Recent passed parent had Vanguard TOD and will. What now?

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VanGuppy
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Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Wed Jan 29, 2020 8:10 pm

The facts. Parent recently deceased. Only child TOD beneficiary of both taxable mutual funds acct / IRA acct at Vanguard. Child has IRA acct at Vanguard. There is a will to go through probate. Both parent and child domicile in NY in joint ownership house with survivorship. There are some non-TOD banks. Probate assets mid 6-figures. 2011 gift tax mid 6-figures. VG account 7-figures. Total IRS estate < $5.5 million.

Recently "protected" parent Vanguard account. Rep asked if I wanted to transfer ownership online. Wasn't sure what to do so said not right away. These are some questions was hoping to get answered before transferring either online or on paper.

1) VG rep said online process could use a PDF scan of Death Certificate. This did not sound right.

2) Since part of assets must go through probate can the VG accounts be transferred/inherited now or must that happen after probate close?

3) Does 2011 gift tax count in figuring IRS+NY estate taxes?

4) Since total of all assets would be less than $5.5 million do IRS and NY estate tax returns have to be filed?

5) Should I transfer online myself, online with rep on phone or by paper forms?

Any other helpful advice also welcome.

Thanks from the Guppy.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Wed Jan 29, 2020 8:29 pm

VanGuppy wrote:
Wed Jan 29, 2020 8:10 pm
1) VG rep said online process could use a PDF scan of Death Certificate. This did not sound right.
Welcome! Yes, it is correct. I recently uploaded a scanned image of my late husband's death certificate to Vanguard.
VanGuppy wrote:
Wed Jan 29, 2020 8:10 pm
5) Should I transfer online myself, online with rep on phone or by paper forms?
I did an IRA transfer online, with the rep on the phone guiding me through the process. This was a Vanguard-to-Vanguard transfer, so no Medallion Signature was needed.

(My late husband's status is discussed here.)
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by Grt2bOutdoors » Wed Jan 29, 2020 8:58 pm

Accounts titled TOD pass outside of the will, they don't need to go through probate. You can move those assets now, if you wish and your are the listed beneficiary. You merely need to present a certified copy of the death certificate. That plus your information and whatever Vanguard requests.

Non-TOD assets and real estate will go through probate.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by Dottie57 » Wed Jan 29, 2020 9:08 pm

Grt2bOutdoors wrote:
Wed Jan 29, 2020 8:58 pm
Accounts titled TOD pass outside of the will, they don't need to go through probate. You can move those assets now, if you wish and your are the listed beneficiary. You merely need to present a certified copy of the death certificate. That plus your information and whatever Vanguard requests.

Non-TOD assets and real estate will go through probate.
+1

TOD and POD are good ways to avoid probate.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by WoodSpinner » Wed Jan 29, 2020 9:42 pm

OP,

Sorry for your loss....

Suggest that you familiarize yourself with the new requirements for an Inherited IRA ( Secure Act, if the death was after 12/31/2019).

WoodSpinner

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by senex » Wed Jan 29, 2020 10:41 pm

Sorry for your loss.

1) Sounds fine. It seems somewhat common now to provide an e-copy, and the bank/brokerage/etc will confirm by checking the Soc Security database.

2) Yes, the Beneficiary/TOD transfers can happen whenever you want. Probate timing is unconnected and irrelevant for that.

3) Your info on the 2011 gift is confusing. Usually no tax is due when gifting; you file a federal gift tax form to record the amount against your lifetime exemption. I don't know about NY but this link suggests a 2011 gift would not affect any paperwork today: http://besunderlaw.com/tax-law/new-york ... x-regimes/

4) For NY, I think no return, based on link above. For fed, it would depend if current estate value (including half of the home, all tangible property, etc) plus the 2011 gift amount is above or below the exemption.

5) No opinion.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by bsteiner » Wed Jan 29, 2020 10:48 pm

Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
Last edited by bsteiner on Thu Jan 30, 2020 12:03 pm, edited 1 time in total.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by student » Wed Jan 29, 2020 10:54 pm

bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
Are you talking about the info in this article https://pbmlawyers.com/2019-federal-and ... xemptions/

"Commencing January 1, 2019, the New York State Estate Tax Exemption amount is $5,740,000.00, per person. However, if an individual dies owning just 5% more than the $5,740,000.00, there is a “cliff” taxing the decedent on the full value of the estate, not just the amount over the exemption amount."

