Executor of Living Trust/Will requirements

[Drake3287]

Not sure if this is the right forum but have anyone one of you ever been an Executor or Trustee of an Estate? I'm the Executer of my elderly fathers Living Trust but I'm not sure exactly what I do first when the time comes.

He basically has a paid off house, money in CD's earmarked for us siblings along with a few stocks and of course the contents of the home.

Do most people just start with contacting a lawyer or the firm that wrote up the trust in the first place and go from there? In my fathers case I know everything's pretty well spelled out as to who gets what, etc. But who basically walks me through all this.

As for lawyer costs, I assume anything they charge simply comes out of the estate? Any good tips on how this whole process works?

Thanks

 

[RobbieB]

You just follow the instructions in the trust, you don't need a lawyer. Somewhere in there should be instructions of what to do with all the property that is in the trust's name. And you should do it as soon as possible after the fact, ie you don't want to the trust to hold property long.

The trust will need a taxpayer ID number after the fact, you get that from the government.

A CPA will be a good idea to file the trust's tax return.

 

[socca]

You may find this book helpful:

The Executor's Guide: Settling a Loved One's Estate or Trust

Yes, it's 500 pages, but it's all good info. Happy Reading!

 

[Big_Hitter]

Yes, DW has done two.

You will need an atty to file some probate documents and the trust tax return is a booger - get a good CPA as mentioned. All of that is payable from the estate as are your fees for executing it.

 

[ER Eddie]

I'd consult a lawyer. Laws (and taxes) can vary a lot, state to state. A lawyer can help you to make sure you're doing everything right. If you're handling a lot of money and distributing it among siblings, trying to pay taxes appropriately, and dealing with all kinds of legal paperwork, you don't want questions to come up afterwards. At least that was my feeling, when I administered my dad's estate. I found a lawyer well worth the money.

And yes, you'll need a CPA, too, most likely.

 

[meierlde]

I'd consult a lawyer. Laws (and taxes) can vary a lot, state to state. A lawyer can help you to make sure you're doing everything right. If you're handling a lot of money and distributing it among siblings, trying to pay taxes appropriately, and dealing with all kinds of legal paperwork, you don't want questions to come up afterwards. At least that was my feeling, when I administered my dad's estate. I found a lawyer well worth the money.

And yes, you'll need a CPA, too, most likely.

Actually you can buy TurboTax business to prepare the estate and trust 1041s.
You might have a cpaor a lawyer/cpa (some do exist) review the first trust return, and then use that as a template for the future using TurboTax. (Which is what I did). This is assuming the trust continues long term you then have to file a 1041 for it every year. Note that from a tax perspective you want to distribute as much income to the beneficiaries as possible, since tax rates for living folks are lower than those for estates and trusts (to discourage holding funds in them).

 

[Walt34]

You could do worse than go see an attorney at the beginning but let them know you want to do the work, you're just there to get guidance, assuming that's the case. They can of course handle it all but that will run up the bill, it can be time-consuming. That may or may not matter to you. Generally the estate pays any fees connected to handling the estate.

I handled by mother's estate but it was pretty simple - no property, vehicles, or trusts, just investments. A couple of books that one of the guys at work gave me helped a lot - he had just dealt with his mother's estate. I did go see an attorney at the end to make sure all the "i's" were dotted and the "t's" were crossed but we spent more time talking about my job than the estate and he didn't even charge me anything.

I did have a CPA do the estate tax return. When I looked at that my eyes glazed over and I knew it was out of my league. I think it was ~$200 (1999) but for a one-off it was worth it.

When FIL passed we had the attorney handle it, mostly to keep us out of the line of fire of family drama. DW had been dealing with FIL's issues for a couple of years by then and was pretty stressed.

 

[meierlde]

If there is a will you will need an attorney to do the probate stuff. Then you get letters testimentary (or whatever they are called in your state) that you can take to banks to transfer accounts to the estate, and also get a tax id number for the estate. Then you will have to prepare a final 1040 covering the year up to the date of death, as well as eventually the 1041 for the estate. Unless the estate/trust is over 5.4 million you wont have to worry about the federal estate tax (but may have to for the state, thus consultation with a local attorney can help here).

