You may need to keep the account open through the tax cycle to pay any estate taxes when you file by April.
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and then keep it open ANOTHER year as assets pop up as “unclaimed” in the state treasurer’s office. The procedure for the executor to claim random amounts is easy with a letter of appointment, a death certificate, and a bank account is easy-peasy.
Once the bank account is closed it gets harder.
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For an estate with just a saving account left, the bank check is a pretty good idea. Wire transfers if you do not have large accounts are $$$. At our credit union a “bank check” is just a different kind of withdrawal slip. Not the same as a cashiers check (which costs $10).
Perhaps ask if the person not cashing checks will take paypal. It is easy to hook up an account to paypal and that receipt is good enough for taxes. I get the sense that you are not talking large amounts so no one is going to be grilling and checking you, including the IRS.
People do not realize how hard it is on executors to have uncashed checks or not closed accounts dangling around. Makes taxes not close for example…
Six years later, I still have one account open under my Mom’s name which is a saving account attached to a bond. I can’t get the bond holder (government agency) to send a letter to accept the account (in lieu of us paying lots more). It has so little interest that we don’t get a 1099 so it sits there. I log on an poke it so that it doesn’t go to the unclaimed accounts. But it bugs the heck out of me. I can’t withdraw the $$ and send it because I need the letter for that, too. But I have looked into just about every way to drain the account and get it closed that one can imagine. As far as i am concerned her estate is closed and the IRS can pound sand if we ever get more than $10 in interest so they become aware the account is open. OH and I can’t change the name to Estate of xx, because again, it doesn’t REALLY belong to us.
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Eso- it might be faster for you to drain it IF it goes to unclaimed. Then you are only dealing with the state treasurer’s office. As long as you have your letter of appointment as executor, death certificate, etc. depending on the state- it might be easier.
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Thanks, blossom. I considered it, but since I want them to take the bond and not charge us for the reclamation costs in full, I need them to have the bond to take! It is really sickening to deal with because both my mom and her second husband were fairly demented. His son, a lawyer got all his assets transferred to himself using POA and rammed the divorce through. My mom said that she’d give her H rights to mine gravel. She was sure he wouldn’t have the gumption. But the son got a contract and mined it and left a mess and didn’t have to pay more reclamation, because that wasn’t in the contract. So her original bond is very small compared to the current reclamation costs. The whole second marriage was a very expensive drain of her resources and this last thing is a sliver under my nails whenever I think of it. The ex husband was stuffed into the CHEAPEST horrible assisted living place in town and died about a year after the divorce. I think the son would have let him die sooner (seriously) except that he was still making money off my mom via his dad.
So maybe that is a cautionary tale for estates, make SURE things are nailed down before a second marriage and never give the lawyer son ANYTHING in a divorce.
Eso, I don’t understand much of your post- except there are no fees associated with claiming assets which have been taken over by the state. There are forms to fill out, but there is no “haircut” on the face value of the assets. The process will vary by state, depending on where the assets are held. Sounds like a challenging situation for sure- but you don’t lose anything off the face value of an asset by claiming it.
Sorry I wasn’t very clear, blossom. Mix of data and venting I expect. I have claimed a bunch of stuff from unclaimed accounts for both parents, so am familiar. It is easy and satisfying actually!
I don’t want this particular account to go to unclaimed status because it is a BOND to the state for reclamation costs. I want it to be completely undisputed that the bond is set for the state to take. I am afraid if I let it go to unclaimed, neither the state nor I will be able to claim it and then the state will come after me for larger reclamation costs.
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Sounds complicated- best of luck to you… and sorry you are dealing with such a painful situation.
bumping this thread, since we’ve had recent general discussion on a more specific estate problems thread
This article has info on a variety of types of trust. I can see why guidance from a knowledgeable estate planning lawyer would be needed.
https://smartasset.com/estate-planning/types-of-trusts
As mentioned, we have simple situation and no need for trust (even though we could have one created for free, perk of our financial advisor group). But I do know of situations where it would be useful.
How to pick a trustee? It seems good to have a neutral party. It’s too big a favor to ask younger friends/relatives. But I’ve read complaints about dealing with bank trustees. Ditto for lawyers. Pricey and cumbersome.
Here is an article on above topic
It includes a suggestion to consider co-trustees… a family member + a lawyer (or trust company). Thoughts?
