question RE: Executor of Estate

[Pandora]

Ok, so I get that if you receive an inheritance it must be reported - not a problem - but what happens if you're the Executor of the Estate and are the one responsible for everything, - and this would also include having limited Power of Attorney while the person is still alive (limited just for medical if this person should become ill/incapacitated/etc( - so the bills can be paid during their remaining lifetime ?

What if one siblings portion of the estate had already been given out 2 years ago as a gift - but the will reads still reads "equally divided between siblings"; but given that siblings portion was already received - they plan on forgoing it upon the death of the relative and just be the Executor of the Will (no fees) - splitting the remaining assets of the estate and life insurance equally between all other parties ??? If, by chance there would be anything over and above the portion already received years ago - then that would be claimed.

Complicated a little I know - but... I've not found the answer anywhere...yet. Person does not want will to be changed.. and no, its not "legally" recorded but is notarized and has all the legalese it should have for the state, this is something that will be done just through the siblings soas to know who gets what, where, and how everything is split as well as protecting everything but keeping the estate out of the courts hands.

Thanks.

ETA: also - what if you are on someone elses will - like a distant relative - and you know this but want to be removed and have any portions that may go to you - instead go to your children (basically you just want to give up your rights to the amount). Can that be done legally without incident in a Ch. 13?

[SMinGA]

My best guesses - but keep in mind they are just that:

1. Executor/POA roll does not pass ownership of the assets/funds to you so that would not be relevant to bankruptcy. Kind of like a volunteer job where you don't get paid for your time.

2. Without changing the will - I think the prior received inheritance will be a problem. If will says 3 siblings share equally, then 1/3 of the estate at time of death would be yours. Would not matter to the trustee that you consider your 1/3 share already received and consider only 2 shares remaining for each of the other siblings. Trustee is going to take 1/3 of the estate, as according to the will - its yours.

3. Asking a relative to change a will - when there is no reason to think death is imminent - would not be an issue. If there is medical reason to expect this person would only live another x months/years - different story.

[Pandora]

thanks SMinGA

okay - but if this does not go into court (as executed currently) and remains within the care of the Executor (who is 1 of the siblings) and remaining siblings - you still think it would have to be changed (will) ? This will be handled entirely out of the courts hands, it will be distributed by the siblings as directed.

Crap... she's not going to be happy having to redo her will But...gotta do it right, so....

ETA: What happens if one of the stipulations is that the sale of a home is to be distributed equally amongst the 3 siblings, however from there, the proceeds of the home is to be broken down further to grandchildren; however what if your child is underage, therefore creating a Custodian of the account or even a Trust? Does that count against you or the child from a trustee's standpoint?

[LadyInTheRed]

For the lifetime gifts to be credited towards the inheritance, the will needs to be amended to provide for that. Otherwise, lifetime gifts are irrelevant to post-death administration.

A will can be amended at any time before death, even on the person's death bed, assuming they are competent to do so and are not under undue influence. What constitutes undue influence varies by state. If the person benefiting from the revision is a caregiver of the testator, there may be a presumption of undue influence. Again, it depends on the state law. The bottom line is that you can't force the person to amend their will if they are not inclined to do so. If they don't care that the money will go to unsecured creditors, you're stuck with that decision.

If you are custodian for a child, the property is not yours, it's the child's.

An Executor is not a volunteer job. Executors are entitled to compensation. Many waive the compensation because all beneficiaries are family and they don't feel right charging for their services or don't want the taxable income. But, it is often a difficult job that comes with exposure to liability and deserves compensation.

Pandora, you mention avoiding court but refer to a Will. Is it really a will, or is it a trust? If it is a Will, there are only certain circumstances under which you can avoid court. If there is a trust, there often is also a will. In that case, the trust is administered by a trustee (not a BK trustee) and the will is only there in case something doesn't get transferred to the trust before death. My knowlege of this is all based on California law, so there could be some differences by state that make it easier to avoid court even if there is no trust. But, I think it is pretty standard that if there is no trust and assets are not held in joint tenancy and do not pass by beneficiary designation (like an IRA or life insurance), you need to go to court. There are some exceptions for small estates and assets passing to a surviving spouse. If the hope is to avoid court, check state laws to make sure the estate plan is drafted to do that.

