My Job as an Estate Executor is almost over!!!

[38Chevy454]

Good job completing the process. Take some well deserved time and do something for yourself. It is a big relief once you finalize the estate settlements and paperwork.

 

[audreyh1]

Thanks for posting this. I am executor of my brother's estate, sitting on the last $115K non-interest-bearing cash. The accountant told me recently that the IRS was so backed up that we should not distribute the funds yet. (He passed in 2020).

Audrey, thanks for posting your info. We are just starting with my FIL and MIL. He went into the hospital a week ago and she came to live with us. She has dementia and can't live alone.

We are learning how to live with her. It's a full time job for more than one person. Investigating memory care facilities and waiting to see if her husband gets out of the hospital.

Why would you have to wait on the IRS to distribute the funds. Maybe just retain a small amount?

I’m distributing the land sale.proceeds to heirs as soon as I can. Then the estate is not responsible for taxes on any capital gain. I don’t expect any taxes for 2022 because the estate income will be lower than the expenses and distributions in 2022. The estate still has a few other funds to settle any additional 2022 expenses plus the the final tax preparation.

 

[ncbill]

I love revocable living trusts...so easy for estate handling I used them for the last couple relatives whose affairs I handled.

But had to open a "small estate" for one where I missed just a couple of thousand in assets...still had to pay fees that came close to those of a normal estate, though I didn't have to publish 'notice to creditors' in the local newspaper...during COVID so everything was by mail...took forever compared to using the trusts.

 

[audreyh1]

Good for you!!! Just wondering if there was any financial compensation which is not unusual for executors.

I was executor for my uncle's estate and, per his request, received a percentage for my efforts--in addition to my inheritance.

No, it was a labor of love for DF and for my siblings. I did not want compensation.

I wasn’t an heir either. ~20 years ago I convinced DF to leave me out of his will financially in favor of my siblings. This was because I was already (early) retired, my siblings were not, and my net worth exceeded DF’s at the time and far exceeded my siblings, so I didn’t see the point. Also, I have no children and my siblings would ultimately be my heirs and I’d rather siblings get my chunk directly. DF was a little shocked at first, but then agreed, so we had a new will made. His lawyer was a little surprised too, but then DF proudly announced that his daughter was financially independent .

I also had the option of simply turning the real property over to my siblings each owning 1/3 and letting them then deal with any divisions and sales. But due to the pandemic it became clear that with 2 overseas and travel restrictions it was virtually impossible for them to handle it at least in a timely manner. As executor I could much more readily facilitate divisions and sales even though I had to get their agreement as I did so.

 

[REWahoo]

No, it was a labor of love for DF and for my siblings.

I wasn’t an heir either. ~20 years ago I convinced DF to leave me out of his will financially in favor of my siblings. This was because I was already (early) retired, my siblings were not, and my net worth exceeded DF’s at the time and far exceeded my siblings, so I didn’t see the point. Also, I have no children and my siblings would ultimately be my heirs and I’d rather siblings get my chunk directly. DF was a little shocked at first, but then agreed, so we had a new will made.

I also had the option of simply turning the real property over to my siblings each owning 1/3 and letting them then deal with any divisions and sales. But due to the pandemic it became clear that with 2 overseas and travel restrictions it was virtually impossible for them to handle it at least in a timely manner. As executor I could much more readily facilitate divisions and sales even though I had to get their agreement as I did so.

I can see the headline now, "Audrey1 Nominated for Sainthood".

Kidding aside, that was really nice of you.

 

[audreyh1]

I can see the headline now, "Audrey1 Nominated for Sainthood".

Kidding aside, that was really nice of you.

What can I say? My agreement to be primary executor was really a gift to DF, although all us siblings are close.

And as I routinely gift to my siblings already, it made no sense to me for anything financial to come to me directly, and DH completely agreed.

Leaving something to your children is an emotional thing rather than just financial for most people, and asking not to receive something they want to pass on can even appear as rejection, so I had to carefully explain my (unemotional) reasoning to DF. And then he concurred.

 

[ImThinkin2019]

Why would you have to wait on the IRS to distribute the funds. Maybe just retain a small amount?

I’m distributing the land sale.proceeds to heirs as soon as I can. Then the estate is not responsible for taxes on any capital gain. I don’t expect any taxes for 2022 because the estate income will be lower than the expenses and distributions in 2022. The estate still has a few other funds to settle any additional 2022 expenses plus the the final tax preparation.

Hi Audrey,

The reason I'm holding onto these funds is that I've distributed all the money that goes to individuals, plus about 80% of the remaining estate to the charity he asked me to send it to. It's all cash, no land or anything else. Any taxes were already paid by the estate.

Since I'm the trustee, and since the IRS is very backed up, it's always possible they could audit a return and tell me we owe money. Since I can't claw it back once it's gone, I would be liable for the owed money if I finished the distribution to the charity. So I'm holding it for a while more per the accountant's instructions.

At least that's my reasoning.

