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Old 08-22-2021, 09:14 AM   #41
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+1 an independent, third-party appraisal by a qualified appraiser (not a real estate agent) will only cost a few hundred and will give you and your brother confidence that the deal is fair.... and will also provide documentation for him of his basis for the house if he later sells it.
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Old 08-22-2021, 09:28 AM   #42
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... I would propose to brother that he will receive the $330k house free and clear and $25k, for a total of $355k of value and you will receive $355k in cash and mutual funds. If he later decides that he doesn't want the house then he can sell it.

Since you are already FI and are also getting $500k inherited IRA, you might even want to tilt the deal a bit to induce him to accept it ... ...
Brother has estranged himself and his family. I don't think the OP has to "propose" anything:

Subject to the wisdom of the lawyer he has hired, I would suggest that the lawyer write a letter to brother stating how the estate will be divided ("Pursuant to paragraphs 3.1 and 5.2.8, the estate will be divided as follows ... ") Certainly the OP does not want to invite negotiations at this point; by his behavior, brother has shown that the time for that is past.

IMO @phil1ben's advice to hire a litigator is brilliant. In the likely event that brother hires an attorney, this sends a clear message to the attorney that the OP is not going to be a patsy and cave in response to whatever the brother wants to demand. Said lawyer will also explain to brother that fighting will probably be expensive with brother paying his own bills plus effectively his half of the estate's legal bills and half of the OP's time billed to the estate.

& yes, I would order an expedited fee appraisal.
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Old 08-22-2021, 09:53 AM   #43
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If I understand the the original post, the current occupants of the house are the grandson of the deceased and his DW. If they are over legal age (likely), then OP's beef (as executor) is directly with them and not with his brother (their father). The young couple is likely to claim that grandpa, while living, gave them permission to move in and that may have some influence on a court's path to eviction. Dunno really. Just another complicating factor.

I agree with the poster who suggested "sweetening the deal" to influence the brother to accept it and move on.
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Old 08-22-2021, 11:27 AM   #44
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I like Phil1ben's advice. I have had dealings with a few estate planning attorneys including an ACTEC fellow. They knew a lot about writing trusts but only one mentioned litigation ( I didn't ask.) I think as the financially independent sibling you have an advantage. The trust doesn't distribute until issues are settled.
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Old 08-22-2021, 12:05 PM   #45
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Selling an inherited house with "houseguests"

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Originally Posted by silvor View Post
I don't think I can hand it off. The language says:

If there is no serving trustee, then (me) shall serve as trustees. If (me) is unable or unavailable to serve as trustee, then (my brother) shall serve as trustee.



But if I can handoff, the bank or lawyer would handle an eviction, sale of the home, sale of the household items?



How much does something like that run?



FWIW, the house is worth about $330k net, and there's about $380k in cash and mutual funds.


Great advice from phil1ben. The previous posts have focused on the larger assets. Often smaller things like personal items, vehicles, tools, artwork etc can be equally as difficult to divide. In a previous post you mentioned that your brother was interested in keeping some of those items. All of it should be inventoried & listed as part of the estate. You may be surprised how much it adds up, especially if there are several vehicles. These items can also be used as part of the negotiations especially if you have little emotional attachment to them. Also the longer your brothers son & other relatives has occupancy the more likely that some may disappear as it appears that they have limited assets themselves. It is everyoneís interest to get these items listed in the estate quickly. If there is a large amount it may be useful to hire an estate sale specialist. From your posts itís not clear if you are retired. If not you may need to take time off work. The estate should reimburse you for lost vacation/leave time. Good luck. You have a complicated situation.
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Old 08-22-2021, 12:22 PM   #46
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... In a previous post you mentioned that your brother was interested in keeping some of those items. All of it should be inventoried & listed as part of the estate. You may be surprised how much it adds up, especially if there are several vehicles. These items can also be used as part of the negotiations especially if you have little emotional attachment to them. ...
Good point to think about the small stuff. DW retired as an SVP in megabank investments and trust and has seen many, many estates settled.