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LHDallas » Wed Jan 29, 2020 11:14 pm

bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
While I agree a living trust would have been a better option. Isn't the son able to step up his cost basis, therefore removing any current tax liabilities?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by bsteiner » Wed Jan 29, 2020 11:32 pm

student wrote:
Wed Jan 29, 2020 10:54 pm
bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
Are you talking about the info in this article https://pbmlawyers.com/2019-federal-and ... xemptions/

"Commencing January 1, 2019, the New York State Estate Tax Exemption amount is $5,740,000.00, per person. However, if an individual dies owning just 5% more than the $5,740,000.00, there is a “cliff” taxing the decedent on the full value of the estate, not just the amount over the exemption amount."
No. We don't know what the Federal estate tax exclusion amount will be when the child dies, or what state the child will be domiciled in when he/she dies, or whether that state will have an estate tax then, or if so what the state exclusion amount will be. But if you throw $5.5 million to the child's estate there's a good chance the child will have a taxable estate based on current law.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by bsteiner » Wed Jan 29, 2020 11:36 pm

LHDallas wrote:
Wed Jan 29, 2020 11:14 pm
bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
While I agree a living trust would have been a better option. Isn't the son able to step up his cost basis, therefore removing any current tax liabilities?
You aren't agreeing with me. I didn't suggest that a living trust would have been a better option.

Since probating a Will is generally not difficult, expensive or burdensome in New York, living trusts are not commonly used in New York. It would have cost about as much to have done a living trust and transferred the assets to it as it will cost to probate the Will. Also, the parent would have had to write the check for the living trust whereas someone else writes the check to probate the Will. In addition, even if the parent had created a living trust, there's a good chance that the Will would have had to be probated anyway. There's often an asset not in the trust, or there's an income tax refund check payable to the decedent for the year of death.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by HereToLearn » Thu Jan 30, 2020 12:02 am

bsteiner wrote:
Wed Jan 29, 2020 11:36 pm
LHDallas wrote:
Wed Jan 29, 2020 11:14 pm
bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
While I agree a living trust would have been a better option. Isn't the son able to step up his cost basis, therefore removing any current tax liabilities?
You aren't agreeing with me. I didn't suggest that a living trust would have been a better option.

Since probating a Will is generally not difficult, expensive or burdensome in New York, living trusts are not commonly used in New York. It would have cost about as much to have done a living trust and transferred the assets to it as it will cost to probate the Will. Also, the parent would have had to write the check for the living trust whereas someone else writes the check to probate the Will. In addition, even if the parent had created a living trust, there's a good chance that the Will would have had to be probated anyway. There's often an asset not in the trust, or there's an income tax refund check payable to the decedent for the year of death.
This is the same advice I received when I inquired about having my mother establish a trust. The lawyer's fees for probate were about the same as the cost of the trust, and NYS's fee was maybe $1200, which I believe was triggered once the value of the estate hit $500K.

Also agree with @bsteiner about the random checks that arrive. In addition to the income tax refund, there were also checks from the homeowner's insurance (refund of annual premium payment) and a much larger check from the LTC carrier for home aides in last weeks of life. So even though the house was the only asset that had to be processed through probate, those random checks would have required probate even if we had gone to the effort and expense of creating a trust.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by EHEngineer » Thu Jan 30, 2020 12:03 am

bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
[post has been edited above by bsteiner - moderator prudent]
bsteiner, I really appreciate a professional who donates their time and expertise to the bogleheads community. Thank you for doing that.

However, <snip>

edit: my suggestion was taken, and I have deleted the suggestion here because it does not add to the thread.
Last edited by EHEngineer on Thu Jan 30, 2020 12:41 pm, edited 1 time in total.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by chemocean » Thu Jan 30, 2020 12:30 am

VanGuppy wrote:
Wed Jan 29, 2020 8:10 pm

1) VG rep said online process could use a PDF scan of Death Certificate. This did not sound right.
I talked to a Vanguard representative in the "Change of Ownership" section and was told that Vanguard has access to the database that originate from the Social Security Administration, where all funeral homes file death certificates. Vanguard can check the validity of the death certificate in real time.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by student » Thu Jan 30, 2020 9:12 am

bsteiner wrote:
Wed Jan 29, 2020 11:32 pm
student wrote:
Wed Jan 29, 2020 10:54 pm
bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
Are you talking about the info in this article https://pbmlawyers.com/2019-federal-and ... xemptions/

