Pursue Inheritance Asset or Let it Go?

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lazyumbrella
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Pursue Inheritance Asset or Let it Go?

Post by lazyumbrella »

I'd appreciate input on any of the moving parts that follow, but especially on whether and/or how I should make plans to claim what is presumably an inheritance asset (some pricey paintings) that my aunt owned that I believe is part of her estate. I'm not an attorney and neither are the other beneficiaries. I apologize for the length of this novela with twists. Although I've done my best to provide a scorecard to follow the overlapping details that lead up to the subject of the paintings, please proceed from here only if you don't mind reading about the interlocking drama of family dynamics and financial matters.

Background.--I, Trustee #3, am one three co-trustees re: my aunt's living trust agreement. All three co-trustees are beneficiaries to my aunt's estate along with three other beneficiaries (a total of six beneficiaries, all nieces and nephews of my aunt).

My aunt, who was childless, died in July 2017. There's still flickering hope that distributions from her stock and bond holdings might be made by the end of this year (fwiw, current wild guess is about $600K to each of the six beneficiaries). Some delays were due understandably to recreating tax returns that weren't filed in my aunt's later years and other unexpected (frustrating) holdups mentioned in the paragraphs below. Trustee #1, who lived about 30 minutes from my aunt and was excellent about taking my aunt to medical appointments and the like in her final years, has sole access to all of my aunt's brokerage and bank accounts and paperwork and is the only person who has any clue where all of the assets reside.

Because of Trustee#1's hands-on familiarity with my aunt's stock and bond assets, she insisted from the start on handling the processing of the estate herself ("...I really want to do this as my gift to all of you"). Agreeing to her well-intentioned wish made sense for a number of reasons, including that she always seemed to be competent and detail oriented, so coordinating with the work of an attorney or accountant seemed straightforward; has unquestionable honesty; and had my aunt's complete trust to have control over her finances in her later years.

Unfortunately, I've gotten to know another side of Trustee#1's personality much better, especially in the last year or so. For example, the rest of us didn't learn until well after the fact the true extent to which Trustee#1, in brief, neglected to keep the process moving several times for many months at a time along the way, ("Yeah, sorry, I just let things go..."), creating the lengthy delays that were unexpected. This turned out to be especially disappointing because other beneficiaries politely made clear before Trustee#1 volunteered her aforementioned "gift" that they very much could have used their distributions asap and their inheritances would factor into important, ongoing decisions and future financial planning.

Trustee#1 has been difficult to communicate with at times (e.g., she said she would always keep Trustee#2 and me informed of progress but she hasn't initiated contact and I've had to ask her repeatedly throughout about goings-on, which has made her increasingly unhappy with me). When I calmly asked her more specifically during March and May 2020 about some of her actions, she didn't respond to some of my inquiries. I discussed these specifics with Trustee#2 and the other beneficiaries...they were also not happy with these aspects of Trustee#1's behavior, but are intimidated by her often imperious manner and the respect that she rightly earned in overseeing my aunt's on-the-scene medical care in her final years.

Trustee#2 lives in the same city as Trustee#1 and interacts with her but is passive and hasn't wanted to say anything to Trustee#1 about the unexpected holdups. I am 2,800 miles away from Trustee#1 and while now frustrated after understanding the cause of the unexpected delays, I did try to get stay actively involved. For example, between July 2017 and February 2020, I offered to fly to her location several times to help go through paperwork and have volunteered repeatedly to do whatever I can from afar. I have gently reminded Trustee#1 about her vow to provide all of the beneficiaries status reports as well as a spreadsheet to document all of my aunt's stock and bond holdings, but she has not done neither, so I've tried to update the others informally about whatever I manage to learn.

Almost all of the work re: the estate has involved Trustee#1 coordinating with a local accountant. There was some initial oversight from a local attorney...more on that later.

Paintings.--When I was visiting my aunt several years before she died, she pointed out some paintings on the walls of the house she rented and told me that they had been appraised (no idea by whom) and informed they were worth about $120,000++ in total at the time. My aunt also said that they were part of her estate and laughed that a great nephew, who is the son of Trustee#2, had shown no interest in the aesthetic beauty of the paintings but had taken an enthusiastic interest in their monetary value. She said he might ask for them at her death (I interpreted her comment as a "heads-up" and, again, her trust makes no mention of heirs other than the six aforementioned beneficiaries). No other relative has ever mentioned to me that my aunt ever discussed the paintings with them.

