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New to Inheritance - What to expect

Posted: Tue Dec 17, 2019 11:15 pm
by lgb
I just wanted to inquire in regards to an expected inheritance at some point in the near future - how exactly that would play out. This is due to both parents having ultimately passed at this point (the remaining just recently in the past few months past age 70, and had already been taking RMD's) and the estate getting passed onto multiple beneficiaries that will be occurring at some point here. (to their surviving children)

Consisting of:

Traditional IRA investment of Individual Stock, and a larger portion in a Money Market 'Fund'- ~$180K
Traditional IRA investment of Mutual Funds - ~$448K
Roth IRA investment of Mutual Funds - ~$25K
Trust Account investment of Mutual Funds - $156K
Trust Account investment of Mutual Funds - ~$10K
Bank Account of Cash that transfers to a sibling already on the account, but will be split evenly with the other siblings - ~$45K
Paid for House - no appraisal or anything yet, but let's say ~$300K selling price
Paid for Car - ~$25K

I figure about a 1/4th of the above would be inherited by me at some point.

RMD's have been taken out of the 2 Traditional IRA's already this year. The ROTH IRA was just within the past year re-titled in remaining parents name to correct it not being done previously. I believe this causes some sort of issue with there being a 5-year period or something - but not certain (and it is a small portion of the overall $$ in any case - I'm not sure the exact issue that will cause)

I am in my 40's and I'm trying to understand what out of the above components (Investments, Cash, House) are in a sense locked up (not as accessible) due to either facing Income tax, Early withdrawal penalty of 10%, or neither, or can't touch) - so that we can understand out of this what will actually be somewhat liquid vs. it could be liquid but you'd be silly to do so and possibly why.

Provide the enlightening!
:)

Re: New to Inheritance - What to expect

Posted: Tue Dec 17, 2019 11:47 pm
by BL
lgb wrote: Tue Dec 17, 2019 11:15 pm I just wanted to inquire in regards to an expected inheritance at some point in the near future - how exactly that would play out. This is due to both parents having ultimately passed at this point (the remaining just recently in the past few months past age 70, and had already been taking RMD's) and the estate getting passed onto multiple beneficiaries that will be occurring at some point here. (to their surviving children)

Consisting of:

Traditional IRA investment of Individual Stock, and a larger portion in a Money Market 'Fund'- ~$180K
Traditional IRA investment of Mutual Funds - ~$448K
Above 2 probably will require at least minimum distributions each year (RMD) according to a specific chart. Any withdrawal will be taxed as ordinary income. It will need to be titled in a specific way. If you don't do it right you may have to withdraw everything by the end of 5 years, I think. I believe you can withdraw more than required, but of course will have to pay tax on it. There is no tax to sell funds if you keep the money within the account, but don't accidentally withdraw it.
Roth IRA investment of Mutual Funds - ~$25K
Inherited Roths have non-taxable RMDs, AFAIK, so you must take at least that amount out each year. Leaving the rest in low-ER Index funds would allow it to grow tax-free.
Trust Account investment of Mutual Funds - $156K
Trust Account investment of Mutual Funds - ~$10K
Bank Account of Cash that transfers to a sibling already on the account, but will be split evenly with the other siblings - ~$45K
Paid for House - no appraisal or anything yet, but let's say ~$300K selling price
Paid for Car - ~$25K
There may be a requirement for some/all of this to go through probate. It all depends on how it is set up and whether some have listed beneficiaries and/or Payable on Death.

I figure about a 1/4th of the above would be inherited by me at some point.

RMD's have been taken out of the 2 Traditional IRA's already this year. The ROTH IRA was just within the past year re-titled in remaining parents name to correct it not being done previously. I believe this causes some sort of issue with there being a 5-year period or something - but not certain (and it is a small portion of the overall $$ in any case - I'm not sure the exact issue that will cause)

I am in my 40's and I'm trying to understand what out of the above components (Investments, Cash, House) are in a sense locked up (not as accessible) due to either facing Income tax, Early withdrawal penalty of 10%, or neither, or can't touch) - so that we can understand out of this what will actually be somewhat liquid vs. it could be liquid but you'd be silly to do so and possibly why.