The method she like best is for the beneficiaries (just two brothers, I guess) to take turns selecting items from the estate. Flip a coin to say who starts, then select alternately without regard to value. This eliminates arguments about valuation. When each beneficiary has everything they want, the remaining items go to the estate sale or to charity.

Important: Unless there is a written indication of intent, no one is allowed to claim things like "Grandma told me I could have the gold coin collection." DW's method for that, too late now, is to suggest that clients include "precatory language" in a will or a supplement or, more low tech, for grandma to put tape labels on the bottom of any tchotchkes where she wants them to go to a particular person.
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Old 08-22-2021, 01:36 PM   #47
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Do you have a source for that? Everything I just found said 5 years to distribute, maybe more under certain conditions.

I didn't see anything that said "immediate" or within a year.

-ERD50
I must have a memory lapse of "immediate" being 5 years instead of lifetime before SECURE Act. Here is a Forbes article dated Dec 2020 that says why it is advised against putting a trust as beneficiary.

https://www.forbes.com/sites/bobcarl...h=5d28561f52ac
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Old 08-22-2021, 01:57 PM   #48
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I must have a memory lapse of "immediate" being 5 years instead of lifetime before SECURE Act. Here is a Forbes article dated Dec 2020 that says why it is advised against putting a trust as beneficiary.

https://www.forbes.com/sites/bobcarl...h=5d28561f52ac
Canít see that article due to ad blocker. Still, there are cases where it does make sense to put a trust as beneficiary of an IRA.
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Old 08-22-2021, 02:04 PM   #49
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Canít see that article due to ad blocker. Still, there are cases where it does make sense to put a trust as beneficiary of an IRA.
Sure, especially when trying to pass money on to disabled or minors.

I have copied the article and pasted here:

Dec 23, 2020,07:30am EST|
Should A Living Trust Be Beneficiary Of Your IRA?
Bob CarlsonSenior Contributor

Itís generally a bad idea to name a trust as beneficiary of your IRA. The IRA usually loses the power of tax deferral, because it must be distributed faster than in other scenarios. There are only a few instances when a trust as beneficiary avoids this problem, A recent IRS ruling gives an example, but the ruling also reveals the pitfalls of the strategy.

The general rule is when an IRA beneficiary is not an individual, the IRA must be distributed fully within five years. When a trust, your estate, or a business entity is named beneficiary, the IRA quickly must be distributed and taxed.

Thereís an exception when you name a trust that qualifies as a ďlook-throughĒ or ďsee-throughĒ trust under IRS regulations. You need an estate planner to draft this trust to make sure it avoids the five-year rule. Even then, the IRA must be distributed to the trust within 10 years in most cases.

Another exception was discussed in a recent IRS ruling and shows there might not be a penalty when your spouseís revocable living trust is named as the IRA beneficiary.

The ruling involved a married couple. One spouse, Iíll say it was the husband, owned an IRA and had begun required minimum distributions (RMDs).

The husband passed away and had named a trust as sole beneficiary of the IRA.

His wife had previously established the trust. She was the sole beneficiary and sole trustee of the trust. The wife had the right to amend or revoke the trust and could distribute all income and principal of the trust for her own benefit. In other words, it was a standard revocable living trust primarily used to avoid probate.

The wife, now widow, wanted to exercise the spousal option for an inherited IRA. She wanted to roll the IRA over to an IRA in her name. This would give her a fresh start, allowing her to manage the IRA without reference to her late husbandís IRA. She could start RMDs based on her own required beginning date and life expectancy. The widow also could name her own beneficiaries of the IRA.

The widow asked the IRS to rule that the IRA could be rolled over tax free into an IRA in her name. She planned to have the IRA balance distributed directly to her, and she would roll it over to an IRA in her own name within 60 days.

The IRS ruled in the widowís favor. It pointed out that the widow was the trustee and sole beneficiary of the trust. She was entitled to all income and principal of the trust. Also, she was the surviving spouse of the deceased IRA owner.

In these circumstances, the widow was the sole person for whose benefit the IRA is maintained. That allows her to take a distribution from the inherited IRA and roll it over to an IRA in her own name without having to include any of the distribution in gross income, provided the rollover was accomplished within 60 days of the distribution.