"Commencing January 1, 2019, the New York State Estate Tax Exemption amount is $5,740,000.00, per person. However, if an individual dies owning just 5% more than the $5,740,000.00, there is a “cliff” taxing the decedent on the full value of the estate, not just the amount over the exemption amount."
No. We don't know what the Federal estate tax exclusion amount will be when the child dies, or what state the child will be domiciled in when he/she dies, or whether that state will have an estate tax then, or if so what the state exclusion amount will be. But if you throw $5.5 million to the child's estate there's a good chance the child will have a taxable estate based on current law.
Thanks for the explanation. But I am still confused about the current law part. $5.5 mil is under the limit of exemption under the current federal law, right? My understanding is there is no federal estate tax but one needs to look at state tax, correct?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by SuzBanyan » Thu Jan 30, 2020 11:40 am

Deleted post as the prior post was corrected.

Thanks to all the very knowledgeable people who post at Bogleheads.
Last edited by SuzBanyan on Thu Jan 30, 2020 12:50 pm, edited 1 time in total.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by EHEngineer » Thu Jan 30, 2020 12:40 pm

Gill wrote:
Thu Jan 30, 2020 11:04 am
We are very fortunate to have a prominent New York trusts and estates attorney posting on this forum.
I whole heartedly agree. That's why I started by thanking him for his time and expertise.
Or, you can ... decline to let me, a stranger on the Internet, egg you on to an exercise in time-wasting, and you could say "I'm probably OK and I don't care about it that much." -Nisiprius

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VanGuppy
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 2:34 pm

Sorry, I didn't see any of your responses till just now. Some of the more direct responses were very helpful, but I'm getting a little lost in parts of the back and forth between the expert bsteiner and others. Please bear with me while I absorb it all before responding with additional questions.

I just received copies of the death certificates yesterday and might be rushing through the process. So my first follow up question is: Did I do the right thing by protecting the accounts and better explain what that actually means?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by Kenkat » Thu Jan 30, 2020 3:29 pm

I don’t know what “protecting” the account at Vanguard means, but informing Vanguard of the death of the account owner is a good idea and so it is good that you have done so already.

As others have said, the taxable account with a TOD and the IRA with a beneficiary designation can be transferred at will when YOU are ready - i.e., you don’t have to wait for the probate process to complete. That said, there is no rush either. There is time to take a breather. I do understand the feeling of needing to settle things, but there’s time over the next few weeks to handle these things.

On death certificates, we heard some people say “order a lot”. They are not cheap however (in Ohio at least; I think they were $35 each), so we ordered three. We ultimately only needed two of them - one for Office of Personnel Management (OPM) for civil service pension and one for one insurance company that required it. Every one else accepted a photocopy / scan.

p.s. I am sorry for the loss of a loved one

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VanGuppy
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 4:05 pm

Kenkat wrote:
Thu Jan 30, 2020 3:29 pm
I don’t know what “protecting” the account at Vanguard means, but informing Vanguard of the death of the account owner is a good idea and so it is good that you have done so already.

As others have said, the taxable account with a TOD and the IRA with a beneficiary designation can be transferred at will when YOU are ready - i.e., you don’t have to wait for the probate process to complete. That said, there is no rush either. There is time to take a breather. I do understand the feeling of needing to settle things, but there’s time over the next few weeks to handle these things.

On death certificates, we heard some people say “order a lot”. They are not cheap however (in Ohio at least; I think they were $35 each), so we ordered three. We ultimately only needed two of them - one for Office of Personnel Management (OPM) for civil service pension and one for one insurance company that required it. Every one else accepted a photocopy / scan.

p.s. I am sorry for the loss of a loved one
KenKat,

Thanks so much for your "protection" reassurance and no need to rush advice.

Also, glad you answered an unasked death certificates question for me. Perhaps, the funeral director's number advice was thankfully less than mine. Many places accepting a photocopy was unknown before to me till comments through this thread. I later read that the loss should also be reported to all 3 credit companies, e.g. TransUnion, is that correct?