Provide the enlightening!
:)
Regular accounts probably have a step-up in basis on the date of death, so there would not be taxes on that if sold or exchanged for low-cost funds, except for gains since date of death. This does not include retirement funds such as IRAs, and who knows about the trust (maybe someone else would know more if more info given on the trust such as whose name is on the trust, yours or previous owner? Also there are so many types of trusts, so knowing what kind of trust is important.)

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 1:11 am
by lgb
Hopefully nothing has to go through Probate - as at least all the investment accounts point to the Irrevocable Living Trust as the beneficiary, things like Bank account and Car are a TOD Transfer on Death setup to a Sibling - but known to be split evenly ultimately.

So I presume the Investments all get moved over to an 'Inherited' version of whatever kind of account it already is, if a IRA or ROTH. Yes I agree - forced to take a minimum distribution at least on the IRA's - and if we were wanting to take more out we would be subject to that being realized as additional income for the year (just like the minimum distribution would be - it would just be that we've taken a 'larger' distribution I guess and could decide to do so) - but no early withdrawal penalty type concern... I guess.

The two Trust accounts I think are a bit more 'free to do what is desired' as those have already been populated with money that was previously taxed I believe. Presumably no early withdrawal scenario there either on those.

The Trust is an irrevocable living trust by the way.

I guess the House proceeds once that sells just come via a check whenever that finalizes?, no different than the Bank cash once that is no longer needed to pay for 'this and that' miscellaneous current expenses, or Car proceeds whenever that would sell and there will be 'some' household assets sold for some profit in the picture here as well.

I guess we feel we have a lot of money tied up in Retirement accounts presently to not really touch until 59.5 or 65 etc....- so this inheritance windfall would be nice if it were actually available to be a bit more liquid to take out and have available - but we also don't want to make giant mistakes with it etc.. and find out later what a dumb move that was due to early withdrawal penalties or just plain foolishness with paying income tax on it now vs. some other strategy/plan etc...

I guess these are first world problems. 1st world stress problems.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 2:20 am
by BL
It seems like each state has different rules on inheritances. My state requires probate on real estate unless it goes directly to heirs, such as through Transfer on Death Deed. There is also a dollar limit, I think it is 75k not passing directly to heirs. In other words it is not always simple.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 5:49 am
by Small Savanna
A partial answer - accounts that have designated beneficiaries don't pass to heirs by way of a will or trust. So if you are named as a beneficiary that money should get transferred to you fairly quickly. You will need to provide the financial institution with a copy of the death certificate, and then they will work with you to transfer the funds. I had to do this with Vanguard last year, and they have knowledgeable people who can help with the transfer and titling of the new account and can help you figure out RMDs.

Another wrinkle - under current law your RMDs would be fairly small, but the SECURE act which is part of the budget agreement Congress just passed is changing that, so you may have to take the tax hit on the inherited IRA faster than you'd like.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 6:48 am
by Watty
lgb wrote: Tue Dec 17, 2019 11:15 pm I am in my 40's and I'm trying to understand what out of the above components (Investments, Cash, House) are in a sense locked up (not as accessible) due to either facing Income tax, Early withdrawal penalty of 10%, or neither, or can't touch) - so that we can understand out of this what will actually be somewhat liquid vs. it could be liquid but you'd be silly to do so and possibly why.
The IRAs and Roth will be split according to who is on the beneficiary form for the account, likely each of the siblings. That will create a separate inherited IRA account in each of your names. This can be done without going through any sort of probate. Basically once the IRA company has a death certificate they can do this. Once it is converted to an inherited IRA at the current company you can have it transferred to a different company by contacting the new company and having them handle all the paperwork to have it transferred directly to them.

There is no 10% penalty for withdrawing money from an inherited IRA early but you will pay taxes on any withdrawls from the IRA(not the Roth). You will also have an RMD to take each year.
lgb wrote: Tue Dec 17, 2019 11:15 pm Paid for House - no appraisal or anything yet, but let's say ~$300K selling price
Paid for Car - ~$25K
A few comments about these;

1) Be sure that someone checks with the home insurance company to make sure it is being paid that there is adequate home insurance and that it still covers the house if it is vacant. Some insurance companies have limitations on vacant houses. When we were settling my parents estate we found that amount of the home insurance had not in increased in years so it was way under insured so that had to be increased until it is sold.

