Trustee of trust - unknown particulars!

[pb4uski]

Yes... it sounds like when all is said and done that they should have equity in the house less selling costs less fixup costs plus the $70k to be split 3 ways.

 

[FIREchief]

No one should agree to be an executor of trusts without the tools to do their job. And that includes having access to the defendant's funds and get the ball rolling on settling the estate.

You're mixing two different things together here. An executor executes the will and administers the probate estate. A successor trustee administers a trust and trust owned property (i.e. not part of probate estate). Certainly there is typically a lot of overlap, and often the same person(s) performs both roles. In a typical living trust scenario, the trustee should have immediate access to liquid assets to pay final bills, etc. (without having to seek letters of appointment from the courts, and without having to fulfill the documentation requirements of a formal probate process). For many, it's not just the costs and time requirements of the probate process, but also the legal rigor that makes it undesirable.

 

[Travelfreek]

Trustee of trust - unknown particulars

if I were you I would have a heart to heart with your sister and tell her that what your brother has wrought is painful for you but you recognize you have to accept it, and that she had no part in its design. And that you will allow her to do her job as trustee and executor, and you will step back from the process, as that will allow your healing process to begin. It is her job to handle things from here on out and any involvement of the siblings may be counterproductive.

Sorry to hear of this development, I agree it sounds unfair, but who knows what your brother was thinking or even how much he thought about it, or understood the implications.

Yes, it's very disheartening. I phoned her today and told her how upsetting this is to myself and our brother. She was defensive about it and said she can't make decisions about it yet. She was also fretting about the income tax implications (it's all traditional IRA and she has a large income as it is and is widowed). About 3 weeks ago, we became aware of this large IRA left to her but within a couple of days, she said she was going to divide it by 3 and share with us since she didn't believe he would do that intentionally. Now with yesterday's call, she seems to be walking it all back and isn't wanting to commit to any type of split for awhile (maybe a year). My feeling is she's gotten a bit greedy and wanted to let us know sooner than later that it may not be going down that way. Legally, she doesn't have to share w/ us but she was as confounded as we were that he would leave such a large amount to her. Again, we all got along. My brother and I agreed that we would have split it in 3 in a heartbeat if the tables were turned. Even if she took a 50/25/25 approach or something along those lines, my brother and I would be fine with it.

Bottom line, our DB left a mess that is now causing a rif between us siblings that has never happened in our entire lives. Two of us against the trustee (sis) and 3 against the gf. Since our DB was single and we have a lot of work ahead of us, it's best if we can work as a team. It's not feeling good anymore. My brother and I want to just let the dust settle and do what we have to. She's (trustee) now going to string us along for a year until she's ready to think about it whether and how to divide the IRA. My guess is because of the taxes and her high income, it's never going to be the right time. This is another reason why I wish my brother paid off his house, There would have been less of the taxable inheritance to contend with. His house is worth maybe $425-450k (less the $68 k owed), (less any repairs / cleaning costs, less the commission). The trust account has $75 in it roughly but the $2k monthly payments on the house and other expenses keep adding up plus his pension and SocSec stopped. We will each be very lucky to get $100k but it's going to be so messy along the way. I like the idea one of you had of us (the beneficiaries but not trustees getting paid for our time). The trustee will be working for several months right as the house if available so we (beneficiaries) will be doing all the things.

 

[CardsFan]

OP
WRT to the IRA, keep in mind that your sister cannot simply divide the IRA into thirds, and then let you take distributions. Since she is beneficiary, she is required to take any withdrawals as income, and pay the taxes due. Being single and high income, fed taxes are probably 24% to 35%. Add in state taxes (say 10% in CA), and the net out will be 55% to 66% of the IRA value. So if sis did pay you 1/3 of a $200k IRA it would be in the range of $35k to $45k (+/-).

Not chump change, but IMHO, not enough to cause a huge rift in the family.

 

[CaliKid]

Yes, but unless she was added to the deed, or qualified as a common-law spouse, or could show a record of paying the full mortgage for decades, she would probably be considered at best a tenant, which would mean that in most places all she would be entitled to would be 30-90 days notice to vacate.