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VanGuppy
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 4:20 pm

bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
The $5.5 million figure was intended to convey substantial, but probably a good 6-figures less actual estate.
Last edited by VanGuppy on Thu Jan 30, 2020 4:24 pm, edited 1 time in total.

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Kenkat
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by Kenkat » Thu Jan 30, 2020 4:22 pm

We never thought to notify credit agencies; seems like it’s not a bad idea though.

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VanGuppy
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 4:30 pm

bsteiner wrote:
Wed Jan 29, 2020 11:32 pm
student wrote:
Wed Jan 29, 2020 10:54 pm
bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
Are you talking about the info in this article https://pbmlawyers.com/2019-federal-and ... xemptions/

"Commencing January 1, 2019, the New York State Estate Tax Exemption amount is $5,740,000.00, per person. However, if an individual dies owning just 5% more than the $5,740,000.00, there is a “cliff” taxing the decedent on the full value of the estate, not just the amount over the exemption amount."
No. We don't know what the Federal estate tax exclusion amount will be when the child dies, or what state the child will be domiciled in when he/she dies, or whether that state will have an estate tax then, or if so what the state exclusion amount will be. But if you throw $5.5 million to the child's estate there's a good chance the child will have a taxable estate based on current law.
The child is an only child who would eventually need estate planning so as to later pass his/her estate on to the beneficiaries all of which being charities and non-profits.
Last edited by VanGuppy on Thu Jan 30, 2020 4:36 pm, edited 1 time in total.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 4:35 pm

HereToLearn wrote:
Thu Jan 30, 2020 12:02 am
bsteiner wrote:
Wed Jan 29, 2020 11:36 pm
LHDallas wrote:
Wed Jan 29, 2020 11:14 pm
bsteiner wrote:
Wed Jan 29, 2020 10:48 pm
Sorry to hear of your loss.

This should serve as a reminder that anyone with substantial assets could leave their assets to their children in trust rather than outright. That would keep the children's inheritances out of their estates for estate tax purposes, and would protect their inheritances from their creditors and spouses. Given the reference to the estate being under $5.5 million, presumably the estate is substantial.

TOD was originally limited to bank accounts. An "in trust for" bank account was known as a Totten trust, and was named after the case by that name that allowed it. Many people have very little in the way of assets, and that allowed them to leave their money to their beneficiaries in a simple way. It was later expanded to brokerage accounts and various other assets. But it shouldn't be a substitute for doing the appropriate estate planning.

The child might consider disclaiming some or all of it if it would then go to child's issue. Of course, that would only be appropriate to the extent the child is confident he/she won't need the amount disclaimed, and if the child's children are of sufficient maturity to handle the money appropriately (or the the disclaimed property would go to the grandchildren in trust).

Probating the Will won't be difficult in New York. There are a bunch of forms to file at the beginning, but absent a dispute there's very little to do with the court thereafter. If there's only one child (and no spouse), you may need to provide an affidavit from someone who knew the family saying that there was no spouse and only one child.
While I agree a living trust would have been a better option. Isn't the son able to step up his cost basis, therefore removing any current tax liabilities?
You aren't agreeing with me. I didn't suggest that a living trust would have been a better option.

Since probating a Will is generally not difficult, expensive or burdensome in New York, living trusts are not commonly used in New York. It would have cost about as much to have done a living trust and transferred the assets to it as it will cost to probate the Will. Also, the parent would have had to write the check for the living trust whereas someone else writes the check to probate the Will. In addition, even if the parent had created a living trust, there's a good chance that the Will would have had to be probated anyway. There's often an asset not in the trust, or there's an income tax refund check payable to the decedent for the year of death.
This is the same advice I received when I inquired about having my mother establish a trust. The lawyer's fees for probate were about the same as the cost of the trust, and NYS's fee was maybe $1200, which I believe was triggered once the value of the estate hit $500K.

Also agree with @bsteiner about the random checks that arrive. In addition to the income tax refund, there were also checks from the homeowner's insurance (refund of annual premium payment) and a much larger check from the LTC carrier for home aides in last weeks of life. So even though the house was the only asset that had to be processed through probate, those random checks would have required probate even if we had gone to the effort and expense of creating a trust.
Excellent advice on later additions which may also include later to arrive bills or debts.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 4:43 pm

Kenkat wrote:
Thu Jan 30, 2020 3:29 pm
I don’t know what “protecting” the account at Vanguard means, but informing Vanguard of the death of the account owner is a good idea and so it is good that you have done so already.