2) The lawyer that we were using to help settle the estate told us not to let anyone drive the car until the car title had been changed. The problem was that my parents car insurance would not cover anyone driving it since they did not have permission from the owner to drive it. Likewise our insurance would not cover us either since we did not have permission to drive it. I do not know if that might vary by state law.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 7:04 am
by DarthSage
I would give consideration to having an estate attorney. This isn't your area of expertise, and you want to do things right--which might be different for you versus one or more of your siblings (i.e., you might want to "stretch" the IRA, they may prefer to take the money and the tax hit now).

I believe you will be grandfathered out of the SECURE Act for IRA purposes, since it wasn't law when your parents passed. However, I would check with a professional on this.

The other thing that we found when my MIL died was, there was no "one big inheritance check coming from the lawyer" thing, like you see on TV. We received funds in dribs and drabs over a couple of years. The life insurance paid very quickly (a few weeks). As things were cleared by the lawyer, the IRAs were split/passed down to DH and his brother. (We had to take RMDs on the estate's behalf, as MIL hadn't taken hers yet--you seem to be okay here). Taxable accounts passed down separately. We transferred over stocks "in kind". We left ~$50k in a checking account, to pay estate bills.

DH had a "spreadsheet of phenomenal cosmic power" to keep track of all the accounts. We also had a punch list of sorts, to make sure we took all the necessary actions.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 7:11 am
by Billionaire
lgb wrote: Tue Dec 17, 2019 11:15 pm I just wanted to inquire in regards to an expected inheritance at some point in the near future - how exactly that would play out. This is due to both parents having ultimately passed at this point (the remaining just recently in the past few months past age 70, and had already been taking RMD's) and the estate getting passed onto multiple beneficiaries that will be occurring at some point here. (to their surviving children)

Consisting of:

Traditional IRA investment of Individual Stock, and a larger portion in a Money Market 'Fund'- ~$180K
Traditional IRA investment of Mutual Funds - ~$448K
Roth IRA investment of Mutual Funds - ~$25K
Trust Account investment of Mutual Funds - $156K
Trust Account investment of Mutual Funds - ~$10K
Bank Account of Cash that transfers to a sibling already on the account, but will be split evenly with the other siblings - ~$45K
Paid for House - no appraisal or anything yet, but let's say ~$300K selling price
Paid for Car - ~$25K

I figure about a 1/4th of the above would be inherited by me at some point.

RMD's have been taken out of the 2 Traditional IRA's already this year. The ROTH IRA was just within the past year re-titled in remaining parents name to correct it not being done previously. I believe this causes some sort of issue with there being a 5-year period or something - but not certain (and it is a small portion of the overall $$ in any case - I'm not sure the exact issue that will cause)

I am in my 40's and I'm trying to understand what out of the above components (Investments, Cash, House) are in a sense locked up (not as accessible) due to either facing Income tax, Early withdrawal penalty of 10%, or neither, or can't touch) - so that we can understand out of this what will actually be somewhat liquid vs. it could be liquid but you'd be silly to do so and possibly why.

Provide the enlightening!
:)
I'm sorry for your loss.

Has the executor provided you with a copy of the will? It's also possible the executor can give you a general timeline of when to expect distributions. I've always been given copies of wills in which I've been named a beneficiary.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 8:05 am
by RickBoglehead
lgb wrote: Wed Dec 18, 2019 1:11 am Hopefully nothing has to go through Probate - as at least all the investment accounts point to the Irrevocable Living Trust as the beneficiary, things like Bank account and Car are a TOD Transfer on Death setup to a Sibling - but known to be split evenly ultimately.

So I presume the Investments all get moved over to an 'Inherited' version of whatever kind of account it already is, if a IRA or ROTH. Yes I agree - forced to take a minimum distribution at least on the IRA's - and if we were wanting to take more out we would be subject to that being realized as additional income for the year (just like the minimum distribution would be - it would just be that we've taken a 'larger' distribution I guess and could decide to do so) - but no early withdrawal penalty type concern... I guess.

