From the article above,
Does this mean if your trust is in one of the states that tax to a state that doesn’t tax, do you owe tax although you live in a tax free state?
Just a word about financial POA. My FIL passed earlier this year. My MIL is in an assisted living facility and not capable of handling her finances. My wife, the oldest and only responsible one of their three children is their POA, both financial and medical . She has spent untold hours since her father’s death contacting entities and trying to reorganize their financial affairs. In return she is entitled to nothing as far as compensation goes. She is only burdened with the added stress and responsibilities of ensuring everything is taken care of, in order and available for the eventual dispersement when her mom passes. Her siblings would not have been capable of handling any of these responsibilities and are making her job as POA so much more difficult and traumatizing.
For those that assign a relative to be POA. Think long and hard about how much time and effort they may be saddled with and put in place a way for them to “bill” for their efforts. It’s honestly been an extremely stressful part time job that has just added on top of the grief and added responsibility of caring for mom and ensuing she is getting all she needs. It’s my understanding that without it bring spelled out, a POA cannot pay themselves anything for their time and effort. All they can do is take care of the finances in the best interest of their charge. And, this could go one for years, decades. Again, just consider what you might be saddling a person with and think about what might be fair to compensate them. That’s all.
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If your wife is executor of her dad’s estate (which seems to be what your post implies) she is indeed entitled to compensation.
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It’s my understanding that there is no “estate” to be entitled to get paid from. There are multiple life insurance policies, multiple bank accounts, multiple IRAs, etc. All of those things will be settled via designated beneficiaries when my.MIL passes. Real estate was handled via some form of trust where those funds go into an account to be used to pay for the mother’s care if necessary and then anything left gets reverted to the other siblings. There is no “estate” that we are aware of.
I’m just bringing it up as something to consider for those that assign a POA to a relative. It can be an extreme amount of work/responsibility. Don’t overlook that.
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Agree. I am the POA for both parents; when my Dad died everything was in a trust (I am also the sole trustee). There was nothing for an executor to do. But a TON of work still resulted! Notifying all the financial institutions of his death, getting social security updated for my mom, notifying his pension and getting everything switched over for my mom etc etc.
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It is a huge amount of work and a total pain, even when everything is in order and should be simple. It took months and months to settle my parents affairs after my dad died suddenly. I was on a first name basis with the notary at the bank and felt like I was there multiple times/week for one form or another. It also seemed like the smaller accounts were the hardest to close and had the most hoops to jump through. My brother told me to take a percentage but I didn’t. I wanted the money to be equally split between us.
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if a Trustee wants to raise a stink to get paid, they can legally require all heirs to rebate a prorata portion of their ToD/PoD amounts back to the estate.
The Trustee could also take payment from proceeds from the sell of the house.
But yes, that is one of the downsides to everything being ToD/PoD.
I don’t see how this is even possible. The POA is required to act in the best interest of the individual, in this case the parent. How would a beneficiary legally be required to give anything to the POA unless it was specifically called for by the, in this case, parent? The parent set it up to give specific portions to each sibling, beneficiary. What they didn’t do was take into account the enormous added time and stress that the POA would have to deal with and choose to allow them to compensate themselves.
Yes, and that’s what I am trying to point out to others so they can maybe take that into consideration.
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A POA who is designated by a person in the will who is a lawyer sure isn’t going to do it for free. And that may not be addressed at all in a will.
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I believe that a POA, while the person is still alive, isn’t entitled to any compensation. After death, the executor is entitled to compensation but the amount varies state to state. For example, in MD, there is a sliding scale - 9% of the first $20,000 of the gross estate, down to 0.5% of the excess over $5,000,000.
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Absolutely a lawyer isn’t going to go anything for free. The lawyer that drew up the POA has no problem charging my in-laws and the POA, my wife, to answer any questions they have. A lawyer would certainly put a payment clause in for themselves.
But since everything is beneficiary driven, there is no estate. No estate means there is no portion to make a claim of payment on. That’s my understanding.
