Estate and Probate Attorney in Cincinnati Ohio » beneficiary

How are Retirement Plans Collected?

admin — Tue, 29 Mar 2011 09:09:58 +0000

Retirement accounts and IRAs are not part of the probate estate unless the decedent failed to designate a beneficiary. If there is no named beneficiary or if the beneficiary is “my estate”, the retirement plan will pass per the terms of the will. Otherwise, the named beneficiary will receive the retirement asset. Retirement accounts and IRAs are paid directly to the named beneficiary outside of probate. They are subject to both estate taxes and income taxes. Because the beneficiary may be entitled to delay the payment of income tax, it is extremely important to consult with your attorney or tax advisor before you withdraw any money from the retirement account or IRA. There are very complex rules concerning the income tax aspect of these accounts.

How the IRA is taken and taxed first depends upon the type of beneficiary. A surviving spouse has more options including the ability to rollover the IRA into his or her own IRA and delay taking distributions until they reach age 70 ½. If any other person is the beneficiary, they may take a lump sum distribution and close out the inherited IRA or may set up a decedent IRA or beneficiary IRA and rollover the account into this new account. Once the decedent/beneficiary IRA is set up, a beneficiary may take distributions over their life expectancy or fasted if needed. There is no 10% penalty on distributions from a decedent/beneficiary IRA. However, distributions are subject to income tax.

Warning: These rules are complicated; you must get good tax advice to delay income taxes and to avoid penalties.

Actions against the Executor/Administrator

admin — Tue, 29 Mar 2011 09:02:09 +0000

The executor, administrator and trustee are also called fiduciaries. This is because they owe the estate, trust, and the beneficiaries of the estate or trust a fiduciary duty to act in the best interest of the estate, trust, and the beneficiaries. This is the highest levels of legal duty. The fiduciary acts with the same regard as they would if it was their own estate or trust. The beneficiaries can bring an action to remove the fiduciary and to recover money under the following:

Delay in the administration
Mismanagement of the estate or trust affairs
Self dealing – using assets for their own benefit
Breach of a fiduciary duty
Breach of loyalty
Failure to communicate to the beneficiaries

Objections?

admin — Tue, 29 Mar 2011 08:49:22 +0000

Just like at the opening of the estate and the filing of the Inventory, the beneficiaries can file objections to the account five days before the hearing.

Who gets notice?

admin — Tue, 29 Mar 2011 08:48:47 +0000

The heirs or beneficiaries must receive a copy of the account by certified mail or must waive notice. Once notice is received the beneficiary has five days before the hearing date on the account to file objections to the account. ...
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Notice to Heirs

admin — Tue, 29 Mar 2011 08:45:16 +0000

The heirs and beneficiaries must receive a copy of the inventory by certified mail or must waive notice. Once notice is received, each beneficiary has five days before the hearing date on the approval of the inventory to file objections...
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Powers and duties of the Executor/Administrator

admin — Tue, 29 Mar 2011 08:40:15 +0000

An executor or administrator of an estate is the person who is responsible for the administration of the estate. They must identify and evaluate the assets. They must identify and pay all bills. They are responsible for selling the assets that need to be sold and all tax filings for the decedant and the estate. Finally, the executor distributes the assets in accordance with the terms of the will or state law if there is no will.

The executor/administrator also agrees to:

Give notice of the admission of the will to the heirs and beneficiaries
Make and file an inventory with the Probate Court
Deposit all funds in an estate account and to keep all records
Keep estate funds separate
Invest all funds in a lawful manner
Make and file a distributive and final account with the Probate Court
File all tax documents required by law
Maintain insurance on the estate assets
Obey all Court orders

Notice to the Heirs

admin — Tue, 29 Mar 2011 08:34:56 +0000

In order to give each beneficiary of the will and the heirs at law the opportunity to contest the will, each has to receive a copy of the will by certified mail or must waive notice in writing. Once all have received notice or waived notice of the filing of the will, the three month will contest period starts. If the will is not contested within this time period, it is valid.

What is a Revocable Living Trust?

admin — Tue, 29 Mar 2011 08:27:03 +0000

There are three main purposes for using a revocable living trust as a part of your estate plan. The purposes are:

Reduce or eliminate estate taxes
Control over the beneficiary’s inheritance
Probate avoidance

During life, the creator of a Revocable Living Trust (also known as the Settlor), can change the distribution plan. Upon the death of the Settlor (or both Settlors if there are more than one) the Trust then becomes irrevocable and cannot be changed.