Read up on Marvin v. Marvin (same last name but not legally married) and/or palimony. It's a very real concern at least in crazy California.

 

[pb4uski]

OP
WRT to the IRA, keep in mind that your sister cannot simply divide the IRA into thirds, and then let you take distributions. Since she is beneficiary, she is required to take any withdrawals as income, and pay the taxes due. Being single and high income, fed taxes are probably 24% to 35%. Add in state taxes (say 10% in CA), and the net out will be 55% to 66% of the IRA value. So if sis did pay you 1/3 of a $200k IRA it would be in the range of $35k to $45k (+/-).

Not chump change, but IMHO, not enough to cause a huge rift in the family.

I'm not so sure CardsFan. Why couldn't the sister disclaim 33% or 50% of the IRA, in which case I think it would then go to the next of kin being the two remaining siblings.

 

[Travelfreek]

Trustee of trust - unknown particulars

OP
WRT to the IRA, keep in mind that your sister cannot simply divide the IRA into thirds, and then let you take distributions. Since she is beneficiary, she is required to take any withdrawals as income, and pay the taxes due. Being single and high income, fed taxes are probably 24% to 35%. Add in state taxes (say 10% in CA), and the net out will be 55% to 66% of the IRA value. So if sis did pay you 1/3 of a $200k IRA it would be in the range of $35k to $45k (+/-).

Not chump change, but IMHO, not enough to cause a huge rift in the family.

Yes, I understand that. That she has to take a withdrawal that's taxable to her and then have both fed and state income tax payable as a result. So, she can consider that as part of the payment (the taxes she must pay). There's going to be no way around it as her income is all pension (hers plus her late husband's plus his social security plus her wages that she earns (just under the $17,600 allowed for the year). So her income will not be dropping at any point in time and when she turns 70 1/2, she'll need to start her RMDs.

Maybe if I calculate this out, it will be easier to stomach. I just wish she didn't say one thing and then 2 weeks later, change her mind and say "I don't know" what I'll do. The favoritism displayed by our DB makes grieving his loss easier for the 2 of us left out. But it makes this entire process so much more painful. It would have been an all for one and one for all event had he been fair in his distribution.

 

[CardsFan]

I'm not so sure CardsFan. Why couldn't the sister disclaim 33% or 50% of the IRA, in which case I think it would then go to the next of kin being the two remaining siblings.

Good point, if a beneficiary can do that. I guess this would also force the whole issue into probate, since it outside the trust? IANAL or a tax professional. Maybe DS needs to consult both to see what the options can be, and maybe that is why she wants some time to figure it out?

 

[RunningBum]

OP--You seemed perfectly fine following the estate to the letter when the GF was being left out, but now that you are feeling shorted, you want it ignored? Something sound funny here?

And you're going to get more than $100K on the house. You're going to cause a family rift for what, another $67K you'd get of the IRA, which would be a lot less after taxes?

Your sis is in a tough spot, having to execute the estate and taking grief from the GF, and now you and your brother.

 

[Travelfreek]

Trustee of trust - unknown particulars

Well, another option is for our sis to gift us $25k each during the house sale and not touch her inherited IRA. That will allow her to have the full $200k IRA in tact. I'm not wanting a full 33% of the $200 k. Neither does my brother. It's just a nice gesture since this was so unusual. It will go a long way as we work as a team through this big fat mess. The gf will likely want a lot of his things and maybe will buy the house. If she starts cooperating we will be very easy to work with and give her a bunch of stuff. If not, then we sell on the open market. Our sis (trustee) is not as likely to give her a discount as my brother and I. We just want all this behind us.

 

[ivinsfan]

Yes, I understand that. That she has to take a withdrawal that's taxable to her and then have both fed and state income tax payable as a result. So, she can consider that as part of the payment (the taxes she must pay). There's going to be no way around it as her income is all pension (hers plus her late husband's plus his social security plus her wages that she earns (just under the $17,600 allowed for the year). So her income will not be dropping at any point in time and when she turns 70 1/2, she'll need to start her RMDs.

