My husband is the Trustee of his Mother's trust, she passed last week. The trust contains a home that will need to be sold. What steps do we need to take do transfer of title for the sale.
We also have an Annuity that was not placed in the trust but my husband is the beneficiary. The Annuity should have been placed in the trust and split between 3 children. If my husband is the beneficiary then we have the tax liability. How can we transfer the annuity in to the trust and then have it split 3 ways with out us assuming the tax consequences?
There is quite a lot involved (or there can be depending on the circumstances) in administering an estate and/or trust. You would be best served to seek the advice of an estate administration attorney who can walk you through the process.
This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature.
First of all I am sorry for your loss, it is perfectly acceptable to spend the first few weeks grieving, however, if you are ready to go... If the house is in the trust the trustee needs to hire a realtor to sell the house. The sale will be from the trust. If your realtor, the escrow company or title company balk at selling from the trust, transfer the property by deed to the three benes and sell it. The Annuity goes to who ever is named on the beneficiary designation sheet if that is your husband it's his; if feels morally obligated to divide the property with his siblings there could be a gift consequence. But if you and your husband use a split gift startegy you can give the each child $28,000.00 or $56,000.00 dollars for the two children without creating a taxable gift and if you do it this year prior to 12/31/2014 you can do it tax free on January 1, 2015 so that would get $112,000.00 out of your husband's estate tax free. Hope this helps you and your husband with the estate
Every thing that I am saying here is my opinion and it is not based on any particular case. My response is just unsupported general information. If it helps you to resolve an issue that's great but do not rely on it as legal advice because it is not based on the facts in your case and it is not based on any specific legal research. Answering this question creates no relationship between the writer and reader of the writing. I am not your attorney now, nor have I been on the past. If you just want to comment please do that on AVVO where the price is $0.00. I do typically respond to all AVVO comments.
The answer to your question requires an attorney licensed to practice in your state. That said, generally speaking, the trust instrument (or trust agreement) will state what is to happen upon the death of the grantor/settlor (the person who created the trust). Generally speaking, the trustee(s) of the trust would simply execute a deed to the buyer of the home, the same as any other sale of real property. This deed may have a different title in the case of a trust, e.g. a fiduciary deed, rather than a standard warranty deed or the like. The powers of the trustee should be included in the trust agreement, but if not, then inferred by law. The sale of property ought to be included...
Further, if your husband is a beneficiary of a financial instrument (via payable on death provision?), then it is your husband's property. The fact that it was intended to be placed in trust may be irrelevant, but probably the subject of dispute among the trust's beneficiaries in the event he does not transfer it. Does your husband even want to transfer the annuity?
As far as tax consequences for your husband transferring the annuity to the trust, I presume that you mean gift taxes? If so, then it might be possible for your husband to disclaim or otherwise dispute his POD benefit in the annuity, in which case it may fall to his mother's estate (which may require probate, etc.). If so, then you may lose control as to who receives the money, in the event the mother died without a will or the will is invalidated.
Further, you may consider gifting all of it, in the event you do not expect to have any estate tax issues upon your death. The transfer may not require you to pay any tax out of pocket, but you may use up some of your lifetime credits in the process and also be required to file a gift tax return.
You might also consider a gifting regime. Each person can gift $14,000/year, tax free, to another individual. You and your husband may each gift this amount, to each of his siblings. In the event his siblings are married, then maybe you can gift the siblings' portion to their respective spouses as well, effectively doubling the transfer amount. Depending on how much the annuity was, it may not take any time at all to remedy the situation.
Regardless, I would not suggest gifting to the trust if you are just planning on terminating the trust.
It sounds like to me there are enough complexities and enough money at stake to contact a local attorney for a consultation. I suggest doing so. You will also want to contact the person who you plan on filing the tax returns for his mother and any other transactions.
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I am sorry for your family's loss. Your husband, as the trustee has numerous responsibilities at this time. The trust is now irrevocable and your husband will need to obtain a taxpayer identification number and notify the taxing authorities that he is the fiduciary of the trust. Then he will need to file an affidavit of death and transfer the home into his name as trustee of your mother-in-law's trust. At that time, he will be able to sell the home. He must also notice all the other beneficiaries pursuant to the probate code. The annuity is tricky as the beneficiary statement generally trumps and unwritten directive, so I cannot advise on anyway to redirect the distribution to the trust. As you are in California, I am assuming your mother-in-law also lived in California. If this is not the case, then you should consult with an attorney in the state she died.
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