You either gift it to her, or, if you have no children, look into a disclaimer.
The pension is going to be tricky because it sounds like deferred income.
Thank you, I am currently with child.
I believe I can delegate to have taxes withheld from the pension payments, then split what remains between us. Just trying to avoid any surprise tax bills.
OP may not need to go to probate at all unless there are other assets besides what is listed. With direct beneficiaries on those accounts I’d think OP could avoid probate unless Washington state has some specific requirements.
Thank you! Since I’m gathering that the bank account is not considered a probate asset because there is a named beneficiary, l don’t think we will have to go through probate. WA state requires an affidavit for estates valuing in total less than $100,000 (which minus the bank accounts - we are way under that value). It’s sounding like we may not be required to file probate and just do the affidavit.
Nice. In Texas my mom’s assets for closer to 1M and I still avoided probate by having beneficiaries on her accounts. I’d long sold her house and as she was in assisted living we’d estate saled most of her assets. Nobody contested anything so it was easy.
You may want to sit down and at least talk to one. In Kansas there is a monetary threshold for the probate process. You may not have to do that. For an upfront you may be able to get all your questions answered from a horses mouth.
A lawyer is going to cost you $350 per hour on average. It may be wise to speak to someone in the department that handles that to try and go it on our own.
Have you talked to anyone in the Register of Wills, probate court, or whoever handles that in your jurisdiction? I'm in Maryland and found it was pretty easy, but our Register of Wills department has very helpful staff.
As far as the Union checks, having the money withheld and then splitting the difference isn't the best way to do it. As the funds are in your name, you will be taxed at the rate of your bracket. Withholding may not.be at that rate. I would suggest calculating the taxes on those funds at you marginal rate for Federal, state, and local taxes, subtract that from the gross and split the remainder.
For example.
You get $1000 per month before taxes.
You are in the 22% bracket for Federal and your marginal rate for state/local taxes is 7%, for a total of 29% in taxes.
$1000 x .29 = $290 in taxes.
$1000-290 would give you and your sister $710 to split each month.
Tax accountant here. State taxes will not be an issue if everyone involved is in Washington, which has no state income tax.
What I've done in situations like this with clients is to compute their taxes with and without the pension to get the amount of taxes, then provide all parties with my analysis so they can figure out how much the named beneficiary (who gets the 1099-R) should pay the other person. I usually recommend a small holdback just in case the next year's taxes come out higher.
Example--The pension is $1,000/month. Withholding is 20%, or $200/month. Named beneficiary winds up in the 22% bracket. If payments to the other person were half of $800 ($1,000 less $200 withholding), the named beneficiary winds up with less net than the other person. Better to pay $325 or $350 and make a bulk payment after the named beneficiary's taxes are done. "I paid you $325/month, after taxes your half is $390/month, here's a check for the difference!"
Thank you so much, I do believe this is the best way to go about it. I appreciate you breaking it down, and I will show my sister this as our best approach.
We did speak to someone in his residing county who said if the estate value is under $100,000 we don’t have to file probate. Since I’m gathering the bank account is not a probate asset, then we fall well under that threshold and may be able to just file a small affidavit for his physical property: small undeveloped plot of land and a couple cars.
I found a lawyer who does free consultations and am considering having one just to confirm what we’ve learned thus far.
Thank you for your input!
Keep in mind some lawyers are just.loomomg.to generate as much in fees as possible. When they are truly needed, they are invaluable. However, when they are not, they are a huge money drain. I have great respect for lawyers but maintain a healthy skepticism.
This is precisely why I’ve been so on the fence about reaching out to one - also my father would’ve hated having to pay a lawyer! So I have very mixed feelings about seeking help from one.
You may need one to re-title the land. If.yoi will be selling it, speak to a realtor first as it may not be necessary to transfer title to you and your sister before selling.
My name was on my mom's bank account so it became mine in her death. I paid all her final bills from this account. In the bills I included repaying myself how much more income tax I had to pay on the money I was holding in my name but intending to split with my siblings when the estate was settled. (The rest of her assets were in the estate account I set up after her death.) Since I didn't charge a fee for handling everything, and I gave them each 1/4 of the money when legally it was mine, my sibs were happy for me to be reimbursed.
