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Payments Made By Executor For Beneficiaries

hank
  |     |   110 posts since 2016

my dad and I have a joint account. I am the executor of his will. When he passes, the joint account will become mine. Can I make payments out of that account to beneficiaries? It occurred to me that if I make payments from that account, I don't want it to be treated as payments from me to the beneficiaries. Can the payments to beneficiaries be made out of that account? Thank you.

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4


Answers
Bozo
  |     |   1,375 posts since 2011
Sibling rivalry aside, there are advantages to being an only child. I never had to get into a debate with myself over what to do with my parents' estate.
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Ricochet
  |     |   522 posts since 2010
If he is joint owner the money is his and he doesn't have to give it to anyone.
He just needs to deal with what is in the Will assets
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Ally6770
  |     |   4,294 posts since 2010
You should a Power of Attorney, then you can write checks when needed and the account would go to the estate when he passes.
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me1004
  |     |   1,379 posts since 2010
Careful, there. The POA dies with the person, it does not extend beyond death. From death, it would be the executor in charge, and that is not the POA. If there is a will, it is the executor of the will who can write checks (under whatever state's rules of probate apply), not the POA. And if an executor has not been designated, the court will do so.
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Ally6770
  |     |   4,294 posts since 2010
He is the executor of the will. So it doesn't matter. Read the second sentence.
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me1004
  |     |   1,379 posts since 2010
Oh, yes, OK, he is the executor of the will. So POA for the father's individual money before death is good as it keeps the money under the will, and after death he is the executor.
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CuriousDave
  |     |   233 posts since 2018
If he is shown as "joint tenant" on the account, as the survivor of the joint tenancy he can go directly to the bank/broker with the death certificate, together with proof of his own ID, and the account will be re-titled in his own name. This has nothing to do with his happening to also be the executor. The executor of an estate is concerned only with carrying out the provisions of the will, and joint tenancy property completely by-passes the will. Unlike property left by will, joint tenancy property also avoids probate.
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me1004
  |     |   1,379 posts since 2010
I am not a lawyer, so what I say is just my opinion and thoughts, not the final say. That aside, when you put your money in a joint account it is similar to a POD account in that the survivor is the beneficiary. So, it follows that when the one joint holder dies, and the other takes over the account, any more being given to anyone, "beneficiary or not," is coming from the survivor, not the person who died.

POD and joint accounts are outside a will. What a will says about beneficiaries can be undermined by POD or joint accounts. If the will is to prevail, then you don't want a joint account or POD account.

There might be things you can do to get around that, such as some sort of legal filing to turn down your inheritance of the joint account, and in that case maybe the will then could take that over. