Suggestions for reducing estate issues?

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alpenglow
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Suggestions for reducing estate issues?

Post by alpenglow »

I've been handling my Mom's finances (at her request) since the death of my Dad a number of years ago. After the recent death of a close friend, my Mom starting asking questions about wills and estates. To be honest, that is my weakest area in personal finance. My sister and I are currently estranged and there is a desire to make settling the estate as clear cut as possible. Liquid assets are held at Vanguard with both of us as beneficiaries 50/50. That shouldn't be a problem. The will has the house to be split 50/50 as well. There is also some art and silver in the house that is of value. I am currently listed as the executor, but for some reason my Mom has raised the idea of making us co-executors, which I think would be a disaster since my sister refuses to communicate and it likely won't change. Her finance knowledge is also very poor. What can I advise my Mom to do to minimize future issues? Would a trust be of any help here? This is in NY if it matters.
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OldTimer
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Re: Suggestions for reducing estate issues?

Post by OldTimer »

Have you thought of putting the house in joint ownership with right of survivor? I am not an attorney so the term may not be correct. When my sister passed away recently her house was titled like that, make life easy for me. Also was settled out of probate. Also her beneficiary on IRA, etc was correct so that skipped probate also.
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Re: Suggestions for reducing estate issues?

Post by sailaway »

I would suggest that it is much more straightforward to have a single executor. If she is trying to avoid the impression of favoritism, she should consider a third party.
senex
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Re: Suggestions for reducing estate issues?

Post by senex »

There are some boglehead posts on co-executors being a huge pain (you can't just "show up" and do things, you need to mail everything to sibling for notarized signature before anyone will talk to you, etc).

I believe probate is considered straightforward in New York, but that is a relative term. I've never heard of probate finishing in less than 6 months (due to public notice requirements, etc), and it sometimes takes a year or longer (hopefully not in simple cases, but you never know). Probate also requires more paperwork than the non-probate transfers I've seen, and may require paying an attorney.

I believe I've seen bsteiner (a prolific boglehead and prominent estates attorney in NY) say that it's relatively uncommon to use a living trust in NY purely for reasons of probate avoidance. Searching his posts is a good education.
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Re: Suggestions for reducing estate issues?

Post by JoinToday »

senex wrote: Mon Aug 31, 2020 1:32 pm There are some boglehead posts on co-executors being a huge pain (you can't just "show up" and do things, you need to mail everything to sibling for notarized signature before anyone will talk to you, etc).
.....
This above! I may have posted my experience previously.

My siblings and I were co-executors and co-trustee's of my mom's estate & trust. My mom didn't want to show favoritism. Fortunately, we all got along well and trusted each other, but it was a real pain since we did not live close to one another. Forms needed to be signed & notarized by all 3 of us.

It can be a difficult process in the best of circumstances; you have my sympathy if you & sibling are estranged.
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Re: Suggestions for reducing estate issues?

Post by ionball »

I think co-executors would increase difficulty. Also, be sure that language explicitly says that the executor may sell the house or any other means of liquidation. You probably don't want a house co-ownership situation where all parties must agree on every decision regarding that property.
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Re: Suggestions for reducing estate issues?

Post by delamer »

There are repeated examples of a family member going to a house after a death and cleaning out all the valuables before the estate is settled and other heirs have a chance to make their claims.

I am not sure what the solution is. One possibility would be for your mother to distribute physical assets prior to her death. Another would be to have the items appraised now and have her will distribute them equally. Or have the will specify a system to distribute them (like each heir gets a fake $1,000 and uses it to bid on items in an auction). Maybe the locks need to be changed as soon as she passes.

I agree that co-executors who are estranged is not a good idea. A neutral 3rd party, like an attorney, would be an option.
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Re: Suggestions for reducing estate issues?

Post by Flobes »

My sister and I were co-executors for two estates in New York.

Nightmare!

I sent you a PM.
OnTrack2020
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Re: Suggestions for reducing estate issues?