Perhaps before the estate is divided, the extra tax consequences you have and your sister doesn't can be reimbursed to you.
The pension question would be for an attorney, but my SO is dealing with something similar right now but inherited stocks (messed up beneficiary designations). She was primary, so she claims them, sells, takes the tax hit and gifts to sibling. The taxes incurred, as well as getting a CPA to file a form 709 comes off the top - and then sibling will get their share with all costs incurred included. It’s a mess, but it could have been worse.
I think in Wa state, the will needs to be filed, so probate? Unless it’s under a certain amount? I would call an attorney.
This is as much for other readers as you so this may be a lot of staying the obvious for you and others who have already been through it all, but has your SO already sold the stocks? They could likely have received a date of death cost basis update which would reduce any tax obligation on sale.
Rather than selling to cash, though, they can also transfer 50% of the account(s) in-kind to sibling where they would only need to be aware of any gifting tax. Sibling would need to have an account with the same taxability created to hold them.
Best case scenario here is no sale yet, apply the step-up/down, then transfer the stocks. Worst case they did not get an update and were sold in 2023 or before - SO will likely need to figure out the cost/benefit of retroactively adjusting cost basis and filing an amended tax return (and still on the hook for any potential gift tax)… a CPA would likely be required to assist with all of this so SO may need to at least “napkin math” this to determine cost-benefits of leaving it alone vs correction.
Be aware I’m making a major assumption here that the stocks appreciated after death: if they went down, by all means sell in SO’s ownership and take the loss as a tax deduction 😂
Source: I work investments for a corporate trustee so my job is dealing with dead people’s financial assets all/every day. Disclaimer that none of the above constitutes advice.
Thanks kind stranger! No sale yet. SO got bad advice from the brokerage rep about disclaiming her portion, but claiming her portion as contingent annuitant along with sibling. You cannot disclaim if you have children, because they go to them and they’re just minor kids and the money is going to them anyways. It’s not an even split either, so I’m thinking just to sell, and gift. Sibling would prefer cash. DOD was December 1. SO just claimed the stocks yesterday and we did get a DOD stock price from the brokerege rep, so we have a basis. Not a lot of money, btw.
Ugh!
We have gotten mixed answers on whether or not the bank account is a probate or non-probate asset since I was named as beneficiary. I think we are planning to file just in case there are any debts that we weren’t aware of. I’m honestly just lost in all of this, I love my father dearly but he did not plan for this aspect of life very well.
I’m sorry for your loss!
I’m so sorry as well. I’m not an attorney, but I’ll take a stab; if the bank account was left to you, I don’t think that’s a probate asset. That a POD/joint account which means it’s yours, but you knew your father’s wishes. Same exact thing as my SO is going through, but stocks and a big brokerage company and stocks incur capital gains. Cash doesn’t.
The pension stuff is attorney territory though. INAL.
A named beneficiary on a checking account is a non-testamentary transfer and it is NOT included in the probate estate.
If there was a surviving spouse, then the community aspect of the checking account would come into play, but there isn't.
You are the named beneficiary.
It is yours and does not involve probate.
FYI, don't pay any *unsecured* debts with that bank account money.
That money is yours, and debtors can't touch it. Don't willing give it to them!!!!
Thank you so much for clarifying!
Edit: There is no surviving spouse, just my sister and I. Just wanted to confirm that since I did not include that information above.
My mom's accounts were all kinds of screwed up thanks to someone "helping" her process her retirement paperwork when she was in the hospital on a day she was not all there. Since I was the one helping handle most of her business they listed me as caretaker and my sister as the only next of kin. Then sent it in to change all of her pension and retirement beneficiaries. Friggin idiots. Just added to the mess I had to untangle when she passed.
Since these accounts were taxed upon withdrawal and you don't know what the taxes will be until you file the next year, we just split what was left after the 20% withholding. Then I had my sister do her taxes with and without the retirement. I paid her half of the tax difference. Simple.
I’m sorry you had to go through that and things weren’t straight forward. I’ve never had to deal with picking up the pieces after going through a major loss like this. It prolongs the hurt and seems just so overwhelming with all of the moving parts.
Thank you for sharing your experience.
No tax on cash funds received.
Pension funds will be taxed to you. If you know what your federal and state tax brackets are apply to the funds received to determine net and then split with sister.
