POD CD and Checking Account

[iginiowa]

What is the name of your state (only U.S. law)? IA

My great uncle passed away in May and left a POD checking account and CD with both my brother and my name on the accounts. There is no problem with my brother and I splitting the money and I already have half of the checking account. My concern though is the federal estate tax. If my uncle's estate is valued at more than 2 million dollars, will my brother and I be responsible for paying any of the estate tax? Right now, we don't know what the value of the estate is, but our funds have been released to us. The rest of the estate is in probate court, which obviously our funds were POD so they didn't have to go through probate court. Since they are POD are they even considered part of the estate and are they subject to the federal estate tax?

I am really ignorant about all of this and would really appreciate your help! I just don't want to invest the money somewhere that's not easily liquidable and not be able to take care of my financial responsibility.

 

[anteater]

...The rest of the estate is in probate court, which obviously our funds were POD so they didn't have to go through probate court. Since they are POD are they even considered part of the estate and are they subject to the federal estate tax?

Even though they would not be part of the probate estate, they would be part of the gross estate upon which the federal estate tax is based.

Usually, the probate estate pays any estate taxes due. Why not contact the probate estate's administrator to check?

 

[iginiowa]

Thanks for your info! I need someone to clarify all of that for me.

The administrator is kind of a sticky situation. The man who was appointed as administrator does not like our family. (he is not a famiily member, he was my great uncle "friend". Not much of a friend if you ask me!) Communicating with him is my last resort, although I think I will ask the attourney for my family about the total value of his estate. But ultimately someone will have to contact my brother and I if we owe any money, correct?

Is there a time limit that the estate has to get all of this wrapped up?

Thank you!

 

[anteater]

There is no problem with my brother and I splitting the money and I already have half of the checking account.

I sort of passed over this in your first post. If great uncle passed away in May, what are you and your brother waiting for? Get the money in your names!

Is there a time limit that the estate has to get all of this wrapped up?

I don't know IA specifically. But, generally, probate takes as long as it takes. If a probate estate is open for too long, the court will ask the estate administrator what is going on. If there is good reason for the estate to still be open, then it stays open. If no good reason, then the court jumps all over the administrator to wrap things up.

If your great uncle's estate's value is up around that $2 million mark, then I would expect it to take awhile. Say, at least a year, unless the assets are all highly liquid.

 

[iginiowa]

I sort of passed over this in your first post. If great uncle passed away in May, what are you and your brother waiting for? Get the money in your names!

My dad waited until last Thursday to even tell us about the money. I guess he didn't want us to know right away?!?! The bank was a little irritated it took so long to contact them, but I told her I just found out.

So I guess I should try to contact the attourney for the family and find out what is going on. No one in my family is offering me any information about anything.

Thanks!

 

[BlondiePB]

My dad waited until last Thursday to even tell us about the money. I guess he didn't want us to know right away?!?! The bank was a little irritated it took so long to contact them, but I told her I just found out.

So I guess I should try to contact the attourney for the family and find out what is going on. No one in my family is offering me any information about anything.

Thanks!

Keep in mind that the estate attorney represents the Personal Representative of the estate (executor). Probate cases are public records. You can obtain a copy of the entire file for a nominal fee from the courthouse.

The bank had good reason to be irritated for not know about the death.

 

[anteater]

My dad waited until last Thursday to even tell us about the money. I guess he didn't want us to know right away?!?! The bank was a little irritated it took so long to contact them, but I told her I just found out.

So I guess I should try to contact the attourney for the family and find out what is going on. No one in my family is offering me any information about anything.

Thanks!

Just guessing here.... But, since it is your great uncle, it is not likely that you or your brother stand to inherit anything under the will. So, there would be no real reason, legal or otherwise, to keep you and brother informed about the probate case.

But, as BlondiePB said, the case file is open and it might be a good learning experience for you to peruse it.

