I think it was MarylandJoe who has a wife acting as POA and said there is no estate.
As others mentioned, there is no probatable estate. There is still a value of the estate. If it was a large enough number to require estate taxes, you bet the state or feds would call it an estate.
If you own a life insurance policy on yourself, that payout is the value in the estate, plus the values of the real estate, bank accounts etc.
There may be no cash available, but there is an “estate.” If wife is the executor and the estate value is $500k and her state says she can charge 5%, she could bill the beneficiaries that $25k.
On the trust v probate, I think it depends on your state. CA = trust please, probate can be expensive and slow. We had a distant family member die intestate and things were a mess, everyone let the county adjudicate that probate, it took years. There were very little there, but they had to jump through so many hoops, so slow!
When my Dad died, I was created their trust on Legal Zoom, it worked great, I was the trustee, I had already been handling everything for them. But it still took nearly a year to finish transferring the final details. I think he had a bunch of $25 bonds that needed to be listed, one by one, on paper, etc. It was such a pain, I was glad not to have any added steps to what was already a time consuming process at a stressful time (helping my mother!)
NYS would have been second in line, only behind the US government. The other creditors would have to get in line behind the governments; credit card companies are last.
OTOH, New York State created this moral hazard by paying out benefits the month before they are due.
Ok, so say that the “estate” consists of three IRAs, one 200k, one 150k and one 50k. Two life insurance policies, one 100k and one 50k. A 401k worth 250k and a brokerage account worth 100k (these are fictitious numbers for reference only). So there are accounts worth 900k. These accounts are all set up with beneficiaries and are split fairly evenly three ways. Because they are beneficiary driven it’s my understanding that they are not part of any probate “estate”. Why would an executor, if there were one, be entitled to any amount from these beneficiaries? The entities paying out the funds would pay them directly to the beneficiary once they were notified of the death. I just don’t see how they are part of an “estate” that is then subject to a charge by the executor. Maybe I’m missing something.
If someone asked me to be POA or executor, I would carefully consider the responsibilities as they pertained to THAT person…and I would say NO if I didn’t feel I wanted to undertake the responsibilities without compensation.
I’m so thankful that my sister and I had the Zoom meeting with Dad and his bookeeper just two weeks ago! Dad mentioned that he was planning on going to the funeral home and pre-paying for it, but of course that didn’t happen (and I figured it wouldn’t, since Dad has been in denial that his health has been bad for awhile). We’ll have to figure out how to pay for the funeral until we have access to Dad’s funds. Neither of us has extra cash sitting around.
Not to sound crass, but I figure the CC folks would know - do you have any idea how long it takes to receive life insurance funds? Ugh, I hate even bringing it up, but it’s reality. If it makes a difference, Dad has a life insurance trust, and I am the trustee.
@MaineLonghorn , it has been a while since I was the beneficiary of a life insurance policy, but payout was quite quick. My recollection was that I reached out, sent a death certificate, and payment was made within a month, possibly faster. Hopefully someone else here has more recent experience.
You may be able to find details from the company providing the policy.
Insurance can be pretty fast. Another option, if dad is willing, is to add you ad co-owner of his local bank account. That way, when he passes, you receive immeidiate ownership of the account upon presentation of a death cert. (Assumes he has enough cash in his bank account to pay funeral/service.)
Yes, legally that money would be yours, and not subject to probate, but since you are Trustee, it is an ownership transfer for convenience of his estate to pay final bills.
(When my step-dad passed, my niece was living in the house helping out, and she was named on teh bank account as co-owner for convenience when he passed. As Trustee, I required that she turn the account balance over to the estate to pay other bills, and she did.)
I have POA as well as check signing privileges on Dad’s accounts, but I’m not a co-owner. The bookkeeper suggested that we withdraw some money out of his investment account immediately, so we’ll have funds if we need them. I left a message for my dad’s financial advisor, and he has already called back and scheduled the transfer.
Dad can’t really give permission for anything right now. If he improves, I will definitely ask him to sign me on as a co-owner.
My BFF lost both her parents recently. Her dad was a UT professor like mine. She’s filling me in on how wills work in Texas. Dad was supposed to update his will, which was written in 1995, but he never did.
At one point, he told my sister and me that he expected us to donate money to HIS church once a year. My sister, being the forthright one, said, “Uh, no, Dad, we’re not doing that. Give them money now, or set up a trust so they’ll get a little every year.” He didn’t like that idea. He could have bequeathed the church money if he’d wanted to.
Yes, that’s why we’re withdrawing money now, while Dad is still here. When I called his financial advisor and told him how much we wanted to transfer (a good chunk of change), the guy said more than once, “Remember, you will have NO access to your dad’s funds if he passes…” I knew that, but I finally got the hint that he wanted me to withdraw more, so I bumped up the amount another 25%. I think I have to be careful about the IRS limits on gifts, so I’ll take the share my husband and I are allowed and my sister will get the rest. Sis is fine with me being in charge of the money.
or use the gift money to you and yoru sis and both of you prepay final expenses. (If you know dad’s wishes.)
edited to add: my folks had prepaid their final wishes and it made it much, much easier during a really emotional time. Highly recommended, if possible.
You can take it as much as you want, if you exceed the yearly exemption the balance goes against the lifetime limit, which I think is $12.something million right now. There’s a form to fill out (709? 710? I forget exactly) if you exceed the yearly limit, but unless your dad’s estate is > $12 mil there’s no tax consequence.
Thanks, everyone. If Dad is responsive when I get there (and he’s a little better today than yesterday), my sister and I can talk to him about prepaying.
Dad has such good intentions, but it’s similar to when we were trying to move him and Mom out of the house. He KNEW he needed to go through all his many, many, many books, but he waited until the day before the boxers came and I literally made him sit next to the man coordinating the move to look at books. And now he mentions books that he should have kept.