Not quite sure who needs to know this. I asked my brother (POA) to set up a PO Box for Dad’s business before we sold the house (that had also been used as the business address). It had not been done by the time the sale was complete. After the sale, he proposed a virtual mailbox service but that requires more forms with USPS. We don’t have any documents to prove identity with the address of the AL facility.
It would be possible to get something from AL to take to the DMV to get new driver’s license or state ID, but it is very challenging to get Dad and SMom to the DMV office.
Even a passport could have been helpful — so here’s my new takeaway. Get a new passport at 80-85 just to have another ID that may be valid when you need it!
Yes, we got mom a new passport just as her driver’s license was expiring, just so she’d have a reliable form of ID. This was during covid and getting in to DMV was a struggle for anyone and the rules kept changing. We had peace of mind that we had a valid ID for 10 years. I kept the passport with mine as well as all the vaccination records do we could show that she had all her covid shots.
In our state, after you reach a certain age, you have to renew your license every 2 years (perhaps they hope elders will “forget” or have to have a conversation with loved ones about it). They do NOT do anything about drivers, even if someone reports a dangerous driver—I asked about a stranger who threatened “playfully” to drive his truck through the plate glass window at diner and also about aging relatives.
My brother was in charge or ringside she had current DLs. He kept letting it slide and didn’t share screen shots of her DLs with those of us who transported mom to the md, so not very useful. Mom was old enough that the license only lasted 2 years and kept having to be renewed.
I sent everyone screen shot if mom’s photo page of passport so they could have it as needed for her ID. Also gave everyone a printout that page of her passport for ID.
Our NJ attorney has told us that if we setup anyone of our California based relatives or friends at executors/non-beneficiary trustees of our trust for our kids, that even though none of assets are in CA and none of the beneficiaries reside there, that CA will still tax all the annual realized income gains of the trust assets.
This seems like an insane money grab on CA’s part. Even though we all reside on the East Coast, pretty much every other relative and lifelong friend resides in CA. Crazy that they can claim gains when neither the assets or beneficiaries reside there.
That likely leaves us calculating the better value of a close relative being the trustee for free in CA and paying annual income there or the cost of paying a third party firm to act as trustee where we reside (NJ).
Now that this has me looking at trust income tax and third party trustees, has anyone looked into using a financial firm that can act as a Delaware Directed Trustee? My NY-based bank promotes this as an option that is tax advantaged.
Trusts come in all shapes and sizes, depending on the needs of the grantors. For example, our simple revocable Trust has no need for income, and thus will have no income tax due, regardless of any state law.
But for many trusts it seems like income would be hard to avoid. If the trust has any kind of diversified investment assets, chances are some portion of it will generate dividends or interest income, even if there are no beneficiary distributions. And even if 100% of those dividends are reinvested in the securities, that would still trigger the income taxes.
Sure, but I would guess that many trusts are really just pass-through revocable trusts setup for beneficiaries – kids – while the parents are still alive. So, retitling a brokerage account to the Family Trust means little until both parents have passed, as the brokerage income flows thru to the parent’s 1040 as long as they are alive. In such cases, when the surviving parent passes, the Trust then distributes the stepped-up assets to the beneficiaries. Sure, there is a time period after passing and before the assets are distributed that might show some interest and dividends, but that can be offset by closing Trust expenses.
OTOH, a trust setup to care for an incapacitated child will have assets and income long after the parents have passed.
Annual. Let’s say your trust has $5M of invested assets plus a home. They are invested in stocks and bonds mostly. Let’s say that it throws off 5% in interest, dividends and capital gains from rebalancing. That would be about $250K of realized income in that tax year. Even if all of that was just being reinvested, the trust would owe income tax on the $250K for the year. (And probably estimated taxes quarterly to avoid a year end penalty.)
Any beneficiary would also owe income tax on any distributions they receive, but this is a tax just on the growth of the trust itself.
As proposed, upon the surviving spouse’s passing each kid’s share of the assets would flow into trusts that continue after the death of both spouses and for their lifetimes, and those could be subject to long term income tax even if their uncle as trustee lives in CA and they don’t.
Gift link. PLEASE… no political discussions. Just giving an example about downside of creating an irrevocable trust when you might want to change your mind down the road. (In this case it seems more of a debate over power to decide future direction of Fox News. Dad Rupert wants it to keep current conservative slant.)
well yeah, irrevocable is just that for all intents and purposes. (There are a few ways to undo some of them, but one needs to jump thru a bunch of hoops to make it happen.)
I know there are a lot of fans of Irrevocable trust due to the tax advantages, but we are not keen on the idea.
We have considered revocable trust, which would become irrevocable when the first spouse dies (which does make sense to ensure wishes are carried out, but both spouses need to understand and accept that future lack of flexibility).
Their rich is so vast. What applies to them won’t apply to most people. I ranted here a number of times. We had two irrevocable trusts. They may have saved on taxes but their investment returns were poor. Not sure we are coming out ahead in the end.
Another reason to be “slow” about closing accounts associated with an estate:
DH is a year+ out from mom’s passing, and in the last month or so, it’s come to light that one of mom’s income streams had been depositing monthly benefits into the account that was closed less than a month after she passed. (A 1099-r was received in February). The bank states that it has no record of deposits after the account was closed, the payee has the “correct” account number, will take 90 days to investigate, and 180 days to process the paperwork associated with her death.
And, the final tax return most likely will need to be amended to reflect the correct income and deductions paid. What to do about last year’s 1099 that was just received, where none of the benefits were actually received?
Give it at least a month, so most recurring transactions can be identified. “Slow” would have been “faster, easier, cheaper” in this still developing saga…