Maybe if I calculate this out, it will be easier to stomach. I just wish she didn't say one thing and then 2 weeks later, change her mind and say "I don't know" what I'll do. The favoritism displayed by our DB makes grieving his loss easier for the 2 of us left out. But it makes this entire process so much more painful. It would have been an all for one and one for all event had he been fair in his distribution.

Well now we know the issue with the GF ..WAS all about the money. It was your brother's money it was never your money. If you showed this attitude towards the GF no wonder she isn't open to being "nice"..I wouldn't be either. If this causes a sibling rift it's not your sister's fault IMO..

 

[Vacation4us]

Your brother left his IRA to your sister. Not you or your brother. The fact that you think she should split it 3 ways shows that any rift will be caused by you and second brother.

I understand his choice makes you feel less cared for, I would feel the same. BUT it is what it is and not your sister’s fault or responsibility to fix it.

It’s sad that the amount of your inheritance is affecting you grief or lack there of.

 

[Sunset]

I see it is very easy to say if the shoe was on the other foot we would share it all quickly and equally.
It's very easy to say that when you don't actually have anything to give away.

The reality is OP's sister was left the IRA on purpose by the brother. He had lots of time to change it if he wanted, it's not like he died in a plane crash suddenly.

Notice OP is not suggesting the sister give some of the IRA to the gf who took care of the brother for a couple of years while he died. Also OP is not suggesting the gf get some of the house value either (which is something OP could actually give).

All the giving OP is suggesting is to the benefit of OP, so it's really receiving not giving.

 

[Travelfreek]

Actually i would agree to discount house price to gf and I suggested we let her live rent free though the mortgage is $2k a mo. My sis/trustee first agreed to split IRA 3 ways-then lately said after 3 weeks that she’s not sure. I think $150k /25/25 is a nice gesture. Who knows what will happen. I do feel bad for gf but she also is very difficult personality (separate matter). My sis/trustee does not want to discount house for gf. My brother and I don’t mind to give her some equity to compensate for no inheritance and the fact she wants it.

 

[ivinsfan]

Actually i would agree to discount house price to gf and I suggested we let her live rent free though the mortgage is $2k a mo. My sis/trustee first agreed to split IRA 3 ways-then lately said after 3 weeks that she’s not sure. I think $150k /25/25 is a nice gesture. Who knows what will happen. I do feel bad for gf but she also is very difficult personality (separate matter). My sis/trustee does not want to discount house for gf. My brother and I don’t mind to give her some equity to compensate for no inheritance and the fact she wants it.

Put away your shovel and stop digging that hole. You clearly said that when your sis offered to share the IRA she thought it was a paperwork issue with your brother. She later found out it WAS NOT a paperwork issue. So in fact she didnt' "change her mind" she got more information that DB wanted HER to have that money.

And everything you have previously written gave no indication you wanted to "give" the GF a darn thing except a 90 day letter to vacate. Now your sister is the bad guy there too.

Now OP you watched your DB in a 17 month losing battle with a difficult cancer. He's been gone for one month. Is this really what you want to focus on right now? If you can be kind, be kind... to both honor your DB and to realize bad stuff can be right around the corner for anyone. Use this to help you become more compassionate and aware..

 

[The Cosmic Avenger]

Put away your shovel and stop digging that hole.



...



Use this to help you become more compassionate and aware..

Interesting contrast there, between your first and last sentences towards someone who is also grieving.

 

[footenote]

[The sister is a non-spouse IRA beneficiary. She will get hit by the RMD requirement December 31, 2020, regardless of her age.]

 

[ivinsfan]

Interesting contrast there, between your first and last sentences towards someone who is also grieving.

Compassionate and aware yes, trying to point out the OP might try and make better choices before some of his sibling relationships are permanently damaged. Even in grief it's not OK to be angry at someone who hasn't done anything wrong. There is no wrong way to grieve, yet some choices made when grieving can live on for a long time. In fact the old saw, think before you act or in this case speak, is even more important when dealing with loss.

 

[pb4uski]

Good point, if a beneficiary can do that. I guess this would also force the whole issue into probate, since it outside the trust? IANAL or a tax professional. Maybe DS needs to consult both to see what the options can be, and maybe that is why she wants some time to figure it out?

