Tick one thing off the list

Finally, something has happened. I'm still stressing over being unable to return the money that was overpaid to my dad's account by his annuity because the checking account is blocked and without knowing the tax ID number that "nefarious" trust/estate guy may or may not know, I can't write a check - the only form of payment they will take. (When I first questioned the trust/estate guy, he told me about all the different termination dates an annuity might have. But months after months after death... into a new year... for a fellow who died approaching 87... just did not jive with me.)

My positive news is that I did claim my share both of my dad's inherited IRAs.

IRAs are cool. They don't go through probate, even though they can't be part of a trust. They seemly get inherited by the listed beneficiaries. (Of course in the case of my mom's IRA, things weren't that simple. I think I've mentioned this at least once before. Dad was her primary beneficiary. He never went through the process of inheriting her IRA so when she died, it was unclaimed and became part of her previously non-existent "estate." She should have died with no assets requiring probate, but this IRA somehow slipped through. My dad kept telling us that we had plenty of time. We're still trying to work that one out.

IRAs are also interesting. Money goes into your IRA (Individual Retirement Account) before you've paid tax on it. And it can sit there and grow and grow. If you want to take out funds prior to being 59 1/2 years old, you pay a penalty - and tax on the money withdrawn. At 59 1/2, you can take out whatever you'd like but that's the time you pay the IRS the taxes on the amount you withdraw. You can take a little, you can take all, you can take nothing. At age 70 1/2, you are forced to start making withdrawals. The IRS uses actuarial numbers to determine the number of years they think you might live... and then they require your withdrawals to equal what they believe the end of your life will be in years. The amount you are required to take out annually is called your Minimum Required Distribution. You can always take your funds more rapidly at this point, but this is the absolute minimum you can take.

Then, when you die, your beneficiary or beneficiaries get your IRA as an inherited IRA. I'm not sure if minors are required to take MRDs but people the ages of my brother and I are forced to take out MRDs... based on our ages... and if taken in these minimally small amounts, the IRA should be expected to give us something (with taxes owed) each year for the rest of our lives. Interesting concept.

My dad had two IRAs. Somehow he missed the taking the distribution on one of the accounts. I know there's a penalty involved - unless we can persuade the IRS to waive it. Seriously, Dad had a lot going on in his life those last few months... but he took it on one of the accounts. One of the investment firms led me to believe that I needed to take out Dad's final MRD as I started up my inherited IRA account. Without any real guidance from anyone but the investment firm, that's what I did. And the check came yesterday. Will I have messed things up? I have no idea. But... going forward, that IRA is clearly now my inherited IRA and going forward, things should be much more straightforward.

Some might view this as a sideways step and not a step forward at all. But with the path the administration of this estate has taken, I'm viewing this as a positive thing.

Grief continues to hit me in waves. After a grief counseling session where I was reassured that what I'm feeling is normal and after a bereavement support group meeting, I know I'm not alone and that my grief has to run its course. Everyone's journey is different. And everyone has a story.

Help made this job go quicker

Thanks to my husband who helped me calculate date of death values - and alternate valuations this afternoon. I've (re)learned that he can be a really nice guy. Together, it took the two of us about four hours. For stocks, you need to calculate the value by averaging the high and low price for the date of death. You do this for the actual date of death and six months later. For mutual funds, there's nothing to calculate. You look for the sale price in historical data. We used yahoo finance to calculate our prices.

Because I'm doing this for both my parents (who shared most of their assets), it was double the work. Sort of. I had to calculate for the date of my mother's death, the date of my father's death and then my mother's alternate valuation. It's too soon to calculate my dad's alternate valuation because he hasn't been gone six months yet. That just means in another few weeks, I'll have to do it all over again.

Another thing I (re)learned today, and something I've already shared here, is that I can see what I've learned and haven't learned by trying to explain something to someone else. Today I tried to explain to my brother all that I thought I learned from an attorney I met with in New York in December. I took my notes from that day that I hadn't looked at since that day. And then I typed them up all up in an email to my brother. I was happily surprised at how few times I had to write "at least I think that's what he meant" or "I think that's what he said."