As others have said, the taxable account with a TOD and the IRA with a beneficiary designation can be transferred at will when YOU are ready - i.e., you don’t have to wait for the probate process to complete. That said, there is no rush either. There is time to take a breather. I do understand the feeling of needing to settle things, but there’s time over the next few weeks to handle these things.

On death certificates, we heard some people say “order a lot”. They are not cheap however (in Ohio at least; I think they were $35 each), so we ordered three. We ultimately only needed two of them - one for Office of Personnel Management (OPM) for civil service pension and one for one insurance company that required it. Every one else accepted a photocopy / scan.

p.s. I am sorry for the loss of a loved one
Sorry for not asking in this prior post. It seems waiting for the death certificates was needless. Should I immediately notify other TOD and non-TOD banks regardless if I have all certificates or that probate has not yet been filed?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Thu Jan 30, 2020 5:13 pm

You should notify all TOD and non-TOD accounts as soon as possible. They may want to take steps to protect the account from further actions and to protect against fraud. I notified my online bank by phone, my local brick-and-mortar bank was done in-person.

Online banks (and credit card companies) will mail you the documentation in a few days. You'll have to fill out a form and send them a copy of the death certificate. Call them to see if they'll take a copy of the death certificate (scanned image or cellphone snapshot). The local bank just wanted to see the "official" copy and then gave it back to me.

In PA, death certificates are $20 each.

FYI - When I went to my local bank in-person, they told me that the Social Security Administration had already notified them of the death. The funeral home notifies Social Security (they fill out a form electronically). Social Security is very proactive in helping to prevent fraud and money laundering and will inform everyone of the death.

I'm not sure how, but Vanguard told me they can verify a death independently of the death certificate. Perhaps they also received notification from the Social Security Administration.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by F150HD » Thu Jan 30, 2020 5:59 pm

I talked to a Vanguard representative in the "Change of Ownership" section and was told that Vanguard has access to the database that originate from the Social Security Administration, where all funeral homes file death certificates. Vanguard can check the validity of the death certificate in real time.
is this new? I have never read this before. Only VG? or do Fido and Schwab do similar? Not to hijack the thread but just wondered.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by vipertom1970 » Thu Jan 30, 2020 6:04 pm

Just curious if this is where "step-up in basis" will take place ?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 6:18 pm

LadyGeek wrote:
Thu Jan 30, 2020 5:13 pm
A)))))))
You should notify all TOD and non-TOD accounts as soon as possible. They may want to take steps to protect the account from further actions and to protect against fraud. I notified my online bank by phone, my local brick-and-mortar bank was done in-person.

A))))
Online banks (and credit card companies) will mail you the documentation in a few days. You'll have to fill out a form and send them a copy of the death certificate. Call them to see if they'll take a copy of the death certificate (scanned image or cellphone snapshot). The local bank just wanted to see the "official" copy and then gave it back to me.

In PA, death certificates are $20 each.

B)))))
FYI - When I went to my local bank in-person, they told me that the Social Security Administration had already notified them of the death. The funeral home notifies Social Security (they fill out a form electronically). Social Security is very proactive in helping to prevent fraud and money laundering and will inform everyone of the death.

B)))))
I'm not sure how, but Vanguard told me they can verify a death independently of the death certificate. Perhaps they also received notification from the Social Security Administration.
LadyGeek

If I read you right. The A)))))'s mean I should do it right away and the B)))))'s mean it might be redundant, but you're recommending the A))))))'s to be safe.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Thu Jan 30, 2020 6:42 pm

F150HD wrote:
Thu Jan 30, 2020 5:59 pm
I talked to a Vanguard representative in the "Change of Ownership" section and was told that Vanguard has access to the database that originate from the Social Security Administration, where all funeral homes file death certificates. Vanguard can check the validity of the death certificate in real time.
is this new? I have never read this before. Only VG? or do Fido and Schwab do similar? Not to hijack the thread but just wondered.
F150HD - I'm guessing that measures used to protect against money laundering and fraud are not publicized. I only found out when the bank showed me the notification on my husband's account.