It might need to go to probate unless the decedent had the other two brothers as contingent beneficiaries in the event the prime beneficiary (the sister) had passed.

 

[pb4uski]

Actually i would agree to discount house price to gf and I suggested we let her live rent free though the mortgage is $2k a mo. My sis/trustee first agreed to split IRA 3 ways-then lately said after 3 weeks that she’s not sure. I think $150k /25/25 is a nice gesture. Who knows what will happen. I do feel bad for gf but she also is very difficult personality (separate matter). My sis/trustee does not want to discount house for gf. My brother and I don’t mind to give her some equity to compensate for no inheritance and the fact she wants it.

I'm looking at it this way. The OP's DB either intentially wanted his DS to have the IRA or misunderstood how trusts and beneficiary designations work and made his DS beneficiary erroneously thinking that it would go to the trust and then be divided between his three siblings. Who knows? They never will.

If the two brothers would be ok with $150k/25k/25k for the IRA then the bottom line is that they are willing to let $25k be an impediment in their relationship with their sister... and that is sad.

All of that said, if I were in OPs situation I think I might step aside and let sister as the trustee handle everything on her own and just wait for that ultimate trust accounting and check.

 

[Travelfreek]

I love you all! You are helping me realize I’m now getting greedy and think I’ll step back and let chips fall where they may and hope that we can keep our solid relationships. Now I know why the saying, Mo money, mo problems - resonates. Pray for me and wish me luck! It’s been quite a roller coaster for all if of us.

 

[blueskyk]

Inheritance issues can be really painful. And being an executor or trustee in that situation is a really difficult job. It’s super hard for everyone when emotions are washing over everyone.

I’d like to offer a story about unequal inheritance (however anyone defines this).
I was a caregiver for DH1 for 34 years after a horrific accident left him profoundly disabled. My relationship with his family was contentious and difficult with me (as I look back now) shaming them for not helping out more (they visited him once or twice a year, we all lived in the same town) and them (I’m trying to be gracious here) suffering under my withering indignation and judgement. They found DH1’s situation “too painful” to deal with. Involvement didn’t look optional to me.

His parents inherited just under $10M about 15 years ago. I had never asked them for financial help and they had never offered, nor did they now. About 5 years ago, I was regularly visiting MIL who was now a widow and in the early stages of dementia. I was helping her collect all her stuff for doing her taxes when she came across her will and said she “should probably review this.” I wish I had never seen it.

She was leaving everything to BIL (with the proviso that he “in his sole discretion” provide for his brother, who was still alive at the time). Yet, she had me listed as an alternate executor. If BIL died, prior to her, all funds were divided among his one son and third wife upon her death. And I would be the one carrying this out.

It was beyond painful to read all this.

My pain and resentment about the arrangements of the will bubbled up, of course, from a deep sense something else should have happened, that somehow, I “deserved” to share in the bounty of HER money. That money conferred some sort of moral validation and demonstrated a measure of gratitude for the decades of sacrifice I made in the care of her son.

Was it about the money? No. It was about what I thought the money meant. That what I had done for their son meant something to them. That I had some how honored his life and they were grateful.

After DH1 died (about a year after I saw the will), DH2 gave some wise counsel, “Walk away.” And I did. After the funeral, I wrote her a letter requesting to be removed as an alternate executor, and the family and I never spoke again.

It’s super hard to get over that kind of thing (IMHO) and I’m still working on finding some freedom from it. For a while, I engaged in rage as a spiritual practice but eventually found “Resentment is a poison we drink hoping someone else will die” (Thank you St. Augustine). Sometimes people make choices that are painful for others.

Does it sometimes come back to haunt me? Sure. Someone told me BIL recently purchased a $500K home, quit his job and takes super cool vacations.

I take some breaths, remind myself, it’s HER money to do with as she wishes. She gets to choose. I’m still working on this trying to get to the point where I sincerely wish her (she’s still alive) and BIL well.

Because then, I’ll really be free.

