Guardian of mother trying to make children pay

[constantsorrow]

New York

My father passed away Sept. 2001 with no will. My brother and I were appointed administrators. My mother is incapacitated in a mental institution (she has not lived in my father's house in years). My brother lived with my father until he died (my brother was 22 and a student at the time). He now lives with me in Texas. The house passed JTO to my mother. The house is in horrible condition (dirty, needs new roof, new heater, new oil tank, new everything). In great condition, the house could have sold for $180,000. It sold for $95,000. My Aunt is guardian of my mother. She wants us to use our life insurance money to pay my mother the difference (since my brother was living there at the time). Can she do this? If we don't pay it she is going to demand that the estate pay it (part of our inheritance). I thought a house passing JTO was not part of the estate. Also, she wants the Estate to pay off the mortgage ($11,000) instead of my mother since the mortgage is only in my father's name. I really need this inheritance to support my brother and my Aunt keeps finding ways to try and take it from us. What can we do?

 

[advisor10]

3-1-2002

DEAR CONSTANT SORROW:

You have left out some important details:

(1) What is the estimated value of your father's estate?

(2) How much in life insurance money will you be receiving?

(3) Shouldn't there be enough money in your father's estate to be able to afford paying off the balance due on the mortgage?

You are not obligated to spend your life insurance money on any estate expenses--if you were named beneficiary on the policy, that money is yours to spend any way you want to. Your aunt can ask or demand anything she wants to, but what she is asking is slightly improper. However, if out of the kindness of your hearts or for other sympathetic reasons you wanted to assist your mother in paying some or part of these obligations, then that is your right.

From what I can see, your aunt has no authority to affect the amount you will receive as an inheritance. As administrators, you all are in control.

SINCERELY,

advisor

 

[constantsorrow]

Thank you Advisor.

My father's estate for tax purposes is worth roughly 1 million. About $300,000 is going through probate.

401K ($240,000) going to mother.

Life insurance ($251K) went to father's father (our grandfather).
This happened by accident as my father had not changed the beneficiary on his Life Insurance since before he was married and had kids. He gifted us $200,000 of the money but we are informed we can't touch it for 3 years because my grandfather is 86 and if he goes into a nursing home, we may need to give it all back.

Also, my father served my mother with divorce papers a year before he died. The divorce was never finalized.

One more question. I am doing the joint tax return for my mother and father. They owe over $4000. Who is responsible for that? The estate only or a combination of the estate and my mother?


Thanks again for your help.

 

[advisor10]

3-4-2002


DEAR CONSTANT:

(1) Does the $300,000 going through probate include the $240,000 from the 401K or not? I assume that it doesn't include the $240,000.

(2) As your mother's guardian, does your aunt have control of all of your mother's monies?

(3) I don't understand how the house could have sold with a mortgage still on it. Who gets the money from the sale of the house?

A husband is supposed to provide for his wife, so if the estate can afford to pay the $11,000, it should do so. But in view of the fact that there was an intention to divorce, both sides should compromise--estate should pay half of this, and mother can afford to pay other half.

As far as the tax question, you really do need to speak with a local CPA or tax accountant so he/she can figure out the best strategy for you to pay the least amount of taxes (maybe a probate attorney could recommend a good tax accountant if you don't know how to find one in the yellow pages). You will need to have a return prepared for the estate and a separate return for your mother. You can ask the tax accountant whether it would be better to file a joint return or married filing separately.

SINCERELY,

advisor