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Having been through the experience with my mom’s trust (“professional” trustee - horrible experience; now have a bank trustee, much better - but bad advice my mom received from attorney in updating trust), and watching DH starting this path with one of two siblings as trustee ( horrible position for all 3 siblings to be in - again better advice from lawyer - or advice heeded by DH mom), it’s hard to see a good setup.
Best thought from me is to be sure to think through what it will feel like in each beneficiary’s shoes.
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my thought is that this must have been written by a (self-serving) lawyer.
The standard rec is to have one Trustee. Otherwise, both Trustees have to sign every piece of paper, and few pieces of papers in a non-complex Trust require an attorney.
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Trust worthy family members make the best trustees imo. Institutional trustees are difficult to deal with. We have a trust that has to appoint an institutional trustee. Everything moves so slow. We were trying to move the trust to another organization since June. We’d be lucky if we get it done by the end of the year. We had another trust with an institutional trustee. It was going well until they appointment a self serving investment manager who started selling off investments that was held for a long time and doing well. We were lucky we could shut down the trust and fire them.
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It also can help if the trustee is appointed with an eye to family dynamics. This also matters for the executor.
I was recently involved in a situation where it became apparent that the choice had been made because there were some tensions amongst certain siblings. – Choosing a family member who was less intertwined in the dynamic allowed them to simply administer impartially and equitably, solicit input where needed in a non-triggering way, etc. After the fact, it was quite clear that the deceased appreciated all these family dynamics and had in her heart a desire to maintain harmony.
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Family dynamics are huge-- agree with Gardenstate. But having some level of financial competency is also huge.
I’ve seen situations with a highly empathetic and trustworthy trustee (family member) who was also a financial ignoramus (not a value judgement… just reality). That can be a disaster as well.
There are a LOT of decisions which need to be made on a relatively short timeframe. You don’t need to be a CPA or a tax attorney to be a competent trustee, but since you’re going to be getting advice from both of these professionals, you need to have a frame of reference to make good decisions.
Case in point- a house which was in the trust. House needed to be sold. One heir wants the fastest sale possible, just wants the cash. Another heir wants to invest $50K in improvements, repairs, professional staging, etc. to maximize the value of the house (so investing 50K of trust assets for an extra 150K on the upside- which is possible in some housing markets). And if it takes another 6 months-- time for the improvements and then time on the market waiting for the highest bidder- that’s ok. And the third heir doesn’t want the house sold at all… wants to keep it, can’t afford to buy it outright but wants the siblings to shave the price so that he can afford to buy out the other heirs.
This is an emotional land mine for sure… but making the right call requires some measure of financial literacy. And the ability to construct a simple table comparing the costs to the heirs of each of the options. The sibling who wants to invest in improvements may not understand the carrying costs of the house for another 6 months (snow removal, heat, property taxes, insurance). The sibling who wants a buy-out also needs to understand that if he spends his entire inheritance on the house… how will he afford to pay taxes, insurance, etc. once he owns it?
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Totally agree about financial literacy. This can help present options in a more objective way.
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Agree that Dynamics matter, but IMO they are over-rated as long as the 'rents appoint a competent Trustee. My family was as dysfunctional as they come, but the estranged sibs had no choice to deal with me as Trustee if they wanted their share. As I had some financial literacy, I sent them spreadsheets down to the expense penny. All was accomplished by email and texts.
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Parents can be fooled into thinking a child is financially competent on the basis of that child being the oldest, the male, in a certain profession (I know accountants and lawyers who are not and I am a CPA). Ask me how I know…
I strongly recommend allowing adults be their own trustees (unless the person has a cognitive disability and needs someone else managing his/her money or is under the age of 25). H and I are planning to do just that. I do not want either of my kids having control over the other ones money. If one invests wisely and the other spends madly- that’s on them.
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The Trustee’s main job is not to control money, but to distribute all of FallParent’s assets to your heirs as quickly and as efficiently as possible. And file some tax returns.
If you appoint all of FallKids as Trustees/Personal Representatives (will), all Kids will have to sign every minor piece of paper. Want to cancel FallParent’s cable service?, complete our form and have all Trustees sign it.
(Cable can be a real PIA. My dad had just re-upped his service before he died, so they wanted a 12 month payout. I told them, negative, I expected service to be setup at teh cemetery so he coudl watch his favorite teams. They finally got the point, and turned it off.)
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