The two Trust accounts I think are a bit more 'free to do what is desired' as those have already been populated with money that was previously taxed I believe. Presumably no early withdrawal scenario there either on those.

The Trust is an irrevocable living trust by the way.

I guess the House proceeds once that sells just come via a check whenever that finalizes?, no different than the Bank cash once that is no longer needed to pay for 'this and that' miscellaneous current expenses, or Car proceeds whenever that would sell and there will be 'some' household assets sold for some profit in the picture here as well.

I guess we feel we have a lot of money tied up in Retirement accounts presently to not really touch until 59.5 or 65 etc....- so this inheritance windfall would be nice if it were actually available to be a bit more liquid to take out and have available - but we also don't want to make giant mistakes with it etc.. and find out later what a dumb move that was due to early withdrawal penalties or just plain foolishness with paying income tax on it now vs. some other strategy/plan etc...

I guess these are first world problems. 1st world stress problems.
Anything that is in the trust gets divided up as the trust states by the trustee(s).

Any account that is TOD/POD, setup to a sibling, goes to that sibling. If that sibling then decides to evenly split those assets with others, they would be gifting money and that may require a gift tax filing. Of course, all heirs could simply agree that if Bob got $X via a TOD account, and they agree that the intent is to do even splits, then Bob gets less of some other asset (i.e. house proceeds) to make things even. That's up to the executor of the estate and the heirs, but Bob could easily say he wants the account AND what the will/trusts specify.

There should be an executor of the estate and trustee(s) of the trusts. Those are the people you need to talk to.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 8:20 am
by NotWhoYouThink
If the house is owned by the trust, then proceeds from the house sale go to the trust to be divided among the beneficiaries. If not, proceeds will go into the estate account. The trustee and executor will have to figure this out and inform the heirs/beneficiaries.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 10:11 am
by dknightd
Sorry for your loss. This will happen to me one day. My brother is the executor. I trust him to do the right thing, and will back up what he decides. Probably hire a lawyer. Probably hire somebody to sell off the estate. Probably divide things equally between siblings. I'd rather not think about it yet, but, suppose I should . . .

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 11:00 am
by not4me
lgb wrote: Wed Dec 18, 2019 1:11 am Hopefully nothing has to go through Probate - as at least all the investment accounts point to the Irrevocable Living Trust as the beneficiary, things like Bank account and Car are a TOD Transfer on Death setup to a Sibling - but known to be split evenly ultimately.

So I presume the Investments all get moved over to an 'Inherited' version of whatever kind of account it already is, if a IRA or ROTH. Yes I agree - forced to take a minimum distribution at least on the IRA's - and if we were wanting to take more out we would be subject to that being realized as additional income for the year (just like the minimum distribution would be - it would just be that we've taken a 'larger' distribution I guess and could decide to do so) - but no early withdrawal penalty type concern... I guess.
I assume when you say investments that you are referring to the IRAs. I didn't see any investment accounts listed outside either some form of IRA or trust. For both types of IRAs, you need to decide which custodian you want to use & take time upfront to ensure it is handled properly from the beginning. Hopefully, they have beneficiaries explicitly named (vs being blank & passing by a will).Is there an executor or someone taking the lead role? Some custodians won't release unless all beneficiaries have handled paperwork.
As you pointed out on the ROTH, there may be a problem with the 5 year rule, but not enough info given. I'd suggest working closely with your custodian as this is a complicated matter. It maybe that the deceased had already met the requirement & you don't have a problem. Since it is only $6.5k you may decide to just cash out anyway. Some prefer to not having small accounts for years, others will value the tax deferral for the many years you'll have. Even if some is taxable, I think it would only be the earnings & that would be small


The two Trust accounts I think are a bit more 'free to do what is desired' as those have already been populated with money that was previously taxed I believe. Presumably no early withdrawal scenario there either on those.