Hope this clarifies!

 

[Teacher Terry]

Audrey, that’s really generous of you! I think doing the right thing is it’s own reward and feels great even though it often ends up being a lot of work.

 

[audreyh1]

Hi Audrey,

The reason I'm holding onto these funds is that I've distributed all the money that goes to individuals, plus about 80% of the remaining estate to the charity he asked me to send it to. It's all cash, no land or anything else. Any taxes were already paid by the estate.

Since I'm the trustee, and since the IRS is very backed up, it's always possible they could audit a return and tell me we owe money. Since I can't claw it back once it's gone, I would be liable for the owed money if I finished the distribution to the charity. So I'm holding it for a while more per the accountant's instructions.

At least that's my reasoning.

Hope this clarifies!

Oh, I see you are waiting for a potential audit.

I’m not going to worry about it. The estate has had almost no net income so far, and any taxable proceeds are distributed to the heirs.

 

[RE2Boys]

Hi Audrey,

The reason I'm holding onto these funds is that I've distributed all the money that goes to individuals, plus about 80% of the remaining estate to the charity he asked me to send it to. It's all cash, no land or anything else. Any taxes were already paid by the estate.

Since I'm the trustee, and since the IRS is very backed up, it's always possible they could audit a return and tell me we owe money. Since I can't claw it back once it's gone, I would be liable for the owed money if I finished the distribution to the charity. So I'm holding it for a while more per the accountant's instructions.

At least that's my reasoning.

Hope this clarifies!

I did something similar when settling my sister's estate and trust. I knew that there was a final trust tax return to prepare as, per the terms of the trust. it was to be closed upon the tenth year of her passing resulting in a substantial distribution in the middle of a tax period. I held back an estimated amount to cover tax preparation and possible taxes. I over estimated and had to send a final check to the beneficiaries about nine months later.

In 2005 both my sister and my mother passed away, and I was the designated executor for both estates so I was working on them simultaneously. My sister specified a trust in her will due to her spendthrift son (her instincts were right on the mark) giving me the additional ten year job of being the trustee. Some tasks to keep me busy as I had retired from my career job 5 year earlier.

 

[swakyaby]

Thanks for posting this. I am executor of my brother's estate, sitting on the last $115K non-interest-bearing cash. The accountant told me recently that the IRS was so backed up that we should not distribute the funds yet. (He passed in 2020).

Yes, it took over 3 years for the IRS to send this letter demanding more taxes and penalties/interest. My brother distributed the estate to 4 beneficiaries (property, mutual funds, IRAs), but held onto at least $40K remaining in the checking account, instead of distributing it. This was under the advice of the estate attorney. It’s easier than trying to claw back funds from 4 beneficiaries, that’s for sure!

 

[audreyh1]

I know that the estate has to distribute the proceeds from the land sale this year because there is a capital gain, and the estate would otherwise have to pay the taxes supposedly at a higher rate. I guess I’m having a hard time understanding what the estate might otherwise owe substantial taxes on.

 

[skyking1]

congratulations and well done. Labor of love indeed

 

[EastWest Gal]

Congratulations on finishing that. The big bugaboo for my settling my dad’s estate was the farmland he co-owned with his sisters. Their involvement was expecting a check once or twice a year and having him deal with the income tax issues without any input from them. As a W-2 employee his whole life DD did not understand partnerships and business ownership responsibilities, so I had an extra mess to clean up legally.

Dividing up interest in land is a tricky thing. A toast to you for finishing this annoying process.

I’ll bet you learned that being an estate executor is not for the faint-hearted.

 

[audreyh1]

I used a high $ appraiser to set valuations, ha ha.

I knew going in it would be a big job. DF lived longer than we expected, but I knew this chore would become due one day.

 

[StillFiguringItOut]

Audrey, I hope your health holds up and you can enjoy your retirement completely.

I was executor for my mother’s estate. Five days after closing on the sale of her home, I underwent surgery for cancer, discovered after my mother died and while I was dealing with emptying her large home. I dropped the sales price upon my diagnosis to get rid of the house; I didn’t want to deal with it post surgery. That meant that I started packing up lots of stuff that I could deal with later which is currently sitting in a storage facility. It’s always interesting to haul a box home and discover what’s inside.

I’m much better now, but still dealing with cancer treatments and continuing to slowly go through her stuff. At least all the tax stuff is done, as is the bulk of distributions to her heirs, with a bit held back in case. I also declined a significant portion of my inheritance in favor of her grandchildren and my SIL who cared for her husband, my younger brother, for the last year of his life. I am so fortunate to be able to be an early retiree!

 

[MarieIG]

Audrey, you certainly did your father proud!

 

[Winemaker]

Congrats, Audrey, these things grind on forever sometimes.

While it has been almost 9 months since DM passed, the relentless bureaucratic nonsense is never ending. When dealing with these insurance companies, brokerages, etc. the mishandling of documents is ludicrous. Despite enclosing THEIR checklist, marked with requested documents, photos of enclosed documents, I still get requests for previously returned documents. It's crazy.