This gets trickier and here's part of the reason for the lengthy background above...the aforementioned house that my aunt lived in was rented unfurnished from Trustee#1 and her out-of-state sister (the latter is one of the six beneficiaries). Trustee#1 spends most of her time in the house my aunt rented (my aunt gladly paid rent that was far above market value), but also spends some time at another house that she rents from a third party about 30 miles away.

Again, as far as I know, almost all of my aunt's assets were in stocks and bonds. In a section describing the trustee's powers, I'm assuming her trust addresses items such as the paintings under these headings and sentences:

"Powers of distribution: To partition, allot, and distribute the trust estate, on any division or partial or final distribution of the trust estate, in undivided interests or in kind, or partly in money or partly in kind, at valuations determined by the trustee, and to sell such property as the trustee may deem necessary to make division or distribution."

"Trustee's Investment Powers: Power to Sell, Exchange and Repair Trust Property: To manage, control, grant options on, sell (for cash or on deferred payments), convey, exchange, partition, divide, improve, and repair trust property."

I haven't said anything to any of the other beneficiaries about the paintings yet...not wanting to complicate or delay things further because it has been difficult enough to get Trustee#1 to finish the home stretch of the stock/bond portion. I'm thinking I should wait until we get the stock/bond distributions hopefully by the end of the year; regardless, here are two broad options for me to consider:

1) Forget about the paintings. Some of the other beneficiaries and I could definitely find a good use for an extra ~$20K+ that might come our way from a sale of them, but it's not worth getting irritable Trustee#1 upset with beneficiaries other than me. I'm certain that Trustee#1 isn't trying to "steal" the paintings. I think she just hasn't thought about them even though they still presumably reside along with my aunt's other possessions in the house she owns with her sister.
2) Contact the other four beneficiaries individually, including Trustee#1's sister but not Trustee#1, and tell them what my aunt told me about the paintings and see if they want to pursue the matter with Trustee#1 (it seems like way too big a stretch to ask Trustee#1 about other possible assets/possessions such as jewelry and the like). I'm fairly certain that I'm the only one of the other beneficiaries who no longer cares how upset Trustee#1 gets with me about the paintings or anything (she will likely think I'm being something akin to greedy and obsessive (am I?)), so I would likely have to go it alone. I'm okay with that because my aunt chose me as one of the trustees and told me personally about the paintings. Although my aunt wouldn't want the family torn apart over her estate, I also know that my aunt would be very upset with Trustee#1 if she knew about the extent of the unexpected, lengthy delays that have taken place since her death over three years ago.
3) Other suggestions on how to handle matters all things considered? I realize I could attempt to find a local attorney 2,800 miles away from me who is on the scene to shake up the situation regarding the paintings and more. Again, almost all of the professional work so far has been done by a local accountant. Trustee#1 hired an attorney to oversee everything initially (he apparently retired unannounced to Trustee#1 and silently walked away about a year ago...he only knew about the stocks and bonds). After the accountant finishes his work and forwards the final required documents to the IRS it's possible there could be an audit, but we can't control that. As of now, it seems there's likely a role for a new attorney to help eventually divvy things up after the IRS completes its work, but the overall goal would be to keep that involvement and associated expense to a minimum.

I'd appreciate practical suggestions on any of the above "options to consider."

If I were to proceed re: the paintings, when the time is right, I assume I can send photos of them (when and how I get the photos is another matter) to Sotheby's(?) and similar entities. Having never done anything like that, I would appreciate any suggestions on how to handle that task and/or anything related to selling the paintings.

And as far as the last 3+ years and my aunt's estate in general, I can't redo everything differently now as the stock/bond portion's distributions are still possible by the end of this year, but I'm open to suggestions on any of these matters looking forward.

Thank you in advance for reading this saga of a post.
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woolie
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Re: Pursue Inheritance Asset or Let it Go?

