How much to leav

[silvor]

How much to leave after trust expenses are paid, how long?

I am the trustee of a trust - which is just for distribution of my fathers assets.

The numbers are as follows:

There was/is around 1m in retirement accounts, which I am aware is up to the bene's to take care of on their own.

400k in equities and cash - I already distributed

350k from the sale of the home and miscellaneous property which is in cash in the bank.

Everything has been paid for the most part, except taxes, which I expect a modest refund.

FWIW, my brother (the other bene) and I had a falling out, and don't speak.

When I distribute, the $350k, how much is a good amount to hold back in case of back taxes or other expenses or unforeseen issues?

 

[Dtail]

Do you feel there will be any aspects of the distribution that your brother will challenge?

 

[RobbieB]

Bummer dude. Makes it real hard to wrap up eh?

But it sounds like an easy 50-50 split. Was there "heirloom"arguments?

 

[ivinsfan]

It's not clear but I think you saying if you empty the account and an expense comes up your bro will tell you to pound sand.


What are you afraid might pop up? What do you mean by unforeseen issues?

 

[Sunset]

We are currently holding back $~50K until the tax return is done.
Hadn't really thought about what if something else pops up later.
We do have one heir that is not doing things properly, not changing over the utility accounts names, etc. So I'll point out to DW we need to wait for that to happen before letting everything go.


Just thinking here:
Biggest issue I see for OP is the other heir decides to sue him for uneven distribution of the trust. Maybe the trust needs to hold back $100K until all heirs sign a wavier or similar thing, which of course should have an accounting of funds distributed.

 

[swakyaby]

I understand what the OP is describing. Our estate tax attorney advised the trustee hold back an unspecified amount of cash from distribution until it was clear no further taxes would be owed from the estate. Apparently, it’s difficult to get beneficiaries to pay back the trustee when unexpected expenses occur after final distribution of assets, especially if there are any resentments lingering.

 

[ivinsfan]

I understand what the OP is describing. Our estate tax attorney advised the trustee hold back an unspecified amount of cash from distribution until it was clear no further taxes would be owed from the estate. Apparently, it’s difficult to get beneficiaries to pay back the trustee when unexpected expenses occur after final distribution of assets, especially if there are any resentments lingering.

What % of the estate was that number, that might help the OP?

 

[swakyaby]

In our case, my brother the trustee held back $40K out of a $5M distribution to 4 beneficiaries, and explained that if no further expenses or back taxes were owed, this remaining would be distributed. It turned out the IRS demanded over $100K in taxes owed since it said no taxes were paid on an A/B trust established years ago. My brother said he would appeal the IRS penalty. That’s the last I heard of it 3 years ago.

 

[RobbieB]

Mine was easy, I defunded the trust except for 2 grand in a checking account (minimum for no fees) just in case a check comes in and I need to deposit it.

 

[rk911]

I am the trustee of a trust - which is just for distribution of my fathers assets.

The numbers are as follows:

There was/is around 1m in retirement accounts, which I am aware is up to the bene's to take care of on their own.

400k in equities and cash - I already distributed

350k from the sale of the home and miscellaneous property which is in cash in the bank.

Everything has been paid for the most part, except taxes, which I expect a modest refund.

FWIW, my brother (the other bene) and I had a falling out, and don't speak.

When I distribute, the $350k, how much is a good amount to hold back in case of back taxes or other expenses or unforeseen issues?

this may not be pertinent to your situation. I was successor trustee when my BIL passed. there were 5-bene's...my wife, another brother, 2-friends and myself. value was ~$1m. lots of medical bills (pancreatic cancer took him at age 56). his insurance carrier informed me that his medical providers had 18-months from the date-of-service to submit a claim. that meant i had to wait 18-mos to distribute funds waiting on possible claims. i decided to hold back about half of the estate value as a hedge. i distributed the other half and put the hold-back into a money market account. i wrote checks 18-mos later.

 

[ERD50]

It would be interesting to find out just what the legal issues are. I wouldn't think an executor/trustee would be on the hook for anything, outside of them being negligent. Clearly, you need to hold back to cover taxes, or any known bills.

IIRC, don't creditors only have a limited time to make a claim against an estate? Find out that number.

If a legitimate claim was made, and there was not enough $ left to cover it, I would think that if there are two beneficiaries, you would pay your half, and tell the claimant to go see the other guy for the other half. But does it work that way - I dunno?


-ERD50

 

[silvor]

I will try to address everything people brought up...

Distribution of money is pretty easy I would think. It's all now in cash or cash like securities. I have receipts & accounting statements for everything. There's nothing really that can be uneven.

The only issue is expenses I would think. There are some that were never submitted to me even though I asked for receipts repeatedly. We're talking maybe $1-2k in expenses here that the trust may have to pay. However, these are the people who refused to leave the house (see my previous posts). What I think though is he realized they ran up the bills over that. I really don't care unless it's brought up to pay.

So, I wonder if $20k will work? $10k? $100k? I don't know.

I asked the lawyer about having the other bene sign a waiver, but he didn't really give me much of an answer on that. The lawyer almost gave me the impression that's not really done.

FWIW, my father got a small inheritance in the early 1990s. A 750k estate was split up 20 ways. The expenses were paid, they each got $30k, and over $46k was left behind. I'm not exactly sure what happened to the 46k. I found no paperwork on it and he never mentioned anything to me. So I guess that's 6%. Which is about what I'm dealing with here. But do I include the retirement accts?

I guess if I ever get questioned on "why is there 46k left sitting there", I can point to that?

 

[Bamaman]

Good luck to you on this matter. There's nothing that brings out relatives nature like having to split an inheritance.

Communication is so important in these situations. And complete honesty is also important--no matter what the others try to pull over on you.

We inherited a minority interest in a 10 story office building, and didn't even personally know our partners who were attorneys with CPA's. They wanted to bring us into the partnership--and we had to negotiate a buyout at what I assume was less than the property is actually worth. We didn't even know the "basis" for tax purposes. And you should have seen my tax return the next year.

My idea is to just keep estates as simple and transparent as possible. Make sure everyone knows what assets and liabilities are--and that there is some money to be held back for the unknown that'll be distributed later.

 

[Jerry1]

It’s hard to say, but much like a contractor, I’d think about holding back enough money to ensure not only the expenses are paid but that the beneficiaries comply with your instructions. For example, if you need some final papers signed, it will be a lot easier for the brother who’s not talking to you to ensure he gets it done if it comes with the final check of say $25K. Personally, I’d see if your lawyer balks at $50K.

 

[Music Lover]

The only issue is expenses I would think. There are some that were never submitted to me even though I asked for receipts repeatedly. We're talking maybe $1-2k in expenses here that the trust may have to pay. However, these are the people who refused to leave the house (see my previous posts). What I think though is he realized they ran up the bills over that. I really don't care unless it's brought up to pay?

To me it's simple. Don't disperse any money until all the expenses are accounted for. The $1k or $2k could end up being a lot more, especially if the people who refused to leave ran up the bill.

If someone complains blame the delay on the the squatters.