Distributing Inheritance Money

My mom recently passed and my Dad probably will pass in the next 6 months. All of their money is in a trust account. There is no real estate, just cash and mutual funds in a trust brokerage account. My sister is the executor of the trust. They have a checking account and we transfer money between the brokerage account and the checking account to take care of dad’s long-term care expenses. My sister and I are on the checking account and can write checks against it.

My question is what happens when my dad passes. Since the money is in a trust, there is no probate. So, can we just immediately disperse the funds to the heirs and be done with it? We figure we can just transfer all the money to the checking account and write the checks according to what’s stipulated in the will. We have a problem sibling that doesn’t get the same amount as the others and want to get it done quickly. It just seems like we have to go through some process so the money looks like inheritance rather than a gift, but since they would both be gone, it’s not too hard to show that it was distributed after they died. None of us have had to deal with this before.

As my Trust atty explained, yes, you are free to disperse the funds.
[but I’m NOT an atty]

Based on my research, that’s what I’m finding. And it’s even simpler since we have no creditors to deal with and the distribution of funds is clearly defined in the trust docs. But like you, I am also not an atty.

The reason I got my Trust was advice from RE Broker friend. She has countless horror stories of heir who inherit a house, but without a Trust, it can be tied up in probate for months and BIG bills to the atty’s who get rich on probate problems.

She told me my heirs can sell this house immediately after submitting DC to county recorder.

hmmm… that’s interesting… can you put just the house in a trust? Or does the entire estate have to go into a trust?
On the other hand, my neighbor passed last November, leaving the house to her 3 nieces/nephews in her will. They sold the house in April, not an unreasonable amount of time, since they had to clean it out and do some repairs/touch ups.

Yes, that’s one primary purpose of a Trust. That and avoiding probate.

Was the will sent to probate? Did she say what that cost?

By ‘trust account’ do you mean revocable living trust? And by ‘sister is the executor of the trust’ do you mean she is successor trustee? If so, perhaps the proper way to do this is to get the brokerage firm to recognize her as successor trustee, which would require some paperwork (death certificate, trust doc naming her as s.t., etc). Then she tells them to close the trust and send xx% to rjratnip, xx% to herself, xx% to other sibling(s). Then the trust is closed, and distributions look a little more ‘official.’

You’ll have to file a final personal income tax return for your parents. And I think you have to file Form 1041 for the trust, but that can run on a fiscal year rather than calendar year.

I’m not an attorney…I was successor trustee for my dad, executor for my mom and administrator for my brother.

Sorry you’re having to deal with this.

Doesn’t your sister have an accompanying Trust document that specifies how funds are to be distributed ?

Best bet, talk to a lawyer.

Lawyers cost money.

Not talking to a lawyer can cost $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.

Yes on both counts. She is the successor trustee, and I am successor trustee if she is unable. I forget what terms to use.

Yes, we know exactly how things are to be distributed. It’s actually quite simple: X amount is distributed four ways, and then any remaining amount is distributed five ways. Five total siblings. We are slightly worried about the fifth sibling causing trouble since their share will be less. But they have already stolen their share from my parents and this is how my parents wanted it so things would be more equal.

It may come to that if we don’t think we know all the rules.

What is in a trust is distributed according to what the trust stipulates; a will does not dictate terms to a trust. Anything that is not in the trust (amounts in the checking account?, personal property, etc.) will need to be distributed according to the will or if there is not one according to the intestate laws in your state.

What I have heard is that the contents of a trust are private information, so you may be able to avoid disclosing that the distribution to one sibling is less than to the others.

So, in my experience…its the lack of transparency from the Parents that falls on the executor to deal with during settlement. Your Dad should make it clear what is happening before you have to deal with it. Just my $.02 on the matter…seen too many family member never speak again after estate settlements because allocations were not discussed ahead of time.

Thanks for that perspective and I agree. Unfortunately, we’re already there and Dad is unable to have that conversation (memory loss). He doesn’t know who any of us are.

They tried to deal with this earlier, but things went nowhere. There has been little contact with the other sibling since.

Oh so sadly true! As my wife spent her final days in a hospice, I took coffee breaks with other family members grieving over their loved ones. It was terrible to hear how many patients had not made their final wishes made clear, and the survivors were often clueless.

I guess we’re lucky there. My parents spent quite a bit of time making sure things were clear to us and trying to make it as easy as possible. My mom was a nurse and had taken care of elderly people in the past, so she had seen the best and worst and really tried to get things in order. They updated the trust documents a couple of years ago so it was all current.

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Sounds like you may have a situation involving both a trust and a will. The trust will likely be a pretty straightforward process, the trustee just follows the instructions put forth in he trust and that’s it.

But if you also have a will to deal with and/or part of your dad’s estate is not addressed in the will then you have what may turn out to be challenging situation.

If your statement, “we know exactly how things are to be distributed,” applies to things not in a trust, it may not happen as you think it should.

All that’s left is money which is mostly all in the trust. Except for a couple of pictures in my dad’s room, there is no physical property. Money moves around due to long term care expenses and reimbursements from insurance for that. If that gets caught in the ether after my dad’s passing and doesn’t end up in the trust, then so be it. It’s not enough to worry about.

Oh PLEASE don’t try and do this yourself. It will be a nightmare when there is fallout. Contact an attorney, pay the consultation fee and get some advice then go from there

After advice here and looking into this ourselves, we decided to hire the estate attorney to deal with everything. There are many steps to dealing with this that need to be done correctly and even if we had the time we’d probably mess something up. If a sibling has an issue with the trust or will, we’ll just have them talk to the attorney and we can pretty much stay out of it. In the end, it’s worth it to not have to worry about it.

Thanks for all the help.

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That’s the smart thing to do… your next challenge will be finding a good estate attorney.

In my experience your extended family, business associates and social sphere are good resources for your search. I’d be careful of advertisers who are prone to run high-volume factory-model operations.

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