Post by woolie »

My condolences on your loss. You’re fortunate to have had an Auntie who cared about you so much and who had enough wealth to leave large inheritances. It is funny, in a sad way, how common your situation is. Relatives who got along fine previously get drawn into disputes over money, even over small amounts. One thing to remember is that an attorney has every incentive to drag the process out as long as possible. So it is quite possible that your cousin is frustrated by her inability to resolve this as quickly as she expected, but is too proud to admit it.
My feeling is that if you walk away you may regret it. You might actually need the money later on, and even if you don’t you would always wonder what happened to those paintings. If it were me, I would send an email to Trustee 1 and copy all the other heirs. Here’s a draft:
Dear X,
I’m glad to see that we’re close to resolving Y’s portfolio. I know you put a lot of work into it and it must have been frustrating at times. As we wind down Y’s estate, I wanted to be sure that you realize her paintings could be worth a significant amount of money. Over $100,000 if I recall correctly. Y mentioned it to me in passing once, so I don’t know any more details. But given the potential value of them, let’s please have them appraised and discuss what to do with them.
aristotelian
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Re: Pursue Inheritance Asset or Let it Go?

Post by aristotelian »

How odd that someone would go through the trouble of creating a will and nominating trustees but don't in such a way that actually creates more problems that it solves.

Does the trustee have an attorney that is helping her? Have they done an Inventory of the estate? Do you?

Are the investment accounts not TOD? I don't see why you need to go through the trustee I'm the first place. Unless...

Maybe there is one painting that is worth 110k and the rest aren't worth anything. In that case the paintings could affect the distribution of the investment accounts. That would argue for getting her moving on the paintings and making sure her attorney is aware of all the assets.
pennywise
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Re: Pursue Inheritance Asset or Let it Go?

Post by pennywise »

Responding to the query about paintings-if I understand the situation OP presents, s/he is one of a group of 6 who is inheriting an estate worth ~$3.6 million (OP mentioned each person will receive $600K).

These paintings' value is based on one comment by the deceased aunt several years ago that has not been in any way corroborated. The art MAY be worth what she said. It may be worth more and it may be worth less. Assuming aunt's valuation is correct this is an amount that is .03% of the total value of the estate.

So my inclination would be to let this alone for now. Really, what is the point? If the executor cousin is responsible then everyone including OP should rest easy in faith she will do what is right. If not, there are any number of legal methods to pursue but again for a very uncertain payoff.

Larger issue which is what actually seems to be worrying OP: settling an estate can be a very long, very frustrating process with a lot of unforeseen and sometimes lengthy pauses that cannot be controlled by the executor. One that was glancingly mentioned involved un-filed taxes. We inherited such an estate and surprise! it turned out that even though there was no tax liability per se, there was fraud committed and an incorrect refund had been issued to a scammer. That took nearly a year to unwind. A car and a couple of motorcycles had to go through a court procedure to retitle in beneficiaries' names which took months more. And so on.

Reading between the lines it sounds like OP is frustrated and wants the money now as do all the other relatives. While understandable this seems to be a good example of the old cliches about what happens to families when inheritances with substantial sums are involved.

However I am very puzzled by one item that is mentioned: the executor actually owned the home that the deceased lived in and lived/lives there both before and after aunt's death? And the aunt paid 'above market' rents to that cousin???? Very odd.
senex
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Re: Pursue Inheritance Asset or Let it Go?

Post by senex »

Regarding the delay, my first thoughts are:
1) Three years is absurd for a simple estate
2) Call the CPA and get his status: what is done, what he is doing, when he will be done, whether he has all info he needs. Also ask for all known accounts and asset list (I'd guess you are legally entitled to them).
3) Fly to city of Trustee #1 and plan to spend 1-2 weeks pushing things along in person. (some things are much easier in person)
4) I would try to learn everything I can, and then start getting things moving myself to the extent my cotrusteeship allows it. (For instance, maybe distribute 80% of assets to heirs immediately, holding back 20% for potential tax liabilities, or whatever the accountant recommends. )


Regarding the paintings, my first thoughts are:
1) Are they actually owned by the trust? I don't know how "ownership" is established for items that don't have a formal title. If not owned by the trust, you may need to open probate to handle them.
2) Tell all cousins (including trustee#1) immediately. All info to all people is the best way to avoid misunderstanding/accusations/etc.
3) Telling everyone may annoy or slow down trustee#1. Fine. She may never finish anyway. You need to get involved anyway (#4 above).
Dottie57
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Re: Pursue Inheritance Asset or Let it Go?