In past rulings, the IRS allowed a similar result when an IRA was payable to an estate and the surviving spouse was the sole primary beneficiary of the estate.

In each case, the surviving spouse effectively was the sole individual for whose benefit the IRA was maintained and intended.

While the widow had a happy result, you still might not want to name a living trust or your estate as the beneficiary of your IRA, even under similar circumstances.

The widow had to apply to the IRS for a private ruling to be sure of the tax results, which is an expensive and time-consuming process.

Also, the widow couldnít have the IRA custodian transfer the inherited IRA directly to an IRA in her name. Thatís probably because the IRA custodian was unwilling to transfer the inherited IRA to any IRA other than one with the exact same legal title. The general rule is an inherited can be rolled over to another IRA tax free only if the two IRAs have the same name or title. Instead, she had to take a distribution. That raises the risk that for some reason she is unable to roll over that amount to an IRA in her name within 60 days, causing the entire amount to be taxable.

These complications are why it is best to review your IRA beneficiary designations every year or two. Donít leave extra work or stress for your family. Be sure only individuals (and perhaps charities) are named as beneficiaries of your IRA and that the named individuals are the ones you currently want to inherit the IRA.
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Old 08-22-2021, 02:06 PM   #50
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Selling an inherited house with "houseguests"

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Canít see that article due to ad blocker. Still, there are cases where it does make sense to put a trust as beneficiary of an IRA.

I think so. Plus, itís not hard to change IRA beneficiary designations, at least at Fidelity and Vanguard. Trusts/will changes seem more involved.
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Old 08-22-2021, 02:45 PM   #51
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I think the takeaway from the article and from this discussion is that it is not a good idea to take tax or legal advice from SGOTI.
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Old 08-22-2021, 02:48 PM   #52
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I think the takeaway from the article and from this discussion is that it is not a good idea to take tax or legal advice from SGOTI.
Take advice? No. Use the issues raised to help focus your questions to people who bill by the hour? Very useful.
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Old 08-22-2021, 04:29 PM   #53
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I don't think I can hand it off. The language says:

If there is no serving trustee, then (me) shall serve as trustees. If (me) is unable or unavailable to serve as trustee, then (my brother) shall serve as trustee.



But if I can handoff, the bank or lawyer would handle an eviction, sale of the home, sale of the household items?



How much does something like that run?



FWIW, the house is worth about $330k net, and there's about $380k in cash and mutual funds.


Just let him have the house and transfer $25K to him and youíre even. Itís really not worth severing a relationship when you can easily make both of you even and hopefully smooth things over with this gesture.
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Old 08-23-2021, 02:44 PM   #54
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Brother has estranged himself and his family. I don't think the OP has to "propose" anything:

Subject to the wisdom of the lawyer he has hired, I would suggest that the lawyer write a letter to brother stating how the estate will be divided ("Pursuant to paragraphs 3.1 and 5.2.8, the estate will be divided as follows ... ") Certainly the OP does not want to invite negotiations at this point; by his behavior, brother has shown that the time for that is past.

IMO @phil1ben's advice to hire a litigator is brilliant. In the likely event that brother hires an attorney, this sends a clear message to the attorney that the OP is not going to be a patsy and cave in response to whatever the brother wants to demand. Said lawyer will also explain to brother that fighting will probably be expensive with brother paying his own bills plus effectively his half of the estate's legal bills and half of the OP's time billed to the estate.

& yes, I would order an expedited fee appraisal.
I disagree. The choices are to sell the house and then split the proceeds from the sale of the house and the cash/mutual funds 50/50... or if the brother wants the house to include the value of the house in the overall settlement.... so there is a negotiation to be had if one is going to be smart about it.

It would be silly to sell the house if the brother wants it. At the same time, the brother needs to make a decision as to whether he wants to accept the house as part of his inheritance or not quickly.... hence the suggestion of 7 days. Then if he doesn't want it then he needs to move out so it can be sold.

My guess is that brother will view a "free" house and $25k or $50k of cash as attractive... and if so, that gets the OP a quicker out than if the house has to be sold.