You

 

[MichaelB]

Not sure an attorney is needed. That's one of the advantages of a living trust.

If all of the assets are in the trust and the trust itself is current, the trustee only needs to contact the different custodians, inform them that he is the trustee, and provide a copy of the death certificate. The trust is then retitled with the trustee info, and the trustee goes about executing whatever was specified.

If there is any property or assets outside the trust, a probate attorney may be needed, depending on state law. In this case, Drake3287 might want to review with his father to see if all of the assets are in the trust, including personal belongings. If not, they can be transferred easily.

 

[meierlde]

Not sure an attorney is needed. That's one of the advantages of a living trust.

If all of the assets are in the trust and the trust itself is current, the trustee only needs to contact the different custodians, inform them that he is the trustee, and provide a copy of the death certificate. The trust is then retitled with the trustee info, and the trustee goes about executing whatever was specified.

If there is any property or assets outside the trust, a probate attorney may be needed, depending on state law. In this case, Drake3287 might want to review with his father to see if all of the assets are in the trust, including personal belongings. If not, they can be transferred easily.

Note depending on the state and the way property taxes for elderly are handled it may be better to keep the house out of the trust, because tax freezes exist in many states, where moving the house into a trust may have the effect of unfreezing the property taxes.

 

[Cooked]

Drake
My understanding is that where a trust is involved a trustee is in play. When a will is involved, an executor is in play. I believe that executors need lawyers more that trustees do. If you do not understand the distinction then you might need a lawyer, or some library reading.
I am a trustee (successor trustee) and hopefully I can negotiate this path with minimal (probably none) legal help. The Nolo Press has some helpful books that are quite readable.
A local elderly support organization (PCOA - Pima Council On Aging) provide some pro-bono legal advice (not document assistance). I tool Mom and our documents in there with a list of questions and came out 30 minutes later a wiser man. The lawyer later got a little of my business cleaning up some documentation.
Get your ducks lined up. When the time comes to do this task, you will have a lot on your mind.

 

[RobbieB]

If the property is in the name of the trust and you are the trustee you will have no problems. You will need to bring the whole trust document with you when you go about this business and they will make lots of copies.

Now would be a good time to see how the assets are titled, read the trust document and know where the paperwork is.

 

[Souschef]

I had a living trust for my wife and myself. When she passed away, I went back to the lawyer who did the trust to divide up the assets. One thing I found out was because the house was IN the trust, the entire house got the stepped up basis. If it was outside the trust, with joint tenancy, only one half would get the stepped up basis. I also got statements showing the value of all assets on the date of death to get their stepped up basis.
Filling out the 1041 is fairly easy, It is sort of like a 1040A, but it also depends on the complexity of the assets. To file it, you need to request a EIN from the IRS, which I did.

 

[Act2]

I've been through this three times, in three different states, in the last six years. In only one of the states would I have been ok without a lawyer. In the other two, I would have missed very important things. Used a lawyer in all three circumstances and am very glad we did. At the time I wasn't sure I needed one in one of the states that I would have messed up in, but am so glad we had one in retrospect.

 

[pb4uski]

I am one of the co-trustee's for my deceased Dad's trust and have executed a couple small estates (neither of which required probate).

While I think the A/B trusts my parents put in place made sense back when the estate tax exemption was lower, today they are a PITA. We may get rid of them and use beneficiary designations and TOD to address distributing the estate.... definitely will for me and DW.

That said, in our case the 1041 is pretty easy. I download the fillable forms off the IRS website... if it was more complex I would use TT.

While a lawyer set up the trusts and I consulted with him when Dad died, after that it has been all me (retired CPA so I know a little about it).

It sounds like the trust will be short lived because it will be used as a conduit to distribute your Dad's assets to his children. Ours is a little more complex because my Mom is the beneficiary as long as she is alive and then us kids are the beneficiaries so I've been dutifully doing trust tax returns for the last 10 years.