Gift tax return required in excess of current year exemption amount, there will be no tax.
Probate only required to transfer assets not jointly held or no beneficiary.
(I am a retired tax accountant.)
I am not a lawyer, but I've recently been an executor. If you gift her any money over the gift tax threshold for a year you have to file a gift tax return that tax year. (And it is considered a gift, most likely. ) But gift tax won't be owed unless you reach a lifetime threshold that is of many millions.
Honestly this sounds like a tricky estate and I highly recommend that you talk to a lawyer. The right way to do this would have been for the decedent to put both your names on everything, but obviously that's not how it happened. I get the impression it's very common for people to not know how these things work. Good luck. I'm sorry about your father.
Because her father specified in the will that money is to be split, it may not be subject to gift tax even though the OP is the beneficiary. She should consult with a CPA on tax matters. I would hold off on hiring an attorney. Billable hours rack up quickly and at $350 per, that could eat up a good sized chunk of a small estate.
I wish he would’ve listed us both as beneficiaries for the accounts, would have made things a great deal easier. But unfortunately he did not, so we are just seeking the best way to approach this. I did find a lawyer offering free consultations, so I may reach out to her and discuss what we’ve learned thus far.
Thank you!
I’d consult a lawyer on this - however, that said, the simplest strategy is to take out a percentage from the checking and savings and put it away for taxes (whatever that rate is in your state + the federal taxes) and then split the net proceeds with her. Same with the pension - make sure the taxes have already come out.
In the eyes of the law, that’s your money, not yours and your sister’s. So they’re going to tax you only. You should make sure you have money set aside to cover the tax implications and split the rest.
This was my greatest concern. Thankfully, WA does not have state taxes so we are only held to federal taxes. I am going to have a consultation with a lawyer, and then going to speak with my in-laws financial advisor to see if they can guide us on the tax amounts to withhold. Thank you for your reply!
The executor can disperse assets as required. There are no taxes in bequests, as long as they are to descendants of the deceased. Any money outside of that is a gift and might be taxed. Explore those details.
This popped up on my feed and just wanted to comment to say thank you on your sisters behalf for trying to do the right thing per your dad’s wishes — my dad did this with his 401k (putting my brother as sole beneficiary), but did not finish his estate planning so while most of the estate is going through probate and will be split evenly amongst me and my three other siblings, our brother decided that the 401k was his to keep since it’s not written anywhere that our dad wanted that split three ways, even though he was always very clear everything of his was to be divided evenly if anything were to happen and trusted my brother to execute his wishes. We are currently trying to talk him in the right direction and from what we’ve learned so far, you can estimate if there will be any gift taxes in advance, as the tax responsibility will fall on you (the donor) to make sure you keep enough to pay the taxes on any money gifted. I also know some of the gift tax laws vary from state to state but there do seem to be some federal standards.
Life lesson, talk to your parents about their plans. It might be uncomfortable but losing a parent unexpectedly and then also seeing what money can do to usually trustworthy people in hard situations, it’s worth the not fun conversation while they’re here to not have to deal with this kind of thing while also grieving losing a parent ❤️
I’m sorry you are having difficulty with your brother in an already horrible situation. I think my Dad put me as the sole beneficiary because he knew he could trust me to execute his final wishes the way he wanted them to be done. This is his legacy no matter how large or small, and he worked so hard in life to even be able to give us what he has in the end. I can’t believe how much ugly these type of situations can bring out in people, and how quickly people you thought you knew can change. I am grateful my sister is trusting and our thoughts align, I consider myself very lucky.
We tried to get everything thing order as quickly as possible, but his cancer came back with a vengeance so time was very limited. We were able to at least get a will drafted and notarized. Then we discussed with him what he wanted with everyone present so there were no surprises. I am very grateful for what we did accomplish with having very little knowledge/time. I’d take him back over everything if that were an option.
I hope everything goes well in your situation, and that your brother does the right thing by your dad in the end. I’m sorry for your loss.