In one case, I had to submit a W-9 with the Federal EIN in order for the securities to be distributed between myself and 3 siblings. Easy peasy, documents submitted, securities distributed, however, the new accounts, except mine, are restricted unless a new W-9 is submitted for each of the 3 accounts. It's enough to wear you down, which is what I think they're trying to do.

 

[Dreamer]

Congratulations for getting it almost done, Audrey.

It is nice that your father knew that you did not need an inheritance and that your siblings would receive a higher amount. Nice to know that he was proud of you and your accomplishments.

I hope that your siblings appreciate all of your hard work.

 

[socca]

... While it has been almost 9 months since DM passed, the relentless bureaucratic nonsense is never ending. ...

So far in 2022 I've spent over 430 hours settling my dad's estate (not including 16 days spent in his town doing various estate-related stuff) and there's still plenty left to do. Looking back over the experience so far it's been about 5% educational and 95% unpleasant bureaucratic cr*p. I was a babe-in-the-woods immediately after he died; now I'm a well-seasoned estate-settlement warrior.

A surprise: the automatic federal estate tax lien the IRS slaps on any property the decedent owned (whether directly or in a revocable trust). The only way to remove the lien is via an estate tax clearance letter. Well, the problem is that the IRS is currently barely functioning, so the delays in the issuance of such letters is rumored to be enormous. It's not possible to file Form 706 electronically.

What's interesting is that some title insurance companies don't require the escrow of property sale proceeds pending the receipt of the estate tax clearance letter. These companies don't ask whether the estate is subject to the estate tax and (of course) the executor doesn't volunteer this info when the property is sold.

If the lifetime gift tax exclusion drops to around $6M in the next few years, then many more estates will have this issue.

 

[ncbill]

So far in 2022 I've spent over 430 hours settling my dad's estate (not including 16 days spent in his town doing various estate-related stuff) and there's still plenty left to do. Looking back over the experience so far it's been about 5% educational and 95% unpleasant bureaucratic cr*p. I was a babe-in-the-woods immediately after he died; now I'm a well-seasoned estate-settlement warrior.

A surprise: the automatic federal estate tax lien the IRS slaps on any property the decedent owned (whether directly or in a revocable trust).The only way to remove the lien is via an estate tax clearance letter. Well, the problem is that the IRS is currently barely functioning, so the delays in the issuance of such letters is rumored to be enormous. It's not possible to file Form 706 electronically.

What's interesting is that some title insurance companies don't require the escrow of property sale proceeds pending the receipt of the estate tax clearance letter. These companies don't ask whether the estate is subject to the estate tax and (of course) the executor doesn't volunteer this info when the property is sold.

If the lifetime gift tax exclusion drops to around $6M in the next few years, then many more estates will have this issue.

Was there an on-going tax issue...apart from filing Form 706?

Very few estates would need Form 706 to be filed.

There was no "automatic federal estate tax lien" when I sold my relative's house just a few years ago & they had moved their home into a revocable living trust after their terminal diagnosis.

 

[socca]

There was no "automatic federal estate tax lien" when I sold my relative's house just a few years ago & they had moved their home into a revocable living trust after their terminal diagnosis.

This is only an issue for estates that have a federal estate tax liability. In 2026 more estates will have this issue unless the gov't takes action.

 

[audreyh1]

So I got the land sale proceeds transferred to the heirs, and now they can move ahead with their personal plans.

A few less substantial items need follow up and tracking, but these can be done remotely and no longer interfere with our personal schedules, which is very freeing!

We have managed to enjoy a few days in the Smoky Mountains at a fairly remote cabin with two-story decks and very nice views. Our new Tesla EV is handling the Smokies very well (what incline? ha ha).

Many thanks for your responses, and I especially enjoyed the stories people shared from their executor experiences.

 

[swakyaby]

My brother who was executor of my mother’s estate when she passed in 2018 shared a letter he received today from the IRS that said the 2019 taxes paid did not add up to their numbers. Said $50K was due, and with late fees and penalties, a total of $74K was due immediately. He has bank proof of payment of $50K, but is emailing the estate attorney who prepared the tax return on what is the best way to respond. DB says this tax stuff never seems to end.

Update: After a 3-way call between DB, an IRS agent, and our estate attorney who prepared the tax returns, it was determined the $50K was applied to the original 2019 tax return instead of the 2019 amended tax return. So even though it would have meant a $50K overpayment on the original return, the IRS zeroed in on the presumptive underpayment of the amended return, and added 2 1/2 years of late fees and penalties. We’re glad this seems resolved (for now), because otherwise it would have meant trying to claw back $34K from 4 beneficiaries.

 

[audreyh1]

What a horrifying mess! The dangers of amended returns, I suppose.

I don’t understand how there would ever have been any need for clawbacks since you all had clearly paid the $50K in a timely manner.