[gayl]

I'm so sorry for your loss

 

[Yarnstormer]

I'm sorry for your loss. My best to your family.

 

[Badger]

Thank you for the condolences. This has been really rough for my wife and I to watch her slowly decline and have to fight for her health, safety, and comfort these past few years.

I spoke with the brother (trustee) yesterday and mentioned there may very well be a loss (possibly substantial) in the inheritance before he begins the distribution. His response was the market it great and has only been doing well in the past year unlike the previous 7years.

I wish there was some way to speed up the distribution instead of having to wait on him to do his responsibility. He is the antithesis of "live below your means" and has no knowledge of stock market or investing since he has never saved any money and will now cost his sister because of his arrogance and lack of experience/knowledge.

He is unwilling to consider anyone's suggestions since he thinks the market is going to continue an upward trend in the near future. He must have the crystal ball everyone is looking for. It looks like there is nothing that can be done unless someone here knows of a way around this.

Cheers!

 

[MichaelB]

The Trustee has a fiduciary obligation to ensure the safety of the trust assets. He is not at liberty to speculate with them. He should provide an accounting of all the assets as of the date of the Grantor's passing and preserve their current value.

The cost basis of those assets resets on the date of passing, and any subsequent change in value represents a potential tax liability for the beneficiaries. The trustee must be aware of this and really shouldn't be engaging in transactions that affect the heirs without their agreement. At this point, moving everything into interest bearing accounts makes sense.

 

[ERD50]

The Trustee has a fiduciary obligation to ensure the safety of the trust assets. He is not at liberty to speculate with them. He should provide an accounting of all the assets as of the date of the Grantor's passing and preserve their current value.

The cost basis of those assets resets on the date of passing, and any subsequent change in value represents a potential tax liability for the beneficiaries. The trustee must be aware of this and really shouldn't be engaging in transactions that affect the heirs without their agreement. At this point, moving everything into interest bearing accounts makes sense.

+1 on everything. If the trustee wants to speculate, he needs to get the money distributed, and then he can do with his share whatever he wants. He is not authorized to speculate on behalf of others, against their wishes.

It sounds like beneficiaries are just him (Trustee), and your wife? If that's the case, you don't have any support from other beneficiaries. I suppose your recourse is to point out some articles that explain the responsibility of a Trustee, and see if that shakes him up and gets him to fly straight. After that, actual legal (or threat of) action?

But hold on - you said "mutual funds"? Do you actually know what the overall AA is? Is it very different from what your wife would chose? Maybe its a moot point?

-ERD50

 

[Badger]

Thank you for the replies. What you have posted is exactly what was done when my parents passed away. Unfortunately BIL is difficult to work with.

I sent an email with an explanation of what you have posted as being the proper method to handle the inheritance (put the money in an interest bearing account, etc.) We will see how he handles his fiduciary responsibility and how efficiently it is carried out.

The portfolio consists of what appears to be 8 stocks and 1 small MM account for everyday expenses.

I would have thought it would have been easy enough to contact the Financial Advisors who handle the equities and have them make the transfer of equities to the MM account.

I was thinking of going to the FA today with my wife to see what has been done since her brother is always slow to respond.

Cheers!

 

[ERD50]

... I was thinking of going to the FA today with my wife to see what has been done since her brother is always slow to respond.

Cheers!

I suppose it couldn't hurt to talk to the FA of the account, and let them know your (wife's) concerns as a 50% (I think that's the case) beneficiary.

I'm not sure if there is any legal standing there, they probably see their job as doing what the Trustee asks of them. But I think they would also see that what you are asking is the correct thing to do, and maybe they will just talk some sense into BIL. Maybe coming from them will have more impact, especially if they point out BIL has an actual legal responsibility here.

Heck, why not sell off half the stocks if nothing else, put them and half the MM in a separate MM until distribution can take place? He also should be able to distribute the majority of it now, and hold back just enough to settle any bills that may come up (how much to hold depends on the clarity of the situation).

-ERD50

 

[MichaelB]

I suppose it couldn't hurt to talk to the FA of the account, and let them know your (wife's) concerns as a 50% (I think that's the case) beneficiary.