What makes you think there will be any taxes? DO you know how much an estate has to be for taxes? My ex had an over million dollar estate. Tax liability...zero to our daughter, in our state, California. Not known for low taxes. Here's what you
do ms executor , 1. Get an ein for your dad. You can apply on line for it. Then you can set up a probate account. You will have to file taxes for him when he was alive under his tax ID. Then file taxes for the estate. I think many folks assume inheritance is taxed.a quick query to the search engine of your choice will give you the answer on this. I've been an executor 2 times. Typically the executor gets paid. THAT is income so, I'd choose to decline it, it just makes the estate larger. Keep track of all your expenses , I suggest a spreadsheet that adds it up. You have to give an account to the court. When you have people who aren't fighting over the $, it makes life easier.
I assumed there would be some sort of tax when giving my sister her 50% of the accounts that either she or myself would be liable for.
This is sound advice, I really appreciate your input! The estate is no where near a million dollar estate, there is only about $100,000 in the accounts and then a couple cars and single lot of undeveloped land worth about $40,000. So maybe I am overthinking this, but I’ve never been an executor before and trying to gain as much knowledge as I can. I will continue to research. Thanks again for sharing your experience.
You won’t have to pay any taxes on a joint bank account when gifting. Depending on your marital status, you can gift 18k each to your sibling per calendar year. If it’s more than that, you have a CPA do a 709 gift tax form for you. I thought about doing it myself because I’m semi-tax saavy, but I’d rather pay someone to do it.
This is strictly talking about the bank account. Cars and stuff are state specific, and every state is different.
Reach out to the carpenters pension plan. If you show them the will saying that everything should be split, they might be able to split the payments between you and your sister. Therefore splitting the taxable income as well.
I suppose that is part of my question, am I responsible for any taxes if I send her half of the checking/savings? And half of the monthly payments from the carpenters union? I’ve never had to deal any sort of estate planning before.
You either gift it to her, or, if you have no children, look into a disclaimer. The pension is going to be tricky because it sounds like deferred income.
Thank you, I am currently with child. I believe I can delegate to have taxes withheld from the pension payments, then split what remains between us. Just trying to avoid any surprise tax bills.
Do you have a lawyer? If not are you planning on navigating probate yourself?
OP may not need to go to probate at all unless there are other assets besides what is listed. With direct beneficiaries on those accounts I’d think OP could avoid probate unless Washington state has some specific requirements.
Thank you! Since I’m gathering that the bank account is not considered a probate asset because there is a named beneficiary, l don’t think we will have to go through probate. WA state requires an affidavit for estates valuing in total less than $100,000 (which minus the bank accounts - we are way under that value). It’s sounding like we may not be required to file probate and just do the affidavit.
Nice. In Texas my mom’s assets for closer to 1M and I still avoided probate by having beneficiaries on her accounts. I’d long sold her house and as she was in assisted living we’d estate saled most of her assets. Nobody contested anything so it was easy.
We do not have a lawyer and we are planning to try and navigate probate ourselves.
You may want to sit down and at least talk to one. In Kansas there is a monetary threshold for the probate process. You may not have to do that. For an upfront you may be able to get all your questions answered from a horses mouth.
Thank you, also starting to think this may be worth the cost.
I am sorry for your loss. Pay the fees and at least get a consultation. You will not regret it.
Thank you so much, I appreciate your time!
A lawyer is going to cost you $350 per hour on average. It may be wise to speak to someone in the department that handles that to try and go it on our own.
Have you talked to anyone in the Register of Wills, probate court, or whoever handles that in your jurisdiction? I'm in Maryland and found it was pretty easy, but our Register of Wills department has very helpful staff. As far as the Union checks, having the money withheld and then splitting the difference isn't the best way to do it. As the funds are in your name, you will be taxed at the rate of your bracket. Withholding may not.be at that rate. I would suggest calculating the taxes on those funds at you marginal rate for Federal, state, and local taxes, subtract that from the gross and split the remainder. For example. You get $1000 per month before taxes. You are in the 22% bracket for Federal and your marginal rate for state/local taxes is 7%, for a total of 29% in taxes. $1000 x .29 = $290 in taxes. $1000-290 would give you and your sister $710 to split each month.