Post by Dottie57 »

senex wrote: Tue Aug 25, 2020 8:42 am Regarding the delay, my first thoughts are:
1) Three years is absurd for a simple estate
2) Call the CPA and get his status: what is done, what he is doing, when he will be done, whether he has all info he needs. Also ask for all known accounts and asset list (I'd guess you are legally entitled to them).
3) Fly to city of Trustee #1 and plan to spend 1-2 weeks pushing things along in person. (some things are much easier in person)
4) I would try to learn everything I can, and then start getting things moving myself to the extent my cotrusteeship allows it. (For instance, maybe distribute 80% of assets to heirs immediately, holding back 20% for potential tax liabilities, or whatever the accountant recommends. )


Regarding the paintings, my first thoughts are:
1) Are they actually owned by the trust? I don't know how "ownership" is established for items that don't have a formal title. If not owned by the trust, you may need to open probate to handle them.
2) Tell all cousins (including trustee#1) immediately. All info to all people is the best way to avoid misunderstanding/accusations/etc.
3) Telling everyone may annoy or slow down trustee#1. Fine. She may never finish anyway. You need to get involved anyway (#4 above).
+1. Certainly 600k is worth the effort.
Jill07
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Re: Pursue Inheritance Asset or Let it Go?

Post by Jill07 »

You and Trustee #2 have an obligation to the beneficiaries to become more involved.

I would be less concerned with the 120,000 in paintings and much more concerned about the estimated 3.6 million in stocks/bonds .
Do you have your own login access to the trust account?

If Trustee #1 was helping your aunt with bill paying in her later years, why were tax returns never filed? Has the trust been filing tax returns?

Trustee #1 should be copying you & Trustee#2 on all communications with lawyers/accountants. Then you would see when the ‘ball is dropped.’ Most things are done online now (esp. w/ Covid) so the distance should not be an issue.
LFS1234
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Re: Pursue Inheritance Asset or Let it Go?

Post by LFS1234 »

lazyumbrella wrote: Mon Aug 24, 2020 9:33 pm Background.--I, Trustee #3, am one three co-trustees re: my aunt's living trust agreement. All three co-trustees are beneficiaries to my aunt's estate along with three other beneficiaries (a total of six beneficiaries, all nieces and nephews of my aunt).
You're a trustee. You have no right to "let this go" even if you wanted to. You have legal obligations to all of the beneficiaries.

It seems quite clear that none of the trustees are up to the job.

An experienced attorney should be hired who is responsible to the trust, who understands that he/she is responsible to all three trustees and not just to one, and who can do the job right. This yet-to-be-hired attorney can work with either the current accountant or a new one to figure out what tax filings have been made, what tax filings still may have to be made, what the assets are, what the liabilities are, and how to deal with issues such as the paintings. Let the attorney be the "bad guy" - he/she has to follow the law and if it ruffles someone's feathers, that's not your fault.

You're going to have to figure out how to get this attorney hired. Do NOT just rely on Trustee #1 to find someone.

If I were in your position, since you live 2800 miles from where the decedent lived, I would probably pay a local estate attorney (where you live) for a few hours of his/her time to get a better idea of how this should be handled. Your local attorney cannot handle the estate, but he/she can tell you pretty precisely what needs to be done by the trust's yet-to-be-hired new attorney and in what order. This information could be put in the form of a letter to you, in which he/she also could note the responsibility all the trustees (including you) have to make sure that this is handled properly. Providing a copy of that letter might prompt Trustee #2 to become more engaged.

With all due respect, none of the trustees seem to have the ability to handle this, and the estate is large enough so that having this properly handled by a competent attorney will be well worth the fees and save a lot of grief all around. This includes dealing with the paintings.
NotWhoYouThink
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Re: Pursue Inheritance Asset or Let it Go?