The Trust is an irrevocable living trust by the way.
I wasn't sure if these were established before death or at the time of death. Either way, the trust determines the disposition not what necessarily what is desired. Find the trustee & talk to them. Is there one trust for 4 OR 4 trusts? & you may not get a step-up in basis

I guess the House proceeds once that sells just come via a check whenever that finalizes?, no different than the Bank cash once that is no longer needed to pay for 'this and that' miscellaneous current expenses, or Car proceeds whenever that would sell and there will be 'some' household assets sold for some profit in the picture here as well.
Again I may have missed if there is an executor, but selling the house may be a bit of a problem. If there are problems with the house that need to be fixed, utilities paid, etc that will take cash. I didn't see listed a source of that cash -- unless you say the $45k account will be used for that & others. If so & house sells fairly quickly, then you'll likely get a check. But, it may also be handled in such a way that you need to report on your taxes (even if no tax due). Check with whoever handles

I guess we feel we have a lot of money tied up in Retirement accounts presently to not really touch until 59.5 or 65 etc....- so this inheritance windfall would be nice if it were actually available to be a bit more liquid to take out and have available - but we also don't want to make giant mistakes with it etc.. and find out later what a dumb move that was due to early withdrawal penalties or just plain foolishness with paying income tax on it now vs. some other strategy/plan etc...

I guess these are first world problems. 1st world stress problems.
I may be a bit more cautious than some other posters, or just having trouble following the situation.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 7:53 pm
by lgb
BL wrote: Tue Dec 17, 2019 11:47 pm
lgb wrote: Tue Dec 17, 2019 11:15 pm I just wanted to inquire in regards to an expected inheritance at some point in the near future - how exactly that would play out. This is due to both parents having ultimately passed at this point (the remaining just recently in the past few months past age 70, and had already been taking RMD's) and the estate getting passed onto multiple beneficiaries that will be occurring at some point here. (to their surviving children)

Consisting of:

Traditional IRA investment of Individual Stock, and a larger portion in a Money Market 'Fund'- ~$180K
Traditional IRA investment of Mutual Funds - ~$448K
Above 2 probably will require at least minimum distributions each year (RMD) according to a specific chart. Any withdrawal will be taxed as ordinary income. It will need to be titled in a specific way. If you don't do it right you may have to withdraw everything by the end of 5 years, I think. I believe you can withdraw more than required, but of course will have to pay tax on it. There is no tax to sell funds if you keep the money within the account, but don't accidentally withdraw it.
Roth IRA investment of Mutual Funds - ~$25K
Inherited Roths have non-taxable RMDs, AFAIK, so you must take at least that amount out each year. Leaving the rest in low-ER Index funds would allow it to grow tax-free.
Trust Account investment of Mutual Funds - $156K
Trust Account investment of Mutual Funds - ~$10K
Bank Account of Cash that transfers to a sibling already on the account, but will be split evenly with the other siblings - ~$45K
Paid for House - no appraisal or anything yet, but let's say ~$300K selling price
Paid for Car - ~$25K
There may be a requirement for some/all of this to go through probate. It all depends on how it is set up and whether some have listed beneficiaries and/or Payable on Death.

I figure about a 1/4th of the above would be inherited by me at some point.

RMD's have been taken out of the 2 Traditional IRA's already this year. The ROTH IRA was just within the past year re-titled in remaining parents name to correct it not being done previously. I believe this causes some sort of issue with there being a 5-year period or something - but not certain (and it is a small portion of the overall $$ in any case - I'm not sure the exact issue that will cause)

I am in my 40's and I'm trying to understand what out of the above components (Investments, Cash, House) are in a sense locked up (not as accessible) due to either facing Income tax, Early withdrawal penalty of 10%, or neither, or can't touch) - so that we can understand out of this what will actually be somewhat liquid vs. it could be liquid but you'd be silly to do so and possibly why.

Provide the enlightening!
:)
Regular accounts probably have a step-up in basis on the date of death, so there would not be taxes on that if sold or exchanged for low-cost funds, except for gains since date of death. This does not include retirement funds such as IRAs, and who knows about the trust (maybe someone else would know more if more info given on the trust such as whose name is on the trust, yours or previous owner?
:happy YES THE TRUST IS IN THE NAME OF THE PREVIOUS NOW DECEASED OWNER - Also there are so many types of trusts, so knowing what kind of trust is important.)