 

[KRABE]

In most states it would be advisable to contact a lawyer.

Quite often individuals with living trusts also have a pour over will that doesn't do anything substantively but is there to address any assets that are missed. That Will in most states must still be filed with the court for safekeeping or probate without present administration. There are typically also notices concerning the trust that must be given to specific parties under state law.

When real estate is owned by the trust there are often certain filings that must be made to show that no federal estate tax is owed or if owed paid.

It does not cost much to ensure there is nothing specific in your state that must be done. As an attorney I have in some instances had to spend way more time fixing mistakes that trustees that have not sought counsel had made than if it had went through probate, which is still significantly more than if they would have came in and asked for guidance on what they needed to do.

(The above comments relate to my general experience and are not offered as part of an attorney client relationship. For specifics relating to your unique set of facts seek legal counsel.) Please excuse any typos as I am on my phone.

 

[Dancfo]

I do this for a living - I'm not an attorney. Make things easier on yourself and take your things to a qualified estate planning attorney and get them to give you a price to settle the estate/trust. They will give you a flat price or hourly; if it is as simple as you say, it should not be much. A few hours at $200 - $350 per hour. Don't go to a large law firm. Depending on where you live, you should be able to find a smaller firm that charges reasonable rates. They should allow you to do as much of the "work" as you want, such as contacting the "banks" and gathering assets. There may be some court papers to file and definitely a 1041 to file. As mentioned, all of these expenses can come from the trust.

I liken this process to working on a car. It may be as easy as changing the oil in your car or as difficult as replacing an engine. If you've changed oil before and know what you're doing, no big deal. But if you haven't, and you screw it up, it can be expensive to repair.

 

[RobbieB]

Be sure to leave a small checking account of his open long after the fact. The interest is so low that no filing will need to be made but I can tell you that it will be very useful as you will be getting checks from various sources well after he is gone and if there is no account to deposit them to...

 

[Drake3287]

Thanks everyone for all the suggestions, lot's of good advise. Although hopefully this won't come in to play anytime soon you never know especially at an elderly parents older age. From what I understand, everything is pretty well spelled out in the trust.

As for me, I'm not in any dire need of inheriting money so spending some on an attorney seem's like a good advice to start with. Unfortunately my sibling's aren't FIRE as me and I'm sure everyone will have an opinion as to spending money.

I can only guess how many family fights have started over these estate issues! I know how much my fathers house is worth based on it's poor condition but my siblings of course think it's worth much more simply because of neighboring home's in the area. I guess I'll let a realtor break the bad news.

 

[Souschef]

I can only guess how many family fights have started over these estate issues! I know how much my fathers house is worth based on it's poor condition but my siblings of course think it's worth much more simply because of neighboring home's in the area. I guess I'll let a realtor break the bad news.

I paid a licensed appraiser to get the value of our house. I suggest you do the same. A realtor may just go with comps in the neighborhood.
The trust should pay for the appraisal and the lawyer.

 

[Bamaman]

When my 99 year old aunt died, she'd been in assisted living for 10 years and her real estate had already been sold. The executor (my cousin) was on the checking account and her stock accounts had beneficiaries listed.

The estate was not required to be probated, and the funds were quickly and efficiently spread to 3 nephews. Since there were no debts of any kind, it was a done deal.

If you get down to it, probate is where a judge gives the executor the authority to sign for the deceased for the purpose of liquidating real property. They will also want to make sure the state/U.S. taxes are paid and all debts have been paid.

If there is no real estate and everything is passed on per the will and the beneficiaries on accounts--no probate is required.

 

[meierlde]

Be sure to leave a small checking account of his open long after the fact. The interest is so low that no filing will need to be made but I can tell you that it will be very useful as you will be getting checks from various sources well after he is gone and if there is no account to deposit them to...

The alternative would be if an estate is opened to open an estate checking account, and deposit the checks there.