That can’t be right. Just because everything has a beneficiary on it doesn’t mean there’s no estate, it’s still part of the estate, just designated to someone. For example, it’s not like estate taxes won’t be due on large estates just because everything has designated beneficiaries and there’s no estate. What an easy tax dodge that would be. And merely because someone had a lawyer designated as executor, POA or whatever in a will, doesn’t mean that lawyer is the one who drew up the will.
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My understanding is that if there is a will to be administered, the executor is entitled to compensation. But I’m in IL and my parents died in FL. The only other states I’m familiar with personally are NY and PA.
And yes, the attorney fees are crazy!
I hope your wife will be able to get some extra compensation for her time.
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Perhaps we are discussing two different issues.
Power of Attorneys are only active when the person is alive. When that person authorizing the power of attorney passes, the POA is not longer valid. And yes, unless the POA allows for the person possessing the power to take a fee, or allowed by state law, compensating themselves could be a no-no.
Once that person dies however, the appointed Executor of an estate has a responsibility to pay all final bills. And if a state allows an Executor/Personal Representative (for Wills) or Trustee (for Trusts) to take a fee for the estate work that they perform, then that fee is no different than paying final property taxes or utility bills or medical expenses; it is a legitimate expense of the estate. If all of the assets in the estate are passed ToD/PoD such that there is nothing to pay final bills, then the Executor/Personal Representative/Trustee can demand that the heirs repay the estate so the decedent’s final bills can be paid. (An estate cannot just ignore final bills just bcos the bank accounts were PoD.)
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Things like insurance with a beneficiary listed never becomes part of the estate and isn’t probated (unless the beneficiary is listed as ‘estate’, then the money gets dumped into the estate). Joint bank accounts or POD get transferred outside the estate.
We didn’t probate either of my parents’ ‘estates’ because they didn’t have anything that didn’t have a beneficiary (except my mother had a car titled in her name, and the DMV allowed us to transfer using the POA). All insurance benefits transferred directly. I was listed as joint on her bank accounts. There were a few refund check that came in and we’ll have to wait for them to show up on the state refund system as we didn’t probate.
I think the cable company did her deposit refund by a visa gift card.
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There was no will when my FIL passed away. My wife was his POA, unpaid. All of his assets transferred to his wife (the beneficiary), my MIL who my wife is POA for (she is not competent). Their real estate transferred via a trust.
When my MIL passes, everything will be paid out via beneficiary on each account. There is no estate. There is no will. It’s all beneficiary driven.
In the meantime, my wife has to handle my FILs affairs until he passed and now my MILs as she can’t do it herself. My wife has had to deal with all of the bills, the accounts, the transfers, the consolidating, the decisions, etc. It is what it is. She gets no compensation because it wasn’t set up in.the POA paperwork.
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I know someone had to handle the parent affairs @MarylandJOE but surely your wife had some idea what this would entail. She could have declined.
I think folks DO need to think carefully about accepting the POA responsibilities. It can be a lot of work.
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Or, she could decline today and hire a professional firm to handle the affairs (of her mom?)
Who are the other heirs? (assuming your wife is one). Could they help out? (they might get interested when they find out how much a professional management firm woudl cost and eat into thier inheritance.)
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Yes, but she felt obligated. Did she know every detail? No. Would she ask for things to be different? Yes. That’s my reason for sharing.
She was the logical choice for both financial and medical POA. My initial and only message has been, if you set up a POA for a relative, think about the extent of what you are asking them to do and consider adding language to allow themselves to be compensated for their time and effort.
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From what I’ve read, if she declined to do her duties as POA, she personally is on the hook for paying someone else to handle the affairs.
Yes, she can get assistance with things. Why pay a lawyer or someone else $$$$ to contact banks, insurance companies, make medical decisions, etc?
Her siblings. They have no power to do anything to help, they aren’t POA. No one will do anything regarding finances or medical care or anything else without POA authorization.
It’s a mess.
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