Thanks, I had missed the earlier post stating that Vanguard has access to the Social Security Administration database, which confirms what they told me on the phone:
LadyGeek wrote:
Thu Jan 30, 2020 5:13 pm
FYI - When I went to my local bank in-person, they told me that the Social Security Administration had already notified them of the death. The funeral home notifies Social Security (they fill out a form electronically). Social Security is very proactive in helping to prevent fraud and money laundering and will inform everyone of the death.

I'm not sure how, but Vanguard told me they can verify a death independently of the death certificate. Perhaps they also received notification from the Social Security Administration.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Thu Jan 30, 2020 6:47 pm

VanGuppy wrote:
Thu Jan 30, 2020 6:18 pm
LadyGeek wrote:
Thu Jan 30, 2020 5:13 pm
A)))))))
You should notify all TOD and non-TOD accounts as soon as possible. They may want to take steps to protect the account from further actions and to protect against fraud. I notified my online bank by phone, my local brick-and-mortar bank was done in-person.

A))))
Online banks (and credit card companies) will mail you the documentation in a few days. You'll have to fill out a form and send them a copy of the death certificate. Call them to see if they'll take a copy of the death certificate (scanned image or cellphone snapshot). The local bank just wanted to see the "official" copy and then gave it back to me.

In PA, death certificates are $20 each.

B)))))
FYI - When I went to my local bank in-person, they told me that the Social Security Administration had already notified them of the death. The funeral home notifies Social Security (they fill out a form electronically). Social Security is very proactive in helping to prevent fraud and money laundering and will inform everyone of the death.

B)))))
I'm not sure how, but Vanguard told me they can verify a death independently of the death certificate. Perhaps they also received notification from the Social Security Administration.
LadyGeek

If I read you right. The A)))))'s mean I should do it right away and the B)))))'s mean it might be redundant, but you're recommending the A))))))'s to be safe.
Yes, the B)))))'s are secondary information. It's up to you, but I like to be proactive to protect financial assets. Although the bank knew of the death, they didn't take any action until I notified them in person. The may use the Social Security death info for other purposes, I have no idea.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by Kenkat » Thu Jan 30, 2020 8:05 pm

LadyGeek’s advice above aligns with my experience as well - contact everyone reasonably quickly to get the process started; most companies had people specifically assigned to handle these types of claims and would have a process to follow - they’d mail a packet, direct you to their website, email instructions, etc. Then once you get the materials you can pull together what is required and file the claim. This should be done reasonably promptly but it does not need to be a mad rush either.

I believe Social Security provides a death master file and many institutions run this against their own information to match and notify beneficiaries. Many states have begun to put regulations in place requiring this on a set basis such as quarterly.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Thu Jan 30, 2020 10:45 pm

I contacted a bank with a joint account by phone. They took some account information to verify then asked if I wanted account closed to get a check (yech) or remove the parent's name leaving mine. I chose the latter. They told me to write a letter of instruction to that effect, photocopy of death certificate, a list of all asset id's in the account and the account number. Five days after receipt they would contact me over the phone to finish the process.

I'll be having an initial meeting in a few weeks with an Estate Admin lawyer. Over the phone they seem to want all probate and non-probate account info. If they get the probate job they may also calculate the total estate size to determine need for estate tax filings that might be subcontracted (perhaps their total bill too). Would proceeding with VG and joint bank claims lead to any advantage or disadvantage that can be summarized.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by bsteiner » Fri Jan 31, 2020 8:40 am

VanGuppy wrote:
Thu Jan 30, 2020 4:30 pm
...
The child is an only child who would eventually need estate planning so as to later pass his/her estate on to the beneficiaries all of which being charities and non-profits.
Then unless there's a concern about creditors the protection of a trust won't be necessary. Amounts passing to charity aren't subject to estate tax.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Fri Jan 31, 2020 1:20 pm

I contacted the local bank and left a message to remove me as the ATF and inform of my parent's passing. Didn't think I was clear enough so called back and got a rep. He said account already had a hold on it from yesterday! Perhaps Funeral Home->SS->Bank. He said I was the beneficiary and could just bring in the certificate to claim. He offered to open an estate account for the executor. Maybe VG asked for a photocopy of the death certificate 2 days ago because SS did not have it then.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Fri Jan 31, 2020 3:03 pm

^^^ My local bank got the SS notification one week after the date of death, so it could have slipped between the cracks.