Post by OnTrack2020 »

Tell your mom you are not interested in being a co-executor, and she will have to decide on one of you or find someone else. If your mom knows that you and your sibling don't communicate, does she think this will change if something happens to her?

As for the house, my father listed me on the deed to his house ... "with right of survivorship." Worked wonderfully. In fact, everything that he had was either jointly titled or "with right of survivorship."
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Re: Suggestions for reducing estate issues?

Post by Jack FFR1846 »

For the house: Get a reverse mortgage so neither of you have to deal with it. For valuable silver, your mother should sell it now. If it's just silver plate, it's only worth the scrap value of brass (not much). Have your mother find a professional who can act as executor. A bank or attorney, for example. None of this is to extract maximum value.....it's to avoid inflicting pain.
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Re: Suggestions for reducing estate issues?

Post by 123 »

If you were appointed as joint executor with your sister you would have the option to decline that appointment or otherwise refuse to serve. Then as a beneficiary of the estate you could proceed with any and all legal action necessary for your sister to act responsibly. The attorneys or courts would argue for you instead of having it as a purely personal conflict. But that would come at a cost.
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Re: Suggestions for reducing estate issues?

Post by bsteiner »

alpenglow wrote: Mon Aug 31, 2020 1:09 pm I've been handling my Mom's finances (at her request) since the death of my Dad a number of years ago. After the recent death of a close friend, my Mom starting asking questions about wills and estates. To be honest, that is my weakest area in personal finance. My sister and I are currently estranged and there is a desire to make settling the estate as clear cut as possible. Liquid assets are held at Vanguard with both of us as beneficiaries 50/50. That shouldn't be a problem. The will has the house to be split 50/50 as well. There is also some art and silver in the house that is of value. I am currently listed as the executor, but for some reason my Mom has raised the idea of making us co-executors, which I think would be a disaster since my sister refuses to communicate and it likely won't change. Her finance knowledge is also very poor. What can I advise my Mom to do to minimize future issues? Would a trust be of any help here? This is in NY if it matters.
Naming you and your sister as beneficiaries of the liquid assets may cause some problems. First, if either you or your sister might do well and have a taxable estate, have a creditor problem, get divorced, outlive your spouse and remarry, or want Medicaid someday, your shares should be in separate trusts for your benefit rather than outright. Second, if the liquid assets pass outside the Will, how will you be able to pay any debts, taxes or administration expenses?

Leaving the house to you and your sister may also cause some problems. You may need to claw it back to raise money to pay debts, taxes and administration expenses. If not, you and your sister will have to cooperate with regard to the sale. That would defeat your power as executor. Your mother might instead direct her executor to sell it.

If you and your sister are estranged, naming you and your sister as executors may also cause some problems. How would you administer the estate together. The choices are (i) one of you, (ii) both of you together with a third party (we have that now in an estate where the children weren't close but they seem willing to cooperate for the common good, especially given that there's an unrelated person as the third executor, or (iii) an unrelated person as sole executor.

The usual clause for tangibles says that the executors are to divide them as equally as practicable. Will you and your sister be able to cooperate sufficiently in order to divide the art and silver? If not, she could give an unrelated person the power to divide them.
OldTimer wrote: Mon Aug 31, 2020 1:14 pm Have you thought of putting the house in joint ownership with right of survivor? ...
That would create the same problems that leaving the house to the two of them would create. It could also create additional problems since the children would be owners even while their mother is alive.
senex wrote: Mon Aug 31, 2020 1:32 pm There are some boglehead posts on co-executors being a huge pain (you can't just "show up" and do things, you need to mail everything to sibling for notarized signature before anyone will talk to you, etc).

I believe probate is considered straightforward in New York, but that is a relative term. I've never heard of probate finishing in less than 6 months (due to public notice requirements, etc), and it sometimes takes a year or longer (hopefully not in simple cases, but you never know). Probate also requires more paperwork than the non-probate transfers I've seen, and may require paying an attorney.

I believe I've seen bsteiner (a prolific boglehead and prominent estates attorney in NY) say that it's relatively uncommon to use a living trust in NY purely for reasons of probate avoidance. Searching his posts is a good education.
Thanks for the kind words.