Post by NotWhoYouThink »

Lots of good advice above not just on your powers but on your RESPONSIBILITIES as a trustee.

As a trustee, you should have available a list of assets of the trust. If there is not one, all three trustees have been irresponsible.

Are the painting owned by the trust? You should know that without question.

If they are not owned by the trust, they are part of her estate. Was there a will? What did that say? Maybe the will said all of her possessions should roll into the trust at her death, but somebody (a trustee - YOU) needs to make sure that happens. And each beneficiary should have received an accounting of the trust at least annually.

So yes, pursue. Or resign as trustee.
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FIREchief
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Re: Pursue Inheritance Asset or Let it Go?

Post by FIREchief »

senex wrote: Tue Aug 25, 2020 8:42 am
Regarding the paintings, my first thoughts are:
1) Are they actually owned by the trust? I don't know how "ownership" is established for items that don't have a formal title. If not owned by the trust, you may need to open probate to handle them.
I believe that typically at the time a living trust is established, there is a formal legal document that assigns ownership of all personal property, both current and future, to the trust. There is also a pour over will that reiterates this upon death. See my signature.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Jack FFR1846
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Re: Pursue Inheritance Asset or Let it Go?

Post by Jack FFR1846 »

I would think that with this much money at stake, you'd take the time to go and get this settled. Yes, hire a competent lawyer to oversee and move it along. Yes, take the paintings and auction them off. Any nephew or random person who expressed interest can put their money where their mouth is and bid along with the rest of the public. If they were appraised at $120k, I'd expect that after auction fees, the six of you will split a total of $10k (not each...total). I'd also expect that some expensive painting sitting at a $200 bid won't be touched by any of those relatives who were quite interested before.

Good luck.
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Fractalleaf
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Re: Pursue Inheritance Asset or Let it Go?

Post by Fractalleaf »

First off, I want to thank you for reinforcing my confidence in the decision to designate a corporate trustee.

The fact that your aunt did not file taxes for the last years of her life should raise alarm bells about the oversight trustee #1 provided. You seem to have some guilt about the level of attention trustee #1 gave to your aunt that you were unable to provide, but clearly this did not extend to ensuring your aunt was in good standing with the IRS.

The size of the estate warrants an immediate consultation with an estate attorney to streamline the process of settlement. An inventory of assets and value at time of death should have been prepared within a few months of your aunt's death. Most assets, not sure about artwork, receive a stepped up basis equal to value at time of death. It could be difficult to find a value for artwork retroactively. The paintings should be appraised ASAP, or at least search the artists online to get a rough idea of value. Perhaps the paintings are worthless.

The trust should spell out how much leeway trustees have in distributing assets. You may or may not be free to give the painting to a beneficiary in exchange for its cash value as part of the distribution.
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FelixTheCat
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Re: Pursue Inheritance Asset or Let it Go?

Post by FelixTheCat »

It should take about two months to get a list of assets, contact the appropriate people (attorney/accountant), and distribute the assets only to the heirs. Your novela doesn't indicate it should take any longer.

The problem I see is trustee #1 is dragging their feet.
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snailderby
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Re: Pursue Inheritance Asset or Let it Go?

Post by snailderby »

The paintings don't seem like the main issue here. I'm not an expert on trust management by any means, but with a $3.6 million estate, it might be worth it to hire a professional to settle the estate quickly, fairly, and in accordance with any applicable laws.
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lazyumbrella
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Re: Pursue Inheritance Asset or Let it Go?

Post by lazyumbrella »

Major thank yous to everyone who read and responded to my lengthy catharsis. I read and reread everything closely. I am thinking how to implement your very helpful suggestions on both the macro and micro levels.

Specifically re: the paintings, Jack FER1846 said, "If they were appraised at $120k, I'd expect that after auction fees, the six of you will split a total of $10k (not each...total). I'd also expect that some expensive painting sitting at a $200 bid won't be touched by any of those relatives who were quite interested before."

Since I know nothing about the process of how I might sell the paintings, I’m taking that as an informed opinion to forget about the paintings given the reality of the way the process and everything involved works. Thanks in advance.
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