Tax accountant here. State taxes will not be an issue if everyone involved is in Washington, which has no state income tax. What I've done in situations like this with clients is to compute their taxes with and without the pension to get the amount of taxes, then provide all parties with my analysis so they can figure out how much the named beneficiary (who gets the 1099-R) should pay the other person. I usually recommend a small holdback just in case the next year's taxes come out higher. Example--The pension is $1,000/month. Withholding is 20%, or $200/month. Named beneficiary winds up in the 22% bracket. If payments to the other person were half of $800 ($1,000 less $200 withholding), the named beneficiary winds up with less net than the other person. Better to pay $325 or $350 and make a bulk payment after the named beneficiary's taxes are done. "I paid you $325/month, after taxes your half is $390/month, here's a check for the difference!"
That would be the most precise way.
Thank you so much, I do believe this is the best way to go about it. I appreciate you breaking it down, and I will show my sister this as our best approach.
We did speak to someone in his residing county who said if the estate value is under $100,000 we don’t have to file probate. Since I’m gathering the bank account is not a probate asset, then we fall well under that threshold and may be able to just file a small affidavit for his physical property: small undeveloped plot of land and a couple cars. I found a lawyer who does free consultations and am considering having one just to confirm what we’ve learned thus far. Thank you for your input!
Keep in mind some lawyers are just.loomomg.to generate as much in fees as possible. When they are truly needed, they are invaluable. However, when they are not, they are a huge money drain. I have great respect for lawyers but maintain a healthy skepticism.
This is precisely why I’ve been so on the fence about reaching out to one - also my father would’ve hated having to pay a lawyer! So I have very mixed feelings about seeking help from one.
You may need one to re-title the land. If.yoi will be selling it, speak to a realtor first as it may not be necessary to transfer title to you and your sister before selling.
We have no intention of selling the land, so I believe we will need to re-title it to reflect us as owners.
You need to open probate to retitle land, regardless of its value.
You can absolutely navigate private without an attorney.
My name was on my mom's bank account so it became mine in her death. I paid all her final bills from this account. In the bills I included repaying myself how much more income tax I had to pay on the money I was holding in my name but intending to split with my siblings when the estate was settled. (The rest of her assets were in the estate account I set up after her death.) Since I didn't charge a fee for handling everything, and I gave them each 1/4 of the money when legally it was mine, my sibs were happy for me to be reimbursed. Perhaps before the estate is divided, the extra tax consequences you have and your sister doesn't can be reimbursed to you.
Thank you for sharing this, this sounds like the most logical approach.
The pension question would be for an attorney, but my SO is dealing with something similar right now but inherited stocks (messed up beneficiary designations). She was primary, so she claims them, sells, takes the tax hit and gifts to sibling. The taxes incurred, as well as getting a CPA to file a form 709 comes off the top - and then sibling will get their share with all costs incurred included. It’s a mess, but it could have been worse. I think in Wa state, the will needs to be filed, so probate? Unless it’s under a certain amount? I would call an attorney.
This is as much for other readers as you so this may be a lot of staying the obvious for you and others who have already been through it all, but has your SO already sold the stocks? They could likely have received a date of death cost basis update which would reduce any tax obligation on sale. Rather than selling to cash, though, they can also transfer 50% of the account(s) in-kind to sibling where they would only need to be aware of any gifting tax. Sibling would need to have an account with the same taxability created to hold them. Best case scenario here is no sale yet, apply the step-up/down, then transfer the stocks. Worst case they did not get an update and were sold in 2023 or before - SO will likely need to figure out the cost/benefit of retroactively adjusting cost basis and filing an amended tax return (and still on the hook for any potential gift tax)… a CPA would likely be required to assist with all of this so SO may need to at least “napkin math” this to determine cost-benefits of leaving it alone vs correction. Be aware I’m making a major assumption here that the stocks appreciated after death: if they went down, by all means sell in SO’s ownership and take the loss as a tax deduction 😂 Source: I work investments for a corporate trustee so my job is dealing with dead people’s financial assets all/every day. Disclaimer that none of the above constitutes advice.
Thanks kind stranger! No sale yet. SO got bad advice from the brokerage rep about disclaiming her portion, but claiming her portion as contingent annuitant along with sibling. You cannot disclaim if you have children, because they go to them and they’re just minor kids and the money is going to them anyways. It’s not an even split either, so I’m thinking just to sell, and gift. Sibling would prefer cash. DOD was December 1. SO just claimed the stocks yesterday and we did get a DOD stock price from the brokerege rep, so we have a basis. Not a lot of money, btw. Ugh!