I'm not sure if there is any legal standing there, they probably see their job as doing what the Trustee asks of them. But I think they would also see that what you are asking is the correct thing to do, and maybe they will just talk some sense into BIL. Maybe coming from them will have more impact, especially if they point out BIL has an actual legal responsibility here.

Heck, why not sell off half the stocks if nothing else, put them and half the MM in a separate MM until distribution can take place? He also should be able to distribute the majority of it now, and hold back just enough to settle any bills that may come up (how much to hold depends on the clarity of the situation).

-ERD50

The FA probably can’t discuss this account with anyone except the authorized representation, and trying to contact the FA might alienate the BIL.

Asking the BIL to segregate the assets and move one share into an interest bearing account might work. Until the assets are distributed they belong to the trust, so that segregation is not enforceable, but it might help.

Suggesting, or requesting, a partial distribution now is another good idea worth pursuing IMO.

 

[harley]

Heck, why not sell off half the stocks if nothing else, put them and half the MM in a separate MM until distribution can take place? He also should be able to distribute the majority of it now, and hold back just enough to settle any bills that may come up (how much to hold depends on the clarity of the situation)

This sounds like a good solution, but if BIL keeps his half in equities and the market makes a major downward move, he will probably end up trying to recoup his losses by digging into OP's DW's funds. If the market makes an upward move and incurs tax penalties, same thing. I don't have a solution, other than hoping they can talk some sense into the BIL.

When I was executor of my DM's (very small) estate, I used some online resources to tell me how to handle things. I'm pretty sure one of them suggested immediate sale of all equities in order to simplify taxes. If I can find it I'll post it, but it's been a while. But maybe showing BIL something like that would help. Lots of times someone will react better to uninvolved party advice than to advice from a sibling.

 

[OldShooter]

OP: I'd like to just draw your attention to my post #12. You don't need SGOTI, you need expertise and, possibly, someone to express your objections to what is happening. A formal letter on legal firm letterhead has the marvelous effect of focusing someone's attention on an issue. And, even if you don't want to fire that artillery, having an advisor in the background will almost certainly benefit you.

 

[ivinsfan]

Thank you for the condolences. This has been really rough for my wife and I to watch her slowly decline and have to fight for her health, safety, and comfort these past few years.

I spoke with the brother (trustee) yesterday and mentioned there may very well be a loss (possibly substantial) in the inheritance before he begins the distribution. His response was the market it great and has only been doing well in the past year unlike the previous 7years.

I wish there was some way to speed up the distribution instead of having to wait on him to do his responsibility. He is the antithesis of "live below your means" and has no knowledge of stock market or investing since he has never saved any money and will now cost his sister because of his arrogance and lack of experience/knowledge.

He is unwilling to consider anyone's suggestions since he thinks the market is going to continue an upward trend in the near future. He must have the crystal ball everyone is looking for. It looks like there is nothing that can be done unless someone here knows of a way around this.

Cheers!

I'm curious, is this is your DW's brother, it that correct? Has your spouse asked you to take on this role. It seems a tad unseemly to be discussing dispersal before the funeral...especially if it's his Mother that died.

It's obvious that you don't think much of the man, but this where permanent family rifts begin. Maybe those bridges have already been burned. It might be he's stubborn and doesn't want to be told what to do and the more you ask the slower he will get.

 

[ERD50]

... I'm pretty sure one of them suggested immediate sale of all equities in order to simplify taxes. If I can find it I'll post it, but it's been a while. But maybe showing BIL something like that would help. Lots of times someone will react better to uninvolved party advice than to advice from a sibling.

I just looked at my NOLO book "Executer's Guide" (5th Edition), chapter 9 is pretty clear. "You have control over someone else's money - and as a result the law imposes a very high standard of behavior on you (the Trustee)". And later "Don't take risks" "Your job is to not lose money". And it goes on to discuss legal action of Trustee is not following this.

And I agree on the separate account issue - no telling if he'd enforce it if it went against him.

The FA probably can’t discuss this account with anyone except the authorized representation, and trying to contact the FA might alienate the BIL.

Asking the BIL to segregate the assets and move one share into an interest bearing account might work. Until the assets are distributed they belong to the trust, so that segregation is not enforceable, but it might help.

Suggesting, or requesting, a partial distribution now is another good idea worth pursuing IMO.