 

[iginiowa]

Keep in mind that the estate attorney represents the Personal Representative of the estate (executor). Probate cases are public records. You can obtain a copy of the entire file for a nominal fee from the courthouse.

You are both right, I have learned so much from all of this! I think that I will do that. Do you have to wait until after the probate case in finished to obtain a copy? Does this file tell you the worth of the estate?

I guess the bottom line is that I just wish someone in my family would tell me how much the estate is worth, if we will owe any money, and wheather on not my brother and I should go ahead and invest our money the way we want without having to worry about obligations coming up later on down the road. If no one tells us anything, could you give any advice as to what would be a responsible percentage to keep out just incase we would owe any money?

Thank you both!

 

[anteater]

No, you don't have to wait until the probate estate is closed. But, keep in mind, that probate may have only been recently opened and there might not be much in the file yet. Three or four months after death is a bit long to open probate, but hardly way out of line.

In Iowa, the estate's personal representatvie is supposed to file an inventory within 90 days of appointment by the court.

If you want to get an idea of what probate is all about in Iowa, here is a link to the code:
Iowa Code 2001SUPPLEMENT: Chapter 633

 

[iginiowa]

In Iowa, the estate's personal representatvie is supposed to file an inventory within 90 days of appointment by the court.

So after this inventory is turned in, my brother and I should be assured about the value of the estate. This will be in the probate file?

Thank you so much!

 

[anteater]

Uh, don't know why, but I went searching to see if Iowa had an inheritance tax and it does.

An inheritance tax is different from an estate tax. The estate tax is a tax on the value of the estate and is almost always paid by the probate estate. The federal estate tax is where the $2million exclusion applies.

An inheritance tax is a tax on the transfer of assets to those inheriting. Usually, any inheritance tax is paid by the probate estate. But that is not a given. The deceased's will often will specify how any taxes should be paid.

So, while I would get my hands on that money ASAP, I think that I would keep it liquid until you get some more information.

ADDITION: Just to add a bit about Iowa inheritance tax, I ran across this in a state gov pamphlet:

Payment of tax

Inheritance tax is a tax on the share going to a beneficiary, and it is the beneficiary who is responsible for payment of the tax. However, it is the duty of the personal representative to see that the tax is collected and paid. When payment in full has been received by the Iowa Department of Revenue, an inheritance tax clearance will be issued. The tax clearance releases the property from the inheritance tax lien and permits the estate to be closed.

 

[iginiowa]

Uh, don't know why, but I went searchig to see if Iowa had an inheritance tax and it does.

You know, I should have specified this before, shame on me. My uncle lived in Missouri and I live in Iowa. So which state would I have to worry about with the inheritance tax?

So, who would I have to pay the inheritance tax to?

 

[iginiowa]

And my brother lives in Arizona...

 

[anteater]

You know, I should have specified this before, shame on me. My uncle lived in Missouri and I live in Iowa. So which state would I have to worry about with the inheritance tax?

So, who would I have to pay the inheritance tax to?

POW! POW! POW!

Now I'm going to start charging for advice. Please provide a valid credit card.

Missouri law applies. Missouri does not have an inheritance tax.

 

[iginiowa]

I know...I'm sorry. Thanks for your patience!

It's funny you joke about the credit card though, because this whole time I have been wondering...is this person that I am communicating with atleast getting paid through a company or are they just the victim of my "worry wortism"? Either way, I soo greatly appreciate your patience and knowledge with me!

So...no inheritance tax to worry about then? Right?

To sum it up then: (correct me if I'm wrong)

I should keep the money liquid until the probate inventory is complete. If the inventory of the estate is under the 2 million dollar mark, I'm good to go. I can invest or go on huge shopping spree...whatever I want to do with the money. (no shopping spree...I WISH!!)

If the inventory shows that the estate is over the 2 million dollar mark, the executor will contact my brother and I if we have any kind of financial responsibility to the estate.

The executor will have to legally prove though that we owe correct? I don't trust the guy!

Thanks again so much!