Re: (OT) Rant re: Mom's Estate - a Cautionary Tale

On Oct 31, 8:58 am, "MaryL" <stanco...@xxxxxxxxxxxxxxxxxxxxxxxxxxxx>
wrote:
"jmcquown" <j_mcqu...@xxxxxxxxxxx> wrote in message

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"MaryL" <stanco...@xxxxxxxxxxxxxxxxxxxxxxxxxxxx> wrote in message
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"MaryL" <stanco...@xxxxxxxxxxxxxxxxxxxxxxxxxxxx> wrote in message
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"jmcquown" <j_mcqu...@xxxxxxxxxxx> wrote in message
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It's almost done.  I got notification from the Probate Court stating as
far as they are concerned the estate is settled.  So I met with a guy
at H&R Block last Thursday to work on her final tax form (Form 1041)..
That's going to cost me $300.  The process seems a little backwards to
me; seems like that should be paid by the estate.  But the monies from
the estate have already been distributed.  That had to be done before
the Probate Court would say it was settled, and this form can't be
filed until after the Probate Court says it's done.  My oldest brother
has agreed to help me pay for this tax filing.  (Obviously I'm not
going to get a dime from the other brother, who did nothing but bitch
because I wouldn't sell the house and give him more money.)

But that's not what I'm upset about.  Dad had an annuity and Mom was
the beneficiary.  After he died she had to name another beneficiary.
She did: Me.  The guy at H&R Block said I needed to call the IRS, ASAP,
because the company withheld 10% taxes on $153,000 under MY social
security number before issuing the check.

Jill

Your last paragraph is good advice.  In fact, anyone named as
beneficiary is normally expected to be the beneficiary of that account,
and that is totally separate from people named in the will.  You can
even name 40% to one person, 40% to another, and 20% to the estate for
other distributions (just an example).  But money listed for a
beneficiary (other than the estate) is not included in bequests made in
the will.  The same is true for insurance policies--money goes directly
to the beneficiary (and the estate can be one), and it is not calculated
when distributing money per the will.  I am also surprised that only 10%
was held back for taxes. That normally is a minimum of 20%.

I'm sorry you are having to go through this.  On the brighter side, you
did get one very important (and valuable) item that went directly to
you, and that was the house.  It is not a liquid asset and does not help
with the payment of taxes, but it is an asset that does not have to be
shared.

MaryL

Now I really *will* appear to be the bearer of bad tidings, on top of my
previous message.  However, I just re-read the part of your message where
you were named the beneficiary and then you distributed that money among
the three of you.  The reason it was reported under your Social Security
number, of course, is that you were the legal beneficiary.  However, the
part that concerns me is that you may have gone *above* the maximum limit
for tax-free gifts.  Unless it has changed, you could give $12,000 per
year to each person without federal tax consequences.  Anything above
that would be taxable, and the *donor* is usually responsible for that
tax.  I am speaking as someone with no legal training, of course, but I
am concerned that there may be some extra tax consequences as a result of
that.  I think you would be wise to ask a professional about that.  You
might even be able to check with H&R Block without any additional cost
since they prepared the form, but this is something that would probably
come out when you prepare your *own* taxes since it's a consequence of
your gift rather than one legally coming from your mother.  One thing I
had my mother do when she was living with me was that she listed the
three of us equally as beneficiaries with POD (payment on death).

Her bank accounts and other investments were all listed as POD.  It was
just this stupid annuity that wasn't.

 I knew that was how she had us listed in her will, but I also knew that
people listed as beneficieries would receive that money directly instead
of theough the estate.The exception was one account where she named
herself and me as joint owners.  Since it was really her money, I felt
that it should be divided.  So, I divided that among us in way her will
specified for anything that might not have been covered.  However, I did
hold a portion until her final tax papers were filed.  I explained that
to my sister and brother and told them that I was holding it for possible
tax payments.  I was a lot more fortunate than you--*much* less money was
involved for us and did not go above the "giftable" limit, but my brother
and sister were always fully supportive of everything I did.  In fact,
they insisted that I keep some extra for myself for all the work I did..
Incidentally, another advantage of following the advice in your last
paragraph is that money that is paid directly to beneficiaries does not
go through probate, and there is no attorney fee attached to it.
(...again, speaking from experience and *not* as a person with any legal
training--and therefore cannot give legal advice)

MaryL

Per the IRS, the "gift limit" is $1 million dollars.  The IRS made sure I
knew about that when I talked to them.  This came nowhere near hitting a
million dollars, but I'm still responsible for the taxes on that friggin
annuity.  I'm not planning on making any gifts.  But thanks for the info
for other people in the U.S. who may run into this situation.

Jill

Doesn't the $1 million actually apply to money coming directly from an
estate but not to a gift given by an individual?  From your description, it
sounds like yours is a gift from you and not from the estate?  I'm
definitely not an expert in this area, and you have already checked with
IRS.  Here's an article describing part of what I was discussing:http://www.fairmark.com/begin/gifts.htm

MaryL- Hide quoted text -

- Show quoted text -

FYI -- An interesting bit of trivia I read the other day.

If the wealth of the entire world were equally distributed among the
planet's inhabitants -- that is, if every man, woman and child
received
a disbursement that would equal all the money in the world, can you
guess how much it would be?

$9,000. Nine thousand dollars.

Kind of puts things in perspective, doesn't it?

Sherry
.

Relevant Pages

  • Re: (OT) Rant re: Moms Estate - a Cautionary Tale
    ... So I met with a guy at H&R Block last Thursday to work on her final tax form. ... The process seems a little backwards to me; seems like that should be paid by the estate. ... But money listed for a beneficiary is not included in bequests made in the will. ... Incidentally, another advantage of following the advice in your last paragraph is that money that is paid directly to beneficiaries does not go through probate, and there is no attorney fee attached to it. ...
    (rec.pets.cats.anecdotes)
  • Re: (OT) Rant re: Moms Estate - a Cautionary Tale
    ... So I met with a guy at H&R Block last Thursday to work on her final tax form. ... The process seems a little backwards to me; seems like that should be paid by the estate. ... Apparently Mom should have specified all three of us as beneficiaries, or at the very least listed her Estate as the beneficiary. ... As far as the IRS is concerned I received all the money, so I'll have to pay them another $16,500! ...
    (rec.pets.cats.anecdotes)
  • Re: (OT) Rant re: Moms Estate - a Cautionary Tale
    ... So I met with a guy at H&R Block last Thursday to work on her final tax form. ... The process seems a little backwards to me; seems like that should be paid by the estate. ... But money listed for a beneficiary is not included in bequests made in the will. ... Incidentally, another advantage of following the advice in your last paragraph is that money that is paid directly to beneficiaries does not go through probate, and there is no attorney fee attached to it. ...
    (rec.pets.cats.anecdotes)
  • Re: (OT) Rant re: Moms Estate - a Cautionary Tale
    ... So I met with a guy at H&R Block last Thursday to work on her final tax form. ... The process seems a little backwards to me; seems like that should be paid by the estate. ... But money listed for a beneficiary is not included in bequests made in the will. ... Incidentally, another advantage of following the advice in your last paragraph is that money that is paid directly to beneficiaries does not go through probate, and there is no attorney fee attached to it. ...
    (rec.pets.cats.anecdotes)
  • Re: (OT) Rant re: Moms Estate - a Cautionary Tale
    ... at H&R Block last Thursday to work on her final tax form. ... seems like that should be paid by the estate. ... because I wouldn't sell the house and give him more money.) ... three of us equally as beneficiaries with POD. ...
    (rec.pets.cats.anecdotes)