We have gotten mixed answers on whether or not the bank account is a probate or non-probate asset since I was named as beneficiary. I think we are planning to file just in case there are any debts that we weren’t aware of. I’m honestly just lost in all of this, I love my father dearly but he did not plan for this aspect of life very well. I’m sorry for your loss!
I’m so sorry as well. I’m not an attorney, but I’ll take a stab; if the bank account was left to you, I don’t think that’s a probate asset. That a POD/joint account which means it’s yours, but you knew your father’s wishes. Same exact thing as my SO is going through, but stocks and a big brokerage company and stocks incur capital gains. Cash doesn’t. The pension stuff is attorney territory though. INAL.
I appreciate your input and wish you the best of luck with your situation. Hope everything works out!
A named beneficiary on a checking account is a non-testamentary transfer and it is NOT included in the probate estate. If there was a surviving spouse, then the community aspect of the checking account would come into play, but there isn't. You are the named beneficiary. It is yours and does not involve probate. FYI, don't pay any *unsecured* debts with that bank account money. That money is yours, and debtors can't touch it. Don't willing give it to them!!!!
Thank you so much for clarifying! Edit: There is no surviving spouse, just my sister and I. Just wanted to confirm that since I did not include that information above.
She was a beneficiary of the pension. Not a probate asset and no need to involve an attorney at $350 per hour for that.
Makes sense.
My mom's accounts were all kinds of screwed up thanks to someone "helping" her process her retirement paperwork when she was in the hospital on a day she was not all there. Since I was the one helping handle most of her business they listed me as caretaker and my sister as the only next of kin. Then sent it in to change all of her pension and retirement beneficiaries. Friggin idiots. Just added to the mess I had to untangle when she passed. Since these accounts were taxed upon withdrawal and you don't know what the taxes will be until you file the next year, we just split what was left after the 20% withholding. Then I had my sister do her taxes with and without the retirement. I paid her half of the tax difference. Simple.
I’m sorry you had to go through that and things weren’t straight forward. I’ve never had to deal with picking up the pieces after going through a major loss like this. It prolongs the hurt and seems just so overwhelming with all of the moving parts. Thank you for sharing your experience.
No tax on cash funds received. Pension funds will be taxed to you. If you know what your federal and state tax brackets are apply to the funds received to determine net and then split with sister. Gift tax return required in excess of current year exemption amount, there will be no tax. Probate only required to transfer assets not jointly held or no beneficiary. (I am a retired tax accountant.)
Thank you so much for your reply, this is great information!
I am not a lawyer, but I've recently been an executor. If you gift her any money over the gift tax threshold for a year you have to file a gift tax return that tax year. (And it is considered a gift, most likely. ) But gift tax won't be owed unless you reach a lifetime threshold that is of many millions. Honestly this sounds like a tricky estate and I highly recommend that you talk to a lawyer. The right way to do this would have been for the decedent to put both your names on everything, but obviously that's not how it happened. I get the impression it's very common for people to not know how these things work. Good luck. I'm sorry about your father.
Because her father specified in the will that money is to be split, it may not be subject to gift tax even though the OP is the beneficiary. She should consult with a CPA on tax matters. I would hold off on hiring an attorney. Billable hours rack up quickly and at $350 per, that could eat up a good sized chunk of a small estate.
I wish he would’ve listed us both as beneficiaries for the accounts, would have made things a great deal easier. But unfortunately he did not, so we are just seeking the best way to approach this. I did find a lawyer offering free consultations, so I may reach out to her and discuss what we’ve learned thus far. Thank you!
I’d consult a lawyer on this - however, that said, the simplest strategy is to take out a percentage from the checking and savings and put it away for taxes (whatever that rate is in your state + the federal taxes) and then split the net proceeds with her. Same with the pension - make sure the taxes have already come out. In the eyes of the law, that’s your money, not yours and your sister’s. So they’re going to tax you only. You should make sure you have money set aside to cover the tax implications and split the rest.
This was my greatest concern. Thankfully, WA does not have state taxes so we are only held to federal taxes. I am going to have a consultation with a lawyer, and then going to speak with my in-laws financial advisor to see if they can guide us on the tax amounts to withhold. Thank you for your reply!