If your rep offered to create the estate account, it's probably a good idea to do so. Everything is fresh in their minds (and you have the paperwork), so it will be easier to take care of it now.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Fri Jan 31, 2020 9:40 pm

LadyGeek wrote:
Fri Jan 31, 2020 3:03 pm
^^^ My local bank got the SS notification one week after the date of death, so it could have slipped between the cracks.

If your rep offered to create the estate account, it's probably a good idea to do so. Everything is fresh in their minds (and you have the paperwork), so it will be easier to take care of it now.
Everything so far now brings me to ask a new question. Does being, or not being, executor have any bearing on what to do with TOD/POD accounts if you're the named beneficiary?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Fri Jan 31, 2020 9:49 pm

If the named beneficiary happens to be the same person as the will's executor, it's just a coincidence. One person has two roles, there's no interaction between them.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by Old Sage(brush) » Sat Feb 01, 2020 8:49 am

If you’re in NY, significantly below the estate tax threshold, have only investment accounts in your estate all of which have TOD and IRAs with beneficiaries (no other assets), why would you need a trust? Seems to me you already have a simple way to avoid probate and settlement of the estate should be relatively easy. In such circumstances would you even need to go through probate or do anything more than follow the process for TOD accounts with investment firms?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Sat Feb 01, 2020 12:49 pm

LadyGeek wrote:
Fri Jan 31, 2020 9:49 pm
If the named beneficiary happens to be the same person as the will's executor, it's just a coincidence. One person has two roles, there's no interaction between them.
Yes, remembering there 2 distinct hats goes a long way. So whose role is it to start the TOD claim process, the beneficiary or executor? Especially when the will has not yet been filed in probate thus only 1 hat so far.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Sat Feb 01, 2020 1:39 pm

Remember there is no such thing as will with a TOD account (filed or not). So, the beneficiary makes the claim.

Actually, I don't think it matters as long as someone notifies the financial institution. Once the death has been confirmed, the rest of the process is transferring the asset to the beneficiary. At that point, I assume the institution will attempt to contact the beneficiary to take care of the details.

If you happen to be the beneficiary making the claim (like I was), the process goes a lot quicker.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Sat Feb 01, 2020 2:26 pm

metalworking has a question which I've moved into a new thread. See: Insufficient assets in an estate - What to do?
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by bsteiner » Sat Feb 01, 2020 6:18 pm

Old Sage(brush) wrote:
Sat Feb 01, 2020 8:49 am
If you’re in NY, significantly below the estate tax threshold, have only investment accounts in your estate all of which have TOD and IRAs with beneficiaries (no other assets), why would you need a trust? Seems to me you already have a simple way to avoid probate and settlement of the estate should be relatively easy. In such circumstances would you even need to go through probate or do anything more than follow the process for TOD accounts with investment firms?
The key is the beneficiaries’ situation. If the chance that any of them will have a taxable estate or a creditor or spouse problem or want Medicaid you’ll want to provide for them in trust under your Will. If the risk of any of these is sufficiently small and the risk that one of them won’t cooperate to pay debts, expenses and taxes is sufficiently small then it doesn’t matter how you provide for them.

Probating a Will in New York is generally not difficult, expensive or burdensome, so people in New York rarely try to “avoid” it.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Sun Feb 02, 2020 1:43 pm

LadyGeek wrote:
Thu Jan 30, 2020 5:13 pm
You should notify all TOD and non-TOD accounts as soon as possible. They may want to take steps to protect the account from further actions and to protect against fraud. I notified my online bank by phone, my local brick-and-mortar bank was done in-person.

Online banks (and credit card companies) will mail you the documentation in a few days. You'll have to fill out a form and send them a copy of the death certificate. Call them to see if they'll take a copy of the death certificate (scanned image or cellphone snapshot). The local bank just wanted to see the "official" copy and then gave it back to me.
Do not think I originally caught detail "mail you documentation" point. For the non-TOD online joint account they told me to mail them letter of instruction and more account details.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Sun Feb 02, 2020 2:25 pm

Perhaps it depends on the institution. In my case, the notification was by phone and they've followed up by mail with some forms I needed to complete.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Sun Feb 02, 2020 3:17 pm

Just found this on the VG inheriting account FAQ:

If the decedent's estate goes through probate, the property in the estate can't be transferred until the court proceedings have concluded. If Vanguard accounts are part of the estate, probate may delay the inheritance of the accounts.

