Attorney and Estate TAX question..

[Richard]

As I understand it, when somone passes away, the (in this case) Executrix has "two years" in which to settle the estate. My question is do they have two years from "date of death"? or is it December 31 of the second year ATER the date of death?

We have someone with substantial sized estate and the daughter has put dealing with this off... Anyway, the 2 year anniversary is this April or so and I want to suggest to her (if it's correct) that my "suspiecion" is she has (one of the two dates) as a deadline and if that deadline IS in fact April, that we get the paperwork ball rolling.

My plan is to suggest to her what I "think" the deadline is and that she needs to contact her attorney to in fact verify. I just want to have my "thinking" researched!

Any takers?

Thanks
Richard

 

[snowman]

Two years from the date of death, but it's not a big deal if the estate is not closed by then. The intent is to prevent keeping the estate open for tax purposes.

In many cases, the estate may need to be kept open for administrative purposes. A primary example would be if it is subject to audit.

In your specific case, you state that the daughter has done nothing with this "substantial" estate and that the two year anniversary is in April 2002. The Federal estate tax return is required to be filed within nine months (and generally any state estate tax return is also due at the same date) after the date of death. In addition, the estate should/would be filing income tax returns.

If she is the Executrix, she has personally liability for unpaid taxes, penalties, interest. If I were you, I would (a) advise her to get an attorney involved immediately, and (b) I would stay out of it, as my experience is that this type of individual can only cause problems.

 

[MikePA]

I agree 100% with snowman, get an attorney involved ASAP.

When my mother passed away in May, 2000, I was the executor. Some of my siblings suggested that I handle the estate all on my own to save the attorney fees. I went to the extent of buying a book that purported to explain what to do and even filed the will at the court house. After reading the book, I hired an attorney. There are SO many forms that need filed, and not just the tax forms. Welfare agencies want notified (even though my mother was not on welfare), as well as various other local and state agencies get involved. They all want time to review the estate and the deceased to make sure they are not owed any money. Advertising needs to be done, estimated taxes need to be paid, an inventory of all assets needs to be completed, etc. Much better to dump all this in the lap of an attorney. In my case, they more than earned their fee, and my mother did not have a complicated estate, e.g., no real estate to sell.

 

[Richard]

Thanks for reply Snowman..

Given my penchent for excess verbosity..I tried to keep it short and may have been misleading..

All the taxes have been filed and paid. What I find interesting is all that is left to do is disperse the assest to the 3 (total) siblings. Here they sit with over a million in cash and have not taken a plumb nickle out for ANY purpose what so ever. That is what I meant by they haven't done anything.

I can assure you that if I had 1/3 of a mil + estate looking at me...I'd be getting the heck over to Dodge and get the paperwork done. The 3 kids aren't "wealthy" by any means..they ARE self sufficint however.

As this account is just sitting here gathering dust..I'd like her to understand that the clock is ticking, some paperwork will need to be done to disperse the assets..and I'd like to kill the Estate account...time to move on.

Thanks for input.
Richard

 

[Richard]

Mike..

She does have an attorney and an accountant dealing with this. This estate now seems to be on everyones back burner as far as I can tell..which is OK by me personally, I just want to make sure SHE knows that (as I understand now) that the "spirit of the deadline" is this April and that she should verify with her attorney if I'm right..if so...the sooner we deal with this..the better.

Father was a surgon and had substantial assets...all have been liquidated..house, car..toys..blah blah. Now all that is left is his holdings with us sitting in his estate account. Taxes, filed & paid...just now waiting for her/them to decide what they want to do with the $$. If they reinvest..fine. If they want to travel the world...fine. I just don't want her to wait until March 15 to decide what to do and then all of us being in the Oh my God situation trying to beat any deadline (that I now understand isn't set in stone).

To illustrate a touch..She is in one state, I'm here in Tennessee and her siblings are in yet ANOTHER state. So if they decide to do something...not just a stop by & sign...we gotta deal with cross country distances which will lengthen the process some.

Richard

 

[snowman]

If the Executrix has received the tax release from the IRS, then presumably there is no reason to continue the estate. Only she can give you a reason why.

In regards to the two year time limit, that's nothing more than a check box on the estate's income tax return (Form 1041), so it's not a big deal if it goes over the two year period.

Therefore, if the estate has filed everything properly and has received all of the necessary releases, then I agree with you - if I was a beneficiary, I would be asking for my share ASAP.

 

[Harv]

I recently went down the exact same path as Mike. Bought a book, read how to do it and even began the process myself. I ran into so many nuances and legal terms that I wasn't quite sure of, that I quickly decided it was best to get an attorney, so I did (last week).

The good news, at least here in California, is that the attorney fees for a formal probate are dictated by the state, so no matter who I went with, the cost would be the same.

The bad news is that the process will take as much as 9 months or more. Hope those 3 "kids" are not in a hurry now.

 

[MikePA]

Harv,

Settling my mother's estate took 14 months. Most of it was waiting for federal, state and local time periods to expire. For example, the welfare department had 90 days to respond, people had so long to respond to the estate advertisements, etc. My attorney handled everything and all I had to do was sign checks and forms.

I had siblings in other states as well - FedEx was a blessing in getting forms sent, signed and returned.

 

[LazyK]

Harv...1st, my condolances to any and all who lost someone to, "the end of life." Before my Dad, Arthur Kelly, passed away in November, he spoke to me in a very solemn brief conversation: "Don't feel sad that I'll be gone, soon, making sure I'm not late for the date I have with your Mother. It'll be the first time that I won't be worried about lawyers being involved in Family business. I used to agonize over the complexities that faced anyone who died in California with anything more than an overdrafted credit card and an NSF check in their pocket!Old Buddy, (laughing), Mr. Trustee, (big smile) let the lawyers take point and let Sandee (my Wife) cover your '6.' Get everything in writing, be sure they know that the given language of the realm is monosyllabic English. Put off all thoughts of buying a new tractor. If you were smart, you would make the first distribution of Trust Assets to the kids with your own money. (!!!) That will shut the non-combatants up and and let the barristers know that you highly respect the defenders of Masada.Oh, (losing his voice, but still smiling) I'm really glad you have that 1-year's supply of freeze- dried food...He died peacefully two weeks later, but not before reminding me how pleased he was not to have to, "...fiddle-fart," with California lawyers. Hey, at this point, God Bless our Lawyers! Some of the language in the documents are almost as hard to follow as kid's toys instructions.

 

[Richard]

> highly respect the defenders of Masada<

A most fascenating and touching story. I had the privilage (stupidity??) of climbing Masada one day. Truely an amazing story, theirs is.

Richard