OT: any CPA's here?

[Richard]

so as POA and Trustee I sold everything the first business day after his death.

Although I know your intentions were honorable and today, this is all past history BUT... it might be worth knowing that technically, the moment your father passed away, your POA (Power of attorney) ALSO ceased to exist. You included Trustee, so you would have been either the trustee or a successor trustee (unclear given your comments) and in that capacity, could have done the trade.

I just want people who see the "POA" part to understand that once the grantor of any POA passes away, that authority passes away with them and is useless.

It's being a Trustee that saves your hiney!!

(again, this isn't legal advice, just stories as they come to me)

Having POA is great as long as the person is breathing...once they pass away, it's useless. What THEN becomes real handy dandy to have is being appointed successor trustee of the trust... you can bypass a LOT of headaches that way.

The real thing that saved California's hiney here was that his father went ahead and consolidated his certificates into an account (and ANY broker/dealer can do this... they will all show them consolidated on an account statement)

Anyways... His father simply signed a bunch of certificates or stock powers and the whole problem was DONE. Had his father NOT done so... then for each different company, California (or whomever was executor) would have had to obtain a SET of legal forms for each individual security.

Too bad there's still no one with a clue on my original question... my attempts locally have also been met with blank stares


Perhaps a change in flavor...

How's this...

If a 401 is comprised of 95K pretax contributions and 5K of after tax contributions... AND if we are required to take an RMD out...

If we can get the 401K company to SPLIT the cash like is in fact happening and give him a rollover check for 95K to bring to me, and a 5K after tax check that's HIS... Can he keep that 5K check and apply it AS his RMD for this year?? even though it's not taxable?




Just to clear the air...I'm now more asking just for intellecutual curiosity... I'm really beginning to gravitate towards simply using the last 12/31 statement (which is inflated by counting the non-taxable part) and be safe about it.... If he can find the answer he's willing to live with through HIS accountant...then I can live with it too... if he's going to rely on MY thoughts, then I'm going to go conservative and simply suggest using the inflated amount and get it over with. It will ONLY be for this single year so it won't be an ongoing problem.

 

[Richard]

Vodaphone, a british corp that had bought PacBell's cell phone division, was the only position I hadn't gotten into the account in time. It dropped from $45 to $13 per share before I could get control over it and get it sold.

I just noticed that... and you bring up a very important reality... a LOT can happen between date of death and clearing things up. That is (unfortunately for you) a very significant example. Hopefully he only owned 5,000 shares and not 25,000,000 shares

BTW, sorry to hear about this situation with you.

 

[ultrarunner]

trusts require annual tax filings of their own and any taxable income is taxed at a high rate.
your heirs will sell off any assets of yours they don't want.

Is a Living Trust always a better option vs. a will?

 

[California]

Having POA is great as long as the person is breathing...once they pass away, it's useless. What THEN becomes real handy dandy to have is being appointed successor trustee of the trust... you can bypass a LOT of headaches that way.

Yes it was a bit of a gamble, that my decision to liquidate wouldn't be challenged. I was willing to bet my own money and others' (our inheritance) that I had timed the market correctly. That $45 to $13 drop in the one asset I couldn't control illustrates that I guessed right.

But the important point here was that the stocks were sold *within* the overall trust account managed at Fidelity and the cash simply moved over to the Cash column *within* the Fidelity blanket account monthly statements. It was all still there visible and untouched, with a clear audit trail, when I wrote the inheritance checks to the heirs later.

Since no money departed the Trust upon the stock liquidation there was no risk of personally standing liable for restitution. Worst case, in case of a challenge, I expect a probate judge would rule that holding the estate (trust) as all cash was a reasonable management choice.

Sometimes you gotta do what you gotta do, and hope it looks clean in hindsight. The numbers here show I avoided losing at least 20% of the value of the estate that would have disappeared in the falling market.

Everybody should have a succession plan in place.

 

[DUMBDOG]

Is a Living Trust always a better option vs. a will?

In my opinion, yes. With a Living Trust, there is no additional tax returns, income is taxed to the owner of the trust, upon death, there is no probate. A person should also have a will, just in case something was not put into the trust.

I am a CPA, although I have not practiced for over twenty five years, instead preferring a life where I was contributing to society rather than being just a mindless pencil pusher.

 

[California]

Originally Posted by ultrarunner
Is a Living Trust always a better option vs. a will?

In my opinion, yes. With a Living Trust, there is no additional tax returns, income is taxed to the owner of the trust, upon death, there is no probate. A person should also have a will, just in case something was not put into the trust.

I am a CPA, although I have not practiced for over twenty five years, instead preferring a life where I was contributing to society rather than being just a mindless pencil pusher.

I'll second that Yes, at least most of the time. Probate is a method for distributing an estate per the wishes of the deceased while resolving conflict among heirs. Absent conflict, the outside 'arbitrator' is a needless expense.

A well-written Trust document will declare that any beneficiary has the right to demand review, and remedy, of the trustee's actions by the probate courts. Where the trustee has been given clear direction in the trust document and all beneficiaries agree this course is what they want, then using a Trust will avoid a lot of complexity and time wasted.

In my case that I described above, the ability to sell instantly during a market crash was priceless. If I had needed to petition a court for approval, a fifth of the estate would have been lost while waiting for permission to proceed.

Obviously, granting this much uncontrolled authority to one person has risks. But the right of other beneficiaries to force the estate into probate court is a backup that protects the non-trustee beneficiaries.

A trust also avoids the waste of funds that would be applied to get through probate - attorney fees, mandated executor fees (I didn't claim any), fees for formal accounting. I simply distributed copies monthly of the Fidelity Investments monthly statement listing all Trust assets, and figured that was a sufficient accounting to the other heirs. Probate accounting would require that same information to be restated in a different style to the benefit of no one but an expensive CPA required to certify that it does correctly repeat what was on the Fidelity statement.

I think most trusts are accompanied by a PourOver Will. This states that any decedent's assets that might fall outside the trust, are to be added into the trust for administration.

 

[ultrarunner]

Thanks for the input... I really should get on the ball and do something... it just never been a priority since I'm single.

Interesting point on the Living Trusts... I been close to several living Trusts that have gone a stray... and they all had provisions that should any heir contest the Trustee, that heir's proceeds shall be reduced to $1.

In one case, it's been 9 years and the heirs have never received ANY accounting... about 5 years ago each heir received a disbursement check along with the "contest" clause.

Each of the Daughter in Law's had a separate 25K individual CD, POD account with the deceased that was closed by power of attorney 2 days prior to the Trust Makers Death.

The Daughters in Law's were told that the account was a little remembrance as they were not named in the Trust. The accounts with interest had been in place for many years...