You said:
Quote:
... Said lawyer will also explain to brother that fighting will probably be expensive with brother paying his own bills plus effectively his half of the estate's legal bills and half of the OP's time billed to the estate.
... I wouldn't think that the OP's lawyer would talk with the OP's brother as you suggest if the OP's brother has legal representation... the OP's lawyer would talk with the brother's lawyer.
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Old 08-23-2021, 03:35 PM   #55
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Actually, I was picking up on your idea that the brother gets the house. The difference is that I see no need for negotiation. Just give him the house at an appraised value with boot as necessary to even things up. If brother wants to sell the house, then that is his option. OP is no longer involved.

I am assuming that brother will be represented since he has a chunk of cash from the $1M IRA they are splitting. If he isn't then things are easier. What I intended to say about the lawyers is that the one the brother hires would explain the fee situation to the brother. OP's lawyer cannot talk to the brother if he is represented.
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Old 08-23-2021, 05:30 PM   #56
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I don't see forcing the house on the brother as an option unless the trust specifically provides that the house goes to the brother. It might be that the brother doesn't really want it.

Another thought that I had was that if the brother doesn't want the house that the trust might offer him to pay his new landlord the required deposit and first and last months rent and some cash as an advance on the brother's inheritance to induce him to move out.
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Old 08-23-2021, 06:40 PM   #57
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Going to see the lawyer tomorrow. I’m nervous even though I talked to him at least a half dozen times through the years about other things.

A couple things:
My brother told me at one point he’s 70% sure he wants the house. Except I think he wants his kid to live there until he decides to leave and we “split “ the bills. And then decide in the spring if he really wants to buy. He said ‘who cares, the trust pays the bills’. . REALLY??

There’s really no issue over the contents of the house. The auctioneer says around 6k. So I really don’t care. It’s junk to me.
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Old 08-23-2021, 06:57 PM   #58
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....He said ‘who cares, the trust pays the bills’. . REALLY?? ...
That would piss me off if I was the trustee.

I'd tell him that 1) it isn't his house and that since he is not a trustee that he has ZERO say in how the house and the trust is managed and he doesn't have the right to continue to live there and 2) he has 7 days to decide and if he wants the house as part of his inheritance or not and if he decides that he doesn't want the house then he has 14 days to move out... and that on the 22nd day then "the trust" will change the locks so it would be best that he get his stuff out of the house by then.

If moving out so the house can be sold is a burden financially, the the trust can make him an advance on his inheritance to help with deposit, first and last month's rent, etc. but he doesn't get the money until he has moved out (other than the trust paying deposit/first/last directly to his new landlord).

Some may wonder... but you'd do that to your own brother and his family?... given the way they have behaved... in a heartbeat.
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Old 08-23-2021, 07:49 PM   #59
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..........My brother told me at one point heís 70% sure he wants the house..........
Given that he has already taken on the task of "renting out" the house, I'd say he has made his decision - he is overseeing "his" house. Time to make it official. Your lawyer can assist you with expediting that.
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Old 08-23-2021, 08:11 PM   #60
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Make it clear you have no interest in dragging this out, you need to get on with your life.
Your brother either takes the house as part of his settlement now or it goes up for sale immediately, no waiting and no excuses. Let him know that you are getting a lawyer to deal with the squatter.
I would also remind your brother that if he goes ahead and does take the house and lets the mooching son live in it, he may have a problem trying to collect rent. In the end he could lose everything if he has no money to pay for the house maintenance, taxes etc. It's better to sell when prices are so high, split the money and everyone moves on with their lives. Suggest that he gets a financial advisor to help invest the money for his future retirement. Let him know that you care about him but not so much about his good for nothing kid who needs to fend for himself. If you've vocalized that you don't think it's a good idea, then if it all goes south, your conscience is clear.
By the way 70% sure, sounds to me like a stalling tactic and not a genuine interest.
Also, if want to offer the kid money to move which I think is a horrible idea, he doesn't get a dime up front. He needs to be out of the house, you need to inspect it for any damage and have a locksmith change the locks immediately.
Good luck tomorrow...
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