Where the children get along well, it's fine for two or more of them to be co-executors. But not where they're estranged.

It can take a while to administer an estate but it usually doesn't take long to probate a Will absent a contest. If the Will provides for the children equally, a contest is unlikely.

You are correct that revocable trusts are not commonly used in New York. Nothing in the original post would suggest the need for one in this case. It would probably be a distraction in this case.
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Re: Suggestions for reducing estate issues?

Post by Bobby206 »

alpenglow wrote: Mon Aug 31, 2020 1:09 pm I've been handling my Mom's finances (at her request) since the death of my Dad a number of years ago. After the recent death of a close friend, my Mom starting asking questions about wills and estates. To be honest, that is my weakest area in personal finance. My sister and I are currently estranged and there is a desire to make settling the estate as clear cut as possible. Liquid assets are held at Vanguard with both of us as beneficiaries 50/50. That shouldn't be a problem. The will has the house to be split 50/50 as well. There is also some art and silver in the house that is of value. I am currently listed as the executor, but for some reason my Mom has raised the idea of making us co-executors, which I think would be a disaster since my sister refuses to communicate and it likely won't change. Her finance knowledge is also very poor. What can I advise my Mom to do to minimize future issues? Would a trust be of any help here? This is in NY if it matters.
Co-executors should always be avoided in my opinion. I have seen many nightmares over the years where one sibling (co-executor) will refuse to sign documents to, for example, sell the decedent's house. Seen that one a few times!

Even in the friendliest of cases it causes more stuff that has to be signed by both people so is just a hassle.

One idea might be finding an independent third party (professional fiduciary if they have them in your state, lawyer, CPA, friend, relative) to serve as executor. Just take it out of your hands to avoid conflict and drama.

At least in California a trust is always the recommendation to avoid probate but I have heard other states are less onerous than California so I can't speak to that. I prefer living trusts as they avoid probate at death and they avoid any hassles or issues if the person becomes incapacitated during life.

Good luck.
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alpenglow
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Re: Suggestions for reducing estate issues?

Post by alpenglow »

Thank you for the advice so far. I will share this thread with my Mother. Even though it will come at a cost, perhaps an outside executor is the best option. My number one goal is to avoid future issues with a very hostile (for no good reason I might add) sibling.
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Re: Suggestions for reducing estate issues?

Post by bsteiner »

Bobby206 wrote: Mon Aug 31, 2020 4:20 pm ...
At least in California a trust is always the recommendation to avoid probate but I have heard other states are less onerous than California so I can't speak to that. ...
There are probably about 49 other states where probating a Will and dealing with the probate court are less difficult than in California.
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Re: Suggestions for reducing estate issues?

Post by FIREchief »

alpenglow wrote: Mon Aug 31, 2020 1:09 pm The will has the house to be split 50/50 as well.
Does this mean that the house is to be sold and the proceeds split 50/50? Or, does it mean that the house will be owned by you and your sister 50/50? The second one would scare the heck out of me..... :twisted:
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Re: Suggestions for reducing estate issues?

Post by Bobby206 »

bsteiner wrote: Mon Aug 31, 2020 4:53 pm
Bobby206 wrote: Mon Aug 31, 2020 4:20 pm ...
At least in California a trust is always the recommendation to avoid probate but I have heard other states are less onerous than California so I can't speak to that. ...
There are probably about 49 other states where probating a Will and dealing with the probate court are less difficult than in California.
No doubt but a trust still might be significantly easier and cheaper than a probate in many of those 49 states AND a trust provides better protection at disability than no trust in my experience. Attorney drafted POAs are not honored by banks at least here in California though attorney drafted trusts are - makes zero sense to me. I am not saying trusts are the answer to all estate issues but they can be beneficial in many of those 49 states you mention I am guessing though I am not licensed in those states so just a hunch.
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alpenglow
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Re: Suggestions for reducing estate issues?