ETA: A POA terminates at death, so you won't be able to use that to avoid court and access assets to distribute to beneficiaries.

[Pandora]

For the lifetime gifts to be credited towards the inheritance, the will needs to be amended to provide for that. Otherwise, lifetime gifts are irrelevant to post-death administration.

A will can be amended at any time before death, even on the person's death bed, assuming they are competent to do so and are not under undue influence. What constitutes undue influence varies by state. If the person benefiting from the revision is a caregiver of the testator, there may be a presumption of undue influence. Again, it depends on the state law. The bottom line is that you can't force the person to amend their will if they are not inclined to do so. If they don't care that the money will go to unsecured creditors, you're stuck with that decision.

If you are custodian for a child, the property is not yours, it's the child's.

An Executor is not a volunteer job. Executors are entitled to compensation. Many waive the compensation because all beneficiaries are family and they don't feel right charging for their services or don't want the taxable income. But, it is often a difficult job that comes with exposure to liability and deserves compensation.

Pandora, you mention avoiding court but refer to a Will. Is it really a will, or is it a trust? If it is a Will, there are only certain circumstances under which you can avoid court. If there is a trust, there often is also a will. In that case, the trust is administered by a trustee (not a BK trustee) and the will is only there in case something doesn't get transferred to the trust before death. My knowlege of this is all based on California law, so there could be some differences by state that make it easier to avoid court even if there is no trust. But, I think it is pretty standard that if there is no trust and assets are not held in joint tenancy and do not pass by beneficiary designation (like an IRA or life insurance), you need to go to court. There are some exceptions for small estates and assets passing to a surviving spouse. If the hope is to avoid court, check state laws to make sure the estate plan is drafted to do that.

As to the Executor and/or Personal Representative- it is worded so that all fees are waived and it doesnt go into probate at all. In VA, its allowed to do it this way and avoid having the courts involved so long as the person designates it so. In general, Virginia laws allow you to dispose of your property as you wish once your debts have been paid and the rights of your surviving spouse and children have been covered. In her will, part of it is worded as such for Personal Representative:

"...Full power and authority to do any and all things necessary for the
complete administration of my estate, by public or private transaction, without court order or approval; to keep intact in its original form, or sell, convey and convert into cash the whole or any part of my estate, real and personal;..."

There is no Trust provision - its merely a do-it-yourself will with standard legalese and necessary provisions added in to avoid it going into the courts hands to distribute; merely to list how things get distributed to beneficiaries and others in the family, to include personal items.


Another question - does it matter if one is primary beneficiary or not?

I want to make sure this is done legally and the right way - and given there are more than the 3 sibilings' rights at stake here, I do not want to have anything held up due to our filing of BK when 1/3 of the estate is not technically ours per sae - given its already been given out, but the will hasnt been changed yet to reflect it because we werent sure if it had to be changed. Now..we're not so sure if it shouldnt be changed given the circumstances at hand.

[Pandora]

ETA: A POA terminates at death, so you won't be able to use that to avoid court and access assets to distribute to beneficiaries.

Right - but I'm talking about limited POA while the person was still alive - used for medical reasons and care of a parent should they be incapacitated later in life.

I'm not trying to avoid anything - I'm trying to ensure that the will is done correctly and that our BK will not put the other beneficiaries out of what is legally theirs given ours was already received years ago.

That is the situation I'm trying to correct and avoid currently. Everything MUST be legal...I'm a fly by the legal type of gal

[LadyInTheRed]

Another question - does it matter if one is primary beneficiary or not?

A primary beneficiary is the beneficiary unless they don't survive the decedent. Contingent beneficiaries become the beneficiaries if the primary beneficiaries are no longer living. x
x (sorry about the x's. For some reason, every time I hit enter, an x appears)

Nice that VA makes it so easy to avoid probate court!

[Pandora]

Yes, it is - and thank God for small miracles there!

Well - decision was made to change the will... so - it'll be taken care of one way or another.

[Flamingo]

To the OP...I suggest you schedule a consultation with an estate planning lawyer to go over the matter. Will probably be the best $75 or so that you will spend.

[Pandora]

To the OP...I suggest you schedule a consultation with an estate planning lawyer to go over the matter. Will probably be the best $75 or so that you will spend.