Yes, technically the FA should probably not discuss specifics with you. But that doesn't keep you from mentioning concerns to him. It could be done in 'stealth mode'. Hey, I'm considering keeping my inheritance with your firm, and since I have other money int he market, I'd like to keep this money in very safe low risk investments, recognizing they won't be expected to provide growth.... That might open up something.

-ERD50

 

[ERD50]

I'm curious, is this is your DW's brother, it that correct? Has your spouse asked you to take on this role. It seems a tad unseemly to be discussing dispersal before the funeral...especially if it's his Mother that died.

It's obvious that you don't think much of the man, but this where permanent family rifts begin. Maybe those bridges have already been burned. It might be he's stubborn and doesn't want to be told what to do and the more you ask the slower he will get.

Yes, I see it has only been ~ 5 days? With funeral and other issues at hand, it seems a bit early to be too worried about any distributions or moving investments from stocks to MM?

IIRC, you'll need to get an EIN assigned to replace the SSN before the Trustee can do anything. You (OP) might want to settle down a bit here...

-ERD50

 

[Badger]

I'm curious, is this is your DW's brother, it that correct? Has your spouse asked you to take on this role. It seems a tad unseemly to be discussing dispersal before the funeral...especially if it's his Mother that died.

It's obvious that you don't think much of the man, but this where permanent family rifts begin. Maybe those bridges have already been burned. It might be he's stubborn and doesn't want to be told what to do and the more you ask the slower he will get.

I have been the go-between for a few years now for my wife and her brother. The relationship between them deteriorated long ago and there is no love lost. The most that can be said is they are civil during the few times they have to deal with each other. Suffice it to say there have been too many times he has proven to be untrustworthy. Bridges were burned long ago.

I hate to think he might try to be a "day trader" with the inheritance as he has tried to do a few times before.

Thanks for everyone's posts. It looks like this might drag out unnecessarily when my wife just wants it to be over and be done with him.

Cheers!

 

[ivinsfan]

I have been the go-between for a few years now for my wife and her brother. The relationship between them deteriorated long ago and there is no love lost. The most that can be said is they are civil during the few times they have to deal with each other. Suffice it to say there have been too many times he has proven to be untrustworthy. Bridges were burned long ago.

I hate to think he might try to be a "day trader" with the inheritance as he has tried to do a few times before.

Thanks for everyone's posts. It looks like this might drag out unnecessarily when my wife just wants it to be over and be done with him.

Cheers!

Sad how often this seems to happen..this certainly won't improve their relationship...your BIL certainly holds most of the power here

 

[Brat]

Have you considered suggesting that he contact a CPA or an estates attorney to assist him? Acknowledge that it is a big responsibility and that with his Mother's passing it is worthwhile to pay a professional to shephard him through its resolution. Maybe offer to pay a couple hundred if he would do that...

 

[SecondCor521]

IANAL. But it seems to me that if the BIL does not live up to his fiduciary duties as executor, then the OP's DW can petition for either injunctive relief or compensatory damages from the supervising probate court.

In plain language, if the BIL is being an idiot, you can ask the court to either (a) make him stop being an idiot and do the job right, (b) make him pay you back for any idiocy that costs you money, or even (c) remove him as executor and appoint DW as executor.

Any of those actions are likely to make the personal rift worse, so that would have to be given due consideration.

 

[ERD50]

... I hate to think he might try to be a "day trader" with the inheritance as he has tried to do a few times before. ....

If there is any realistic chance he might try to gamble with the entire estate, in order to leverage his half, then I agree with the others to get some outside help involved. If he screws up, and it's gone, you won't get blood from a turnip - best to nip this in the bud.

I'd try Brat's soft suggestion first, that he needs help with such a big responsibility, rather than an attack on him. It'll probably cost more than a couple hundred, but it might be worth it, if for nothing else than piece of mind.

And your comments that he thinks the market will keep going up are suspicious - if it was distributed, then he can keep his in the market, so what's the problem? Unless he was just trying to clam you down about doing anything so soon.

Has he applied for an EIN for the trust? You may not be able to do anything at all until that happens.

At a minimum, I would carefully document what would have happened if the estate portfolio was moved to a MM at a specific date that he could have been expected to do it. At least you have a benchmark to argue against if there is a drop.

Is there a reason BIL is POA and Trustee, and not your wife, or the both of them?

-ERD50