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 7:55 pm
by lgb
BL wrote: Wed Dec 18, 2019 2:20 am It seems like each state has different rules on inheritances. My state requires probate on real estate unless it goes directly to heirs, such as through Transfer on Death Deed. There is also a dollar limit, I think it is 75k not passing directly to heirs. In other words it is not always simple.
:happy Will look into this, and ultimately I expect the Estate Attorney to catch these details - or at least I hope!

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 8:01 pm
by lgb
Small Savanna wrote: Wed Dec 18, 2019 5:49 am A partial answer - accounts that have designated beneficiaries don't pass to heirs by way of a will or trust. So if you are named as a beneficiary that money should get transferred to you fairly quickly. You will need to provide the financial institution with a copy of the death certificate, and then they will work with you to transfer the funds. I had to do this with Vanguard last year, and they have knowledgeable people who can help with the transfer and titling of the new account and can help you figure out RMDs.

Another wrinkle - under current law your RMDs would be fairly small, but the SECURE act which is part of the budget agreement Congress just passed is changing that, so you may have to take the tax hit on the inherited IRA faster than you'd like.
:happy Saw this just today in the news ironically, I would hope it is based on the most recent parents passing date as to whether it would be subject to that possible new rule (and I would hope it could be grandfathered in under the old rules), but I guess alternatively it could be based on when these IRA's/Accounts actually get 'inherited' and if this Act is in force yet by then :shock: - but it does seem like quite a negative for those that might have wanted to stretch the draw down over a much longer timeline - instead of a forced 10-year period, Uncle Sam wants their money sooner than later it seems :mad:

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 8:05 pm
by celia
The key to what you need to know is stated within the trust document. After the new trustee gives you a copy (all beneficiaries are entitled to a copy), read it backwards and forwards to understand what directions the trustee needs to follow. It will likely also explain the split of assets among the beneficiaries. It doesn't have to be split up with everyone getting the same amount of everything, but often that is what it says.

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 8:08 pm
by lgb
Billionaire wrote: Wed Dec 18, 2019 7:11 am
lgb wrote: Tue Dec 17, 2019 11:15 pm I just wanted to inquire in regards to an expected inheritance at some point in the near future - how exactly that would play out. This is due to both parents having ultimately passed at this point (the remaining just recently in the past few months past age 70, and had already been taking RMD's) and the estate getting passed onto multiple beneficiaries that will be occurring at some point here. (to their surviving children)

Consisting of:

Traditional IRA investment of Individual Stock, and a larger portion in a Money Market 'Fund'- ~$180K
Traditional IRA investment of Mutual Funds - ~$448K
Roth IRA investment of Mutual Funds - ~$25K
Trust Account investment of Mutual Funds - $156K
Trust Account investment of Mutual Funds - ~$10K
Bank Account of Cash that transfers to a sibling already on the account, but will be split evenly with the other siblings - ~$45K
Paid for House - no appraisal or anything yet, but let's say ~$300K selling price
Paid for Car - ~$25K

I figure about a 1/4th of the above would be inherited by me at some point.

RMD's have been taken out of the 2 Traditional IRA's already this year. The ROTH IRA was just within the past year re-titled in remaining parents name to correct it not being done previously. I believe this causes some sort of issue with there being a 5-year period or something - but not certain (and it is a small portion of the overall $$ in any case - I'm not sure the exact issue that will cause)

I am in my 40's and I'm trying to understand what out of the above components (Investments, Cash, House) are in a sense locked up (not as accessible) due to either facing Income tax, Early withdrawal penalty of 10%, or neither, or can't touch) - so that we can understand out of this what will actually be somewhat liquid vs. it could be liquid but you'd be silly to do so and possibly why.

Provide the enlightening!
:)
I'm sorry for your loss.