I think you're right Flamingo - calling on Monday as a matter of fact. Want to ensure everything is on the up and up.

[LadyInTheRed]

Right - but I'm talking about limited POA while the person was still alive - used for medical reasons and care of a parent should they be incapacitated later in life.

I'm not trying to avoid anything - I'm trying to ensure that the will is done correctly and that our BK will not put the other beneficiaries out of what is legally theirs given ours was already received years ago.

That is the situation I'm trying to correct and avoid currently. Everything MUST be legal...I'm a fly by the legal type of gal

I didn't mean to imply you were trying to do anything illegal. Nothing wrong with trying to avoid probate court! I just encounter people all the time who are surprised to learn they can't use a POA to access their parents' accounts after they die.

My mom is 70 and although she doesn't seem ready to go soon, she knows it's very possible in the next 5 years. She's going to amend her trust to make my husband a beneficiary instead of me.

[Pandora]

I didn't mean to imply you were trying to do anything illegal. Nothing wrong with trying to avoid probate court! I just encounter people all the time who are surprised to learn they can't use a POA to access their parents' accounts after they die.

My mom is 70 and although she doesn't seem ready to go soon, she knows it's very possible in the next 5 years. She's going to amend her trust to make my husband a beneficiary instead of me.

It's all good LadyInTheRed - I knew what you meant, I was just clarifying in case others may have read my intentions wrong ;)

too true - many people dont realize what a POA is for.... only for the living, not the deceased.

[mom901]

I have a question, maybe you all could help. We are starting our 13. I care for my mother but she has my brother on everything, executor, power of attorney, etc. It just never was changed after my dad passed away, it was always my brother. Years have passed and my mom wanted to add me on to be joint responsibilities with my brother. She hasn't done this yet and I am wondering if I should tell her not to do this, I don't want them to know about the bk but I also don't want her things or any inheritance taken from the court or anything. Any suggestions and can they do that? Or does it matter if you are an executor or power of attorney vs. just inheriting items and what happens in that case? Thanks.

[Flamingo]

I have a question, maybe you all could help. We are starting our 13. I care for my mother but she has my brother on everything, executor, power of attorney, etc. It just never was changed after my dad passed away, it was always my brother. Years have passed and my mom wanted to add me on to be joint responsibilities with my brother. She hasn't done this yet and I am wondering if I should tell her not to do this, I don't want them to know about the bk but I also don't want her things or any inheritance taken from the court or anything. Any suggestions and can they do that? Or does it matter if you are an executor or power of attorney vs. just inheriting items and what happens in that case? Thanks.

Inheritances during a Chapter 13 have been discussed heavily in this forum...do a search and you will find tons of postings. An inheritance received during a Chapter 13 is income and must he reported to the attorney and trustee. Depending upon all sorts of stuff cause all situations are different, the trustee may or may not take all or part of any inheritance. Realize that most people in a Chapter 13 are in someone's will. If that person died and you were not in Chapter 13 but in heavy debt you more than likely would use any inheritance to pay off some or all of the debt. One can't base filing a Chapter 13 on whether or not someone will die during the course of a Chapter 13. If it creates anxiety the best thing to do prior to filing is to sit down with an estate planning lawyer and discuss the entire situation with him/her and advise the lawyer in who's wills you are a beneficiary. If you have a copy of the will take it along.

My FIL passed away during our Chapter 13 (about 1 1/2 years after we filed) and my husband and BIL split the insurance and proceeds from the house sale; the trustee took 1/2 of my husband's inheritance which, after paying all bills, etc. from the estate, was not a huge amount to begin with. We at least were able to keep half. That amount was provided to our creditors over and above our confirmed percentage.

[mom901]

Thank you Flamingo, you are always so helpful to me and I am glad to be here. Our mothers don't have a lot but there may a small amount of money and family heirlooms or things my mother wanted us to have. She owes on her house, a home equity loan for close to the full amount so really if it all were to be sold there wouldn't be much money to split four ways and not that I want to think of that sad time, but mostly contents of her home. My sister and I are to split those, just trinkets and momentos and things. Are those types of things allowed to be kept? And also, would my siblings find out about our bk since they are co inheritors or is that private and between you and your attorney? Thanks.