Maybe there's really no rush now. :)

bsteiner or anybody, do you think this is a general rule, but not apply to NY state.?

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by bsteiner » Sun Feb 02, 2020 10:52 pm

VanGuppy wrote:
Sun Feb 02, 2020 3:17 pm
Just found this on the VG inheriting account FAQ:

If the decedent's estate goes through probate, the property in the estate can't be transferred until the court proceedings have concluded. If Vanguard accounts are part of the estate, probate may delay the inheritance of the accounts.

Maybe there's really no rush now. :)

bsteiner or anybody, do you think this is a general rule, but not apply to NY state.?
In New York, it usually takes a few weeks for the Will to be admitted to probate.

In New York, executors have liability to unknown creditors if they make distributions until 7 months have elapsed since they were appointed as executors. That period varies from state to state.

Unless a beneficiary was dependent on the decedent, there's usually no rush. It's usually more efficient to administer the estate in an orderly fashion. There may be income tax reasons to make distributions at one point rather than another.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by VanGuppy » Mon Feb 03, 2020 5:45 pm

bsteiner wrote:
Sun Feb 02, 2020 10:52 pm
VanGuppy wrote:
Sun Feb 02, 2020 3:17 pm
Just found this on the VG inheriting account FAQ:

If the decedent's estate goes through probate, the property in the estate can't be transferred until the court proceedings have concluded. If Vanguard accounts are part of the estate, probate may delay the inheritance of the accounts.

Maybe there's really no rush now. :)

bsteiner or anybody, do you think this is a general rule, but not apply to NY state.?
In New York, it usually takes a few weeks for the Will to be admitted to probate.

In New York, executors have liability to unknown creditors if they make distributions until 7 months have elapsed since they were appointed as executors. That period varies from state to state.

Unless a beneficiary was dependent on the decedent, there's usually no rush. It's usually more efficient to administer the estate in an orderly fashion. There may be income tax reasons to make distributions at one point rather than another.
What happens when there are known bills coming due serially before 7 months have elapsed. Wouldn't distributions have to made to pay the bills on time? By distributions you must mean beneficiaries, correct? What if the executor is a beneficiary? Maybe this is what LadyGeek meant by 2 hats. How does the 7 months relate to probate close date? Finally can you relate this all back to the original question, i.e. TOD accounts, not under probate, being claimed by the beneficiary not the executor, unless financial institution has contrary rules (perhaps ala VG)?

Maybe there's really, really, no rush.

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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by LadyGeek » Mon Feb 03, 2020 6:48 pm

VanGuppy wrote:
Mon Feb 03, 2020 5:45 pm
What if the executor is a beneficiary? Maybe this is what LadyGeek meant by 2 hats.
In my situation, there is no connection between the IRA assets I inherited and any other document (a Will or Trust). That's why I said "2 hats". Only one applies - beneficiary or a Will - and they don't mix.

Your situation is more complex than mine and we're in different states (PA vs. NY), so I'll defer to the experts.
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Re: Recent passed parent had Vanguard TOD and will. What now?

Post by bsteiner » Tue Feb 04, 2020 1:06 pm

VanGuppy wrote:
Mon Feb 03, 2020 5:45 pm
...
What happens when there are known bills coming due serially before 7 months have elapsed. Wouldn't distributions have to made to pay the bills on time? By distributions you must mean beneficiaries, correct? What if the executor is a beneficiary? Maybe this is what LadyGeek meant by 2 hats. How does the 7 months relate to probate close date? Finally can you relate this all back to the original question, i.e. TOD accounts, not under probate, being claimed by the beneficiary not the executor, unless financial institution has contrary rules (perhaps ala VG)?

Maybe there's really, really, no rush.
Distributions means to beneficiaries. They get what's left after debts, taxes and expenses.

New York doesn't have a "probate close date." If you wind up the estate and 20 years later you find another asset (that occasionally happens) you're still the executor and you can get a new certificate from the court for $6 and collect the newly discovered asset.

TOD assets pass outside the Will. They can create lots of problems so except in tiny estates we try to avoid them except for life insurance and retirement benefits.

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