 

[Scratchy]

Inheritance issues can be really painful. And being an executor or trustee in that situation is a really difficult job. It’s super hard for everyone when emotions are washing over everyone.

I’d like to offer a story about unequal inheritance (however anyone defines this).
I was a caregiver for DH1 for 34 years after a horrific accident left him profoundly disabled. My relationship with his family was contentious and difficult with me (as I look back now) shaming them for not helping out more (they visited him once or twice a year, we all lived in the same town) and them (I’m trying to be gracious here) suffering under my withering indignation and judgement. They found DH1’s situation “too painful” to deal with. Involvement didn’t look optional to me.

His parents inherited just under $10M about 15 years ago. I had never asked them for financial help and they had never offered, nor did they now. About 5 years ago, I was regularly visiting MIL who was now a widow and in the early stages of dementia. I was helping her collect all her stuff for doing her taxes when she came across her will and said she “should probably review this.” I wish I had never seen it.

She was leaving everything to BIL (with the proviso that he “in his sole discretion” provide for his brother, who was still alive at the time). Yet, she had me listed as an alternate executor. If BIL died, prior to her, all funds were divided among his one son and third wife upon her death. And I would be the one carrying this out.

It was beyond painful to read all this.

My pain and resentment about the arrangements of the will bubbled up, of course, from a deep sense something else should have happened, that somehow, I “deserved” to share in the bounty of HER money. That money conferred some sort of moral validation and demonstrated a measure of gratitude for the decades of sacrifice I made in the care of her son.

Was it about the money? No. It was about what I thought the money meant. That what I had done for their son meant something to them. That I had some how honored his life and they were grateful.

After DH1 died (about a year after I saw the will), DH2 gave some wise counsel, “Walk away.” And I did. After the funeral, I wrote her a letter requesting to be removed as an alternate executor, and the family and I never spoke again.

It’s super hard to get over that kind of thing (IMHO) and I’m still working on finding some freedom from it. For a while, I engaged in rage as a spiritual practice but eventually found “Resentment is a poison we drink hoping someone else will die” (Thank you St. Augustine).

Does it sometimes come back to haunt me? Sure. Someone told me BIL recently purchased a $500K home in Florida, quit his job and takes super cool vacations.

I take some breaths, remind myself, it’s HER money to do with as she wishes. She gets to choose. I’m still working on this trying to get to the point where I sincerely wish her (she’s still alive) and BIL well.

Because then, I’ll really be free.

Thanks for sharing your story. What you described is really upsetting. I think your DH2 gave you great advice and I sincerely admire you for following it.

 

[Scratchy]

I love you all! You are helping me realize I’m now getting greedy and think I’ll step back and let chips fall where they may and hope that we can keep our solid relationships. Now I know why the saying, Mo money, mo problems - resonates. Pray for me and wish me luck! It’s been quite a roller coaster for all if of us.

OP, I feel for you, suffering a loss with the death of your brother, then the roller coaster with the GF and estate, and receiving some feedback maybe at first difficult to hear on this website. You're definitely handling it better than I would be able to. Good luck going forward from here. I think your current plan is an excellent one!!

 

[gwraigty]

She was leaving everything to BIL (with the proviso that he “in his sole discretion” provide for his brother, who was still alive at the time). Yet, she had me listed as an alternate executor. If BIL died, prior to her, all funds were divided among his one son and third wife upon her death. And I would be the one carrying this out.

It was beyond painful to read all this.

...

I take some breaths, remind myself, it’s HER money to do with as she wishes. She gets to choose. I’m still working on this trying to get to the point where I sincerely wish her (she’s still alive) and BIL well.

Because then, I’ll really be free.

True enough and wise words. She has a lot of nerve though.

I do hope that Travelfreek can eventually find peace. About 10 years ago, I received an inheritance that a family member assumed that she would get and she felt I didn't deserve. It didn't end well. She stopped speaking to me, and shortly afterward, she had a major stroke that left her mind gone and one side of her body paralyzed. She's still alive, if you can call it that. I have no contact with her, not my choice, but that of her husband, who cut off her entire side of the family. I lost 2 family members upon the death of one.