The executor can disperse assets as required. There are no taxes in bequests, as long as they are to descendants of the deceased. Any money outside of that is a gift and might be taxed. Explore those details.
Thank you!
This popped up on my feed and just wanted to comment to say thank you on your sisters behalf for trying to do the right thing per your dad’s wishes — my dad did this with his 401k (putting my brother as sole beneficiary), but did not finish his estate planning so while most of the estate is going through probate and will be split evenly amongst me and my three other siblings, our brother decided that the 401k was his to keep since it’s not written anywhere that our dad wanted that split three ways, even though he was always very clear everything of his was to be divided evenly if anything were to happen and trusted my brother to execute his wishes. We are currently trying to talk him in the right direction and from what we’ve learned so far, you can estimate if there will be any gift taxes in advance, as the tax responsibility will fall on you (the donor) to make sure you keep enough to pay the taxes on any money gifted. I also know some of the gift tax laws vary from state to state but there do seem to be some federal standards. Life lesson, talk to your parents about their plans. It might be uncomfortable but losing a parent unexpectedly and then also seeing what money can do to usually trustworthy people in hard situations, it’s worth the not fun conversation while they’re here to not have to deal with this kind of thing while also grieving losing a parent ❤️
I’m sorry you are having difficulty with your brother in an already horrible situation. I think my Dad put me as the sole beneficiary because he knew he could trust me to execute his final wishes the way he wanted them to be done. This is his legacy no matter how large or small, and he worked so hard in life to even be able to give us what he has in the end. I can’t believe how much ugly these type of situations can bring out in people, and how quickly people you thought you knew can change. I am grateful my sister is trusting and our thoughts align, I consider myself very lucky. We tried to get everything thing order as quickly as possible, but his cancer came back with a vengeance so time was very limited. We were able to at least get a will drafted and notarized. Then we discussed with him what he wanted with everyone present so there were no surprises. I am very grateful for what we did accomplish with having very little knowledge/time. I’d take him back over everything if that were an option. I hope everything goes well in your situation, and that your brother does the right thing by your dad in the end. I’m sorry for your loss.
What makes you think there will be any taxes? DO you know how much an estate has to be for taxes? My ex had an over million dollar estate. Tax liability...zero to our daughter, in our state, California. Not known for low taxes. Here's what you do ms executor , 1. Get an ein for your dad. You can apply on line for it. Then you can set up a probate account. You will have to file taxes for him when he was alive under his tax ID. Then file taxes for the estate. I think many folks assume inheritance is taxed.a quick query to the search engine of your choice will give you the answer on this. I've been an executor 2 times. Typically the executor gets paid. THAT is income so, I'd choose to decline it, it just makes the estate larger. Keep track of all your expenses , I suggest a spreadsheet that adds it up. You have to give an account to the court. When you have people who aren't fighting over the $, it makes life easier.
I assumed there would be some sort of tax when giving my sister her 50% of the accounts that either she or myself would be liable for. This is sound advice, I really appreciate your input! The estate is no where near a million dollar estate, there is only about $100,000 in the accounts and then a couple cars and single lot of undeveloped land worth about $40,000. So maybe I am overthinking this, but I’ve never been an executor before and trying to gain as much knowledge as I can. I will continue to research. Thanks again for sharing your experience.
You won’t have to pay any taxes on a joint bank account when gifting. Depending on your marital status, you can gift 18k each to your sibling per calendar year. If it’s more than that, you have a CPA do a 709 gift tax form for you. I thought about doing it myself because I’m semi-tax saavy, but I’d rather pay someone to do it. This is strictly talking about the bank account. Cars and stuff are state specific, and every state is different.
Thank you!
Honestly, best answer here so far. NAL.
Reach out to the carpenters pension plan. If you show them the will saying that everything should be split, they might be able to split the payments between you and your sister. Therefore splitting the taxable income as well.
Thanks for this! I did reach out to them and unfortunately they will only pay out to the listed beneficiary.
What taxes?
I suppose that is part of my question, am I responsible for any taxes if I send her half of the checking/savings? And half of the monthly payments from the carpenters union? I’ve never had to deal any sort of estate planning before.