One thing that I learned from the attorney is what it means to settle an estate. How do I know if the estate is settled? He explained that the estate is settled when the assets are all collected, the estate taxes are paid and that we get a closing letter from both the IRS and from New York State saying that no more taxes are due. At that point, there needs to be a formal or informal accounting of what we have spent and what's left. The beneficiaries give me a receipt and release once I give them their assets. That releases me from further obligation.

The question came up when I met with the attorney about how to split stocks amongst 5 different people. He said that the cleanest way is to liquidate everything right before distribution. Then it can be easily divided. Leaving stocks to distribute "in kind" (as stocks) gets messy with fractional amounts of shares. I do wonder, though, about the tax consequences of liquidating everything before distribution. We will acquire the cost basis of the date of death valuation of Dad, but again, really need to look at the tax consequences of doing so as we get closer to this point. Right now, it seems like a long way off.

Something else I learned from this attorney is that because Dad never inherited Mom's IRA and it's gone into her estate, it's technically no longer an IRA and it's simply stocks (that will probably need to be liquidated) to distribute out of her estate. This will be the only asset to pass directly from Mom to her beneficiaries (my brother and I). So no inherited IRA from Mom. This is not exactly what I learned from the institution where Mom held her IRA (and that I shared with you earlier last month).

I already have the things I'd like to learn about tomorrow on my "to do" list. I had hoped to file the paperwork to get my dad's death benefit from his union but I learned that can't do that without the paperwork that says that I'm the executor of the estate and that won't happen until the attorney I've hired for probate has done his thing.

Instead, I'll learn about setting up inherited IRAs from two different institutions. And I plan to learn about transferring stock from Computershare... and where it actually has to get transferred to. That, to me right now, is a big mystery.

And now back to reading my executor and trustee book! Lots more to learn.

Twice the fun

Today's lesson: If a spouse doesn't inherit the deceased spouse's IRA before he himself dies, the IRA cannot be transferred to the subsequent beneficiaries without going through probate. I'm now left wondering what other glitches we'll come across because Dad died prior to "officially" inheriting anything that belonged to Mom.

Mom died in late March. We observed the traditional seven days of shiva. We were in mourning. On the day after we got up from shiva, I asked Dad whom we needed to notify about Mom's death (besides the obvious friends and family who were notified prior to the funeral). He said we had time. A few days later I asked, "Don't we need to call a lawyer or something?" His response was, "We have time."

Ten days later, Dad was in the hospital battling cancer. I asked the same question again and would get the same response. Over the next few months, I asked the question again and always got the same response. I trusted my dad, I figured he knew what he was doing. And it seemed like we had time. Mom's social security had stopped coming in as did her pension. Her health insurance companies knew she was deceased. I assumed that Dad inherited everything through some last-to-die clause in their papers. (I can admit now that each time Dad handed me the trust papers, I merely glanced through them and never carefully read them figuring I'd have plenty of time once the inevitable (but unthinkable) happened.)

Now, several months after his death, I'm realizing his mistake - and my mistake for trusting him. Things are so much more complicated because we didn't go through the process of Dad inheriting Mom's assets and then us inheriting Dad's assets. I know he had trust in the "trust." Even though it's only one trust, I'm still technically dealing with two estates, and I'm sure the IRA glitch is just the first of many.

Finally, it's not like I learned any lessons settling Mom's estate. Although I wouldn't have been trustee or executor on that one, Dad would have been. But I'm in a crash course trying to figure things out for Mom - and Dad - on difference schedules, trying to figure out which are the important deadlines.

In a nutshell, when a person dies, even if the trust is joint, don't trust the trust. Start the process of administering the estate immediately. Ask the questions about "second to die." Don't assume the surviving spouse will have a good long life, even when there's no reason to assume he or she won't. (FYI: Until a few days before Dad's death, there was no reason to think he was going to die that quickly. A little over a week before he died, two days prior to his final hospitalization, we'd learned he'd beat the cancer.)