Inheritance question

[Jimbo Slice]

Greetings, new to the board and very new to the investment world as a recent college graduate (and newlywed) trying to do some financial planning. I have a question regarding my grandfather's trust that my mom, siblings, and I are named in as beneficiaries following his recent passing. We are all very fortunate to be receiving a windfall of his hard-earned money that ideally sets us all up for future financial security, but a few things are a little murky given my very limited understanding of how inheritances work.

Shortly after the funeral a few months ago, a close family friend that apparently was in control of my grandfathers finances told my mother that my grandfathers total assets held by Ameriprise totaled over $4M. I am not sure at all how those assets are distributed in his portfolio, but as the trust has moved through the process all the way to the bank now, the bank recently told my mother they estimated after all taxes/fees etc. that the total amount to be disbursed to the beneficiaries is about $2M - half of what we were originally told it was worth.

Is this possible that the trust could take SUCH a beating on taxes and fees... or was the "family friend" just full of crap when she threw out the initial amount? From my very basic understanding reading through this forum and other resources, I understand the bank would take about 2% as payment, but where does the other roughly 48% go??

Thanks for helping a beginner to understand!

[W2R]

Quote:

Originally Posted by Jimbo Slice I understand the bank would take about 2% as payment, but where does the other roughly 48% go??

Might be a good question to ask the executor?

[GrayHare]

Is $2m the estimated after-tax value to the beneficiaries? Outstanding debts, generation-skipping taxes, and state inheritance taxes can take big chunks. Being invested in energy stocks could have shaved 25% this year. Even so I agree halving the original amount sounds excessive.

[JoeWras]

Right. Not enough information. The executor of the estate and the trustee should be transparent and give you this information.

A few possibilities:
- "close family friends" can be mistaken. Was this the trustee?
- Perhaps grandpa had it written that "the first 50% goes to charity". This is actually quite common.
- Were annuities involved? If there is a lot of differed income, taxation can reduce the size substantially.

[Walt34]

Until you see some documentation (and you should) you don't know where either the $4m or $2m figures came from. The executor/administrator should be transparent about showing where the numbers came from. And the family friend may well have been mistaken - where did that information come from and how did he/she come by it?

The others are correct too in that other beneficiaries may be charities or other people you are not aware of.

[Meadbh]

What Walt34 said. It's also possible there may be liabilities, for example, a mortgage.

[Souschef]

Having been the trustee of a family trust, I have a little experience. If you are named in the trust, you are entitled to have a copy of the trust documents. You also have a right to ask for an accounting of the funds.
There may be inheritance taxes that had to be paid, plus paying off all the debts.
I also think the executor gets a fee, amounting to 1%.

[bingybear]

way too many unknowns.
If grandpa was gifting at high levels before death and reduced the unified exclusion. Could have been annuities that were paying on his life. These would be worth zero at his death. We can all have a guessing game as to what it may be. However, not much use until some facts come out.
Now the comment about talking to the executor may not be useful. Part of the reason to use a trust is to bypass probate (save $ and limits the information made public). But the executor may have little knowledge of the trust details. The trustee would be where information may come from if (s)he is willing or allowed to tell. If your grandfather did not want information transmitted for whatever reason, it my not be readily available.

[pb4uski]

+1 The trustee is legally obligated to provide upon request, an itemized listing of the assets of the trust and their value as of your grandfather's date of death as well as what happened between then and now. There may be a reasonable explanation for the difference... or not.

From $4m to $2m does seem like a huge swing, so there should be some good reason for it.

Did the trustee recently buy a fleet of Ferraris?

[Jimbo Slice]

Thanks for the replies guys.

As some have asked re: charities, a percentage of the total trust is going towards a charity once it is disbursed.

It looks as if I'll have to put in a request to the bank (now the trustee) for the itemized list of assets. Part of me felt a little guilty/greedy looking to get a "number" for what we were to inherit, but given the circumstances I think it is warranted.

As for the "family friend," I never knew her until my grandfather's final days. Obviously, he trusted her, so we never thought much of her managing his finances because that's none of our business. You wouldn't think there'd be "foul play" involved when she told my mother that there were $4M in assets. I'll have to check on the fleet of Ferraris though!

[DrRoy]

There are potentially valid reasons for the 50% reduction, as earlier posts have indicated. Charities would certainly be valid, taxes and fees would not. Asking the trustee for the accounting is just to make sure that all has been properly done.

[gcgang]

You mentioned Grandpa's funds were held at Ameriprise. Sounds like he was in their "one for you, one for me" program.

[ivinsfan]

I recently had a cousin die without a will and all the money was split between the first cousins..everything should be right there in black and white for you to look at. I got a complete copy of all assets and the estate split in my first mailing from the lawyer. If you don't get one just press on until you do have the the information. It should be standard procedure to send you the information.

[Sunset]

Quote:

Originally Posted by Jimbo Slice .... It looks as if I'll have to put in a request to the bank (now the trustee) for the itemized list of assets. Part of me felt a little guilty/greedy looking to get a "number" for what we were to inherit, but given the circumstances I think it is warranted.....

Yes it's totally warranted.
You should not feel the least bit guilty about it, as it should be standard practice as otherwise it's too tempting for someone to steal the money.

If they are honest, they will have no objections.

[Dog]

Just recently completed my executor duties for my mother's small estate. I provided regular updates to my siblings and was completely transparent. It wasn't even close to the $ you are looking at.
I agree you should ask for the details.


Sent from my iPhone using Early Retirement Forum

[check6]

Quote:

Originally Posted by Dog Just recently completed my executor duties for my mother's small estate. I provided regular updates to my siblings and was completely transparent. It wasn't even close to the $ you are looking at. I agree you should ask for the details. Sent from my iPhone using Early Retirement Forum

I am as well and currently in the middle of the distribution. Just like you I made a list of the assets complete with copies of bank statements, annuities, etc and sent them to the lawyer that prepared the trust as well as to the beneficiaries. Also included the percentage to each beneficiaries.

[gcgang]

You may not be entitled to a complete accounting, depending on the terms of the trust. Some people set up trusts to keep their affairs private, and to keep nosy relatives out of things.

My wife's never married uncle died recently. Terms of his trust were to give specific amounts to various relatives, with the remainder to various charities. When asked for an accounting, the trust officer showed terms of the trust that pertained to them only. As far as a reconciliation to keep the bank honest, that was up to the remainder beneficiaries, the charities, to ask for.

Whether he died with $5mm or $100mm, the family will never know.

[pb4uski]

+1 IF the OP's inheritance is a fixed amount then he my not be entitled to sn accounting but any remainder beneficiaries would be

[Jimbo Slice]

Thanks again for the replies guys. I e-mailed the bank's lawyer and am awaiting a response.

Quote:

Originally Posted by gcgang You mentioned Grandpa's funds were held at Ameriprise. Sounds like he was in their "one for you, one for me" program.

What types of fees do these management companies have for cashing out on investments? Is Ameriprise "worse" than the others?

Thanks.

[Sunset]

Quote:

Originally Posted by gcgang You may not be entitled to a complete accounting, depending on the terms of the trust. Some people set up trusts to keep their affairs private, and to keep nosy relatives out of things. My wife's never married uncle died recently. Terms of his trust were to give specific amounts to various relatives, with the remainder to various charities. When asked for an accounting, the trust officer showed terms of the trust that pertained to them only. As far as a reconciliation to keep the bank honest, that was up to the remainder beneficiaries, the charities, to ask for. Whether he died with $5mm or $100mm, the family will never know.

As long as your Wife's share was a fixed amount that makes total sense.
However, if it was a percentage, then you need to know the total amount to know if it's correct.