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Death of beneficiary

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M

mixtim

Guest
What is the name of your state? Maryland

Hi,
I am the Trustee of a life insurance trust. The purpose of the trust was to reduce the estate tax burden for my grandmother's estate which is substantial. Per the trust agreement, the proceeds of the trust are to be distributed in equal 1/3s to my grandmother's daughters.
A few months after the death of my grandmother over the winter, one of my aunts died of terminal cancer.

I have filed the appropriate claim information with the insurer and they have advised that they will promptly issue the check payable to the trust. My question is -- what do I do with my dead aunt's share?? Presumably she left everything to my uncle -- and I can confirm this with him although he was having trouble finding her will. Should I request that he give me a copy of her will and/or provide me with a copy of her death certificate so I have it to protect myself in the unlikely event there is a protest about him getting 1/3?? (I HIGHLY doubt this would happen, everyone is on good terms, but nevertheless . . . )

Also, when I disburse the funds I should make the checks payable to each beneficiary correct? What are they supposed to do with their checks in order to reduce and/or pay part of the tax consequences to the estate (the value of the insurance policy is less than the anticipated estate taxes)? Just cash them and do what they want with the money? They will ask me and I would like to have an answer.

Thanks!
 


Dandy Don

Senior Member
You need to be discussing this specifically with a Maryland probate attorney since it is unlikely that one would be reading this message board, and a CPA or tax accountant can advise you on the tax consequences. You need to find out BEFORE payments are made to beneficiaries, and it is possible that you should be preparing a tax return specifically for the trust.

You will need to see what Maryland law says about whether a decedent beneficiary or their estate has the right to inherit or not--some states allow it, others do not.
 

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