Post by alpenglow »

FIREchief wrote: Mon Aug 31, 2020 5:57 pm
alpenglow wrote: Mon Aug 31, 2020 1:09 pm The will has the house to be split 50/50 as well.
Does this mean that the house is to be sold and the proceeds split 50/50? Or, does it mean that the house will be owned by you and your sister 50/50? The second one would scare the heck out of me..... :twisted:
Good point. The will isn't in front of me but I'll have to discuss that with her. Co-ownership would be an absolute nightmare.
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Re: Suggestions for reducing estate issues?

Post by Freetime76 »

alpenglow wrote: Mon Aug 31, 2020 1:09 pm I've been handling my Mom's finances (at her request) since the death of my Dad a number of years ago. After the recent death of a close friend, my Mom starting asking questions about wills and estates. To be honest, that is my weakest area in personal finance. My sister and I are currently estranged and there is a desire to make settling the estate as clear cut as possible. Liquid assets are held at Vanguard with both of us as beneficiaries 50/50. That shouldn't be a problem. The will has the house to be split 50/50 as well. There is also some art and silver in the house that is of value. I am currently listed as the executor, but for some reason my Mom has raised the idea of making us co-executors, which I think would be a disaster since my sister refuses to communicate and it likely won't change. Her finance knowledge is also very poor. What can I advise my Mom to do to minimize future issues? Would a trust be of any help here? This is in NY if it matters.
Absolutely not should she do a co-executor. If she does it, tell her you will bow out and let the financially illiterate sister do it alone. Fair warning. It is so not worth the hassle if you don’t get along and communicate.

Absolutely not should she title the house to both of you - not now and not after death. A litany of reasons...my mother almost did this. It would’ve been an absolute nightmare, and she lives in a state where a partition action to force the sale is (supposedly) not a big deal.

If there might be sibling issues, then her will might specify that the executor gets final say in selling the house and in who gets a specific item. Or put in the will that the house must be sold, and state who is to receive special items. And/or have a third party deal with it all.

Is there something that’s makes parents put on rosy-sunshine glasses and think their kids are magically going to get along *better*, after death, in all the high stress, emotional situations that ensue? Or are they onery and looking for entertainment? (My own family could go either way...)
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Re: Suggestions for reducing estate issues?

Post by Eagle33 »

If the value of the house is less than or equal to the liquid assets, then will the house to just one person plus enough of liquid assets to equalize the value to each beneficiary. Get an appraisal of the valuables in the house and determine if these will cause house value to exceed liquid assets. Basically try to divide the estate value now into the least shared pieces.
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Re: Suggestions for reducing estate issues?

Post by alpenglow »

Eagle33 wrote: Mon Aug 31, 2020 10:54 pm If the value of the house is less than or equal to the liquid assets, then will the house to just one person plus enough of liquid assets to equalize the value to each beneficiary. Get an appraisal of the valuables in the house and determine if these will cause house value to exceed liquid assets. Basically try to divide the estate value now into the least shared pieces.
I have considered that idea as well, because it would be a completely clean break. Of course, I imagine there could be other issues that come up with this arrangement.
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Re: Suggestions for reducing estate issues?

Post by bayview »

alpenglow wrote: Tue Sep 01, 2020 7:10 am
Eagle33 wrote: Mon Aug 31, 2020 10:54 pm If the value of the house is less than or equal to the liquid assets, then will the house to just one person plus enough of liquid assets to equalize the value to each beneficiary. Get an appraisal of the valuables in the house and determine if these will cause house value to exceed liquid assets. Basically try to divide the estate value now into the least shared pieces.
I have considered that idea as well, because it would be a completely clean break. Of course, I imagine there could be other issues that come up with this arrangement.
If neither adult child wants to keep the house, the one who gets it will have to deal with the hassle of selling.
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Re: Suggestions for reducing estate issues?

Post by Luckywon »

I think dividing the art and silver could be straightforward, if your mother is on board with attempting to avert any issues. Ask her to catalogue the major pieces and divide them into two halves and direct which half each of you receive. It might further help to avert problems if she assigned a monetary value to each piece to be given in lieu of from the estate if the piece was lost prior to distribution.
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