Executor called me today

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May 25, 2006 10:55 am

I had a conversation with the executrix of an estate this morning.   I have little experience with estate planning so I was wondering the following:


There are four beneficiaries involved for this settled estate.  There is a lump sum that has been sitting in an estate account for a few years.


The executrix now needs to set up a trust account according to the will.    I'm wondering can this be one account or should it be four separate accounts.


The will stipulates that a certain amount must be dispersed annually to each of the four beneficiaries.    There are no restrictions on how this money can be invested for the beneficiaries.


I'm going to call my back office but before I did just wanted to know if anyone had any experience with a similar situation.


Thanks in advance.

May 25, 2006 11:47 am
scrim67:

I had a conversation with the executrix of an estate this morning.   I have little experience with estate planning so I was wondering the following:


There are four beneficiaries involved for this settled estate.  There is a lump sum that has been sitting in an estate account for a few years.


The executrix now needs to set up a trust account according to the will.    I'm wondering can this be one account or should it be four separate accounts.


The will stipulates that a certain amount must be dispersed annually to each of the four beneficiaries.    There are no restrictions on how this money can be invested for the beneficiaries.


I'm going to call my back office but before I did just wanted to know if anyone had any experience with a similar situation.


Thanks in advance.



Sounds to me like they're long overdue in getting the trust set up.

You will most likely need a copy of the document that established the trust(either will or trust document) or you will need to fill out some sort of trustee certification form.

Try to find out if they're using an attorney to help them settle the estate.  If so, he/she will probably be able to help you out quite a bit in getting the accounts set up properly.

May 25, 2006 2:28 pm

I work in Wealth Mangement for a major bank, so I deal with alot of trust accounts.  It will likely be four different accounts.  Many times the income benes have diferent restrictions or objectives (more growth-oriented, or more income-oriented).  If you can accomodate their needs without injuring the remaindermen, then you may need to open the 4 accounts.  Sometimes they all agree, and it can be one account. 


In all cases you must protect the remainderman, so the account should have at least 50% equities.  The worst thing you can do as a fiduciary is pander to the income beneficiaries (they will want you to).


The attorney should be a great help in interpreting the document if you don't have a trust dept.  The document will drive everything that you are legally allowed to do.

May 26, 2006 1:52 pm

It all depends on how the trust is worded.  (I have seen both ways.  My favorite is when the youngest child turns 25, the assets are to be split into seperate trusts and then paid out slowly over the next 15 yrs.)


The first step would be to get acopy of the trust docu, then contact the attorney after you have reviewed it.

May 27, 2006 12:46 am

Ex EJIR,


If there is an executrix and an estate account why would there be a trust?


Scrim,


What you have is a testamentary trust ( a trust created by a will), the money in the estate account needs to be divided into four seperate testamentary trust accounts (most likely although it dpends on how the will is worded).  The executor needs to file for a TIN number with the IRS for each testamentary trust, the trust will be titled as a testamentary trust, each year that it remains open the executor must fill out some forms for the probate court and file a tax return under the TIN number for each trust.


If it sounds like a pain that is why you set up a trust and not just a will.  PM me if you have further questions, I do these all the time.

May 28, 2006 9:03 am

I would create four different accounts, with titles in the name of the trust.

Underneath the trust title, I would list 'FBO: Jimmie Smith' just so you can

keep things separate.



Each trust would carry it's own investment policy determined by the risk

and investment objectives stipulated by the beneficiaries.



I would avoid co-mingling the investment assets for each individual. You

are looking for a problem if you have drastically different risk profiles for

each client.



Separate accounts are best.



C