Has the executor provided you with a copy of the will? It's also possible the executor can give you a general timeline of when to expect distributions. I've always been given copies of wills in which I've been named a beneficiary.
:happy YES - SIBLINGS REQUESTED IT FROM THE SIBLING THAT IS THE IMMEDIATE EXECUTOR AND HAS PROVIDED - BUT THEY ARE JUST AS NEW/GREEN TO THIS AS ANY ONE OF US AND WE ARE JUST WAITING TO GET DEATH CERTIFICATES AND TIME TO SPEAK TO THE ATTORNEY OF THE TRUST - AND THANK YOU FOR YOUR KIND WORDS

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 8:13 pm
by lgb
RickBoglehead wrote: Wed Dec 18, 2019 8:05 am
lgb wrote: Wed Dec 18, 2019 1:11 am Hopefully nothing has to go through Probate - as at least all the investment accounts point to the Irrevocable Living Trust as the beneficiary, things like Bank account and Car are a TOD Transfer on Death setup to a Sibling - but known to be split evenly ultimately.

So I presume the Investments all get moved over to an 'Inherited' version of whatever kind of account it already is, if a IRA or ROTH. Yes I agree - forced to take a minimum distribution at least on the IRA's - and if we were wanting to take more out we would be subject to that being realized as additional income for the year (just like the minimum distribution would be - it would just be that we've taken a 'larger' distribution I guess and could decide to do so) - but no early withdrawal penalty type concern... I guess.

The two Trust accounts I think are a bit more 'free to do what is desired' as those have already been populated with money that was previously taxed I believe. Presumably no early withdrawal scenario there either on those.

The Trust is an irrevocable living trust by the way.

I guess the House proceeds once that sells just come via a check whenever that finalizes?, no different than the Bank cash once that is no longer needed to pay for 'this and that' miscellaneous current expenses, or Car proceeds whenever that would sell and there will be 'some' household assets sold for some profit in the picture here as well.

I guess we feel we have a lot of money tied up in Retirement accounts presently to not really touch until 59.5 or 65 etc....- so this inheritance windfall would be nice if it were actually available to be a bit more liquid to take out and have available - but we also don't want to make giant mistakes with it etc.. and find out later what a dumb move that was due to early withdrawal penalties or just plain foolishness with paying income tax on it now vs. some other strategy/plan etc...

I guess these are first world problems. 1st world stress problems.
Anything that is in the trust gets divided up as the trust states by the trustee(s).

Any account that is TOD/POD, setup to a sibling, goes to that sibling. If that sibling then decides to evenly split those assets with others, they would be gifting money and that may require a gift tax filing. Of course, all heirs could simply agree that if Bob got $X via a TOD account, and they agree that the intent is to do even splits, then Bob gets less of some other asset (i.e. house proceeds) to make things even. That's up to the executor of the estate and the heirs, but Bob could easily say he wants the account AND what the will/trusts specify.

There should be an executor of the estate and trustee(s) of the trusts. Those are the people you need to talk to.
:happy THANKS FOR POINTING OUT THIS PARTICULAR STICKY SCENARIO WITH THAT HAVING TO POSSIBLY BE GIFTED - I ASSUME THEY'LL TAKE LESS ON OTHER THINGS - BUT I SEE NOW HOW THAT MIGHT NOT BE FAIR AS CASH IN BANK AND CAR ARE QUITE LIQUID VS OTHER STUFF COULD BE A BIT MORE COMPLICATED :oops:

Re: New to Inheritance - What to expect

Posted: Wed Dec 18, 2019 8:18 pm
by lgb
dknightd wrote: Wed Dec 18, 2019 10:11 am Sorry for your loss. This will happen to me one day. My brother is the executor. I trust him to do the right thing, and will back up what he decides. Probably hire a lawyer. Probably hire somebody to sell off the estate. Probably divide things equally between siblings. I'd rather not think about it yet, but, suppose I should . . .
:happy I THINK YOU HAVE TO WORK TOGETHER, DESPITE THE FACT YOU MIGHT HAVE BEEN HANDED THE TORCH - EVEN THOUGH LEGALLY THERE IS NO REASON FOR THAT PERSON TO HAVE TO WORK WITH EVERYONE - JUST HAVE TO DO THE RIGHT THING