Reporting Life Insurance

[jkfendr]

Does life insurance have to be reported to the estate? When is it necessary for the recipient to tell how much and what would that be a concern of the estate? Also anything that was POD or JWT...are these considered part of the total sum of the estate, or is the lawyer just wanting to up the amount on the estate so the percentage of his return is higher?

 

[advisor10]

JULY 13, 2001

DEAR JKFENDR:

Life insurance is NOT considered a part of the estate.

You would need to furnish a more specific description of exactly what assets have the designation POD (I assume you mean payable on death) and JWT (what does this stand for?), before someone could advise you if it would be advisable to report them to the executor. It is possible that the lawyer may be trying to "up the amount on the estate" to get a higher percentage, but that is not very likely, since he is merely trying to fulfill his legal resposibility to claim all assets and make sure that everything that is taxable is accounted for. You can generally report anything to him and let him make the decision as to whether or not it should be included in the estate, but you reserve the right to get a second opinion from another professional about his decision.

SINCERELY,

[email protected]

 

[jkfendr]

Thank you for your prompt reply. I am the executor of the estate, and am the recipient of the life insurance which as far as I am concerned is not part of the "pot". Also, there were some mutual funds that were marked as joint owner to my sister and I consider this also not to be part of the estate as the deceased paid the tax on it each year. The 401K account was likewise given to my sister and the tax of course came right off the top, and if there is anymore to be paid she will be responsible for it as it is under her social security number now. The bank accounts I have already accounted for and reported. I am compelled to question this now as at first he stated that POD,Joint Owner, and life insurance were not part of the estate...and he is getting flaky on what he should charge. When I asked him point blank he said, oh 2 or 3 percent of the estate. hmmmmmmmmmmmmmmmmmm

 

[advisor10]

JULY 14, 2001

You forgot to mention what state this is in. Different states have different percentages. I don't think he was trying to be flaky or dishonest, he probably just couldn't remember (off the top of his head) just what the exact percentage was. I do admit that his slip of the tongue would be reason enough to make someone stop and think.

2-3% is a reasonable percentage, since many states can charge up to 5% or more. Tell me what the state is and I can find the correct rate for you.

SINCERELY,

[email protected]

 

[jkfendr]

State of Estate

The estate is in Nebraska. As to his being flaky I consider it bad business to give people either or scenarios when it depends on how much the estate is. I realize that his timeis worth something, but when I am contracted to do a job the specifics are set.

 

[advisor10]

JULY 14, 2001

In Nebraska, the allowable executors fee is defined as "reasonable compensation". You would need to speak specifically with a local attorney to find out the exact amount or post this question to the website http://www.lawguru.com where it is more likely that a Nebraska attorney would see your question and respond to it.

 

[jkfendr]

Thank you for the reply on the fees. This rather leaves things wide open for the attorney. In this case he has not had to do much to keep this estate going as I have done most of the leg work and getting things arranged and done. As to needing him to do anything with accounting, filing tax returns etc. I have taken care of all things such as this.....so I guess the debate will begin at the end of the estate!