Let's say that my sister has protected all her assets in a trust and listed me as her trustee. Ok, she dies and then I guess that probate won't step in since all her assets are in a trust of some kind. I have to divide up her assets and give them to whomever she specifies in her will. Is that all I have to do regarding her assets or will the IRS, and the goverment and probate come after me for something?
2007-11-21 04:29:01 · 4 answers · asked by Ted (Canton,OH) 2 in Politics & Government ➔ Law & Ethics
Probate is a court system and that court has no jurisdiction over trusts. The only way you'd need probate is if she: 1) has assets not addressed in the trust or 2) has a "pour-over Will" that transfers any non-trust assets into the trust at death. Assuming she has no non-trust assets, probate and the government are pretty much out of the picture except for two exceptions. Both involve the IRS. You have a duty to file an ordinary income tax return for the year she died just as she would have done and/or perhaps a return for the trust if it earned enough to be taxed. Second-if she had a very large estate, the IRS may have a right to inheritance tax. Oh, and I forgot one more thing. Some states have inheritance taxes. My state does not and I don't know much about state taxes.
2007-11-21 04:40:23 · answer #1 · answered by David M 7 · 3⤊ 0⤋
The trust is a stand alone entity pretty much the same as you are. You named as beneficiary of that trust means that you are not liable to your sisters creditors since the liabilities are in the natural name of your sister and the trust legally held her assets. End of story . If you are going to arrange a trust make sure it is perpetual trust with at least 100 years standing. The best trust formations are actually structured offshore in low or "no tax" jurisdictions. You can have a lawyer or trustee register one for about $1,000 USD.
2007-11-21 12:41:20 · answer #2 · answered by Latin Techie 7 · 0⤊ 0⤋
The IRS won't step in for probate UNLESS there is evidence that this is a scheme set up to avoid inheritance tax. It sounds like that's exactly what it is to me. You might want to tell your sister to get a disinterested third party (like a bank) to be the trustee. That would make it seem more like a trust. As it is, it seems more like you're the executor of an estate that just happens to be in a "trust."
2007-11-21 12:41:21 · answer #3 · answered by StressedLawStudent 4 · 0⤊ 0⤋
There will be some taxes to pay, get an accountant to determine a ballpark figure and get some Life Insurance to cover the taxes.
2007-11-21 12:36:58 · answer #4 · answered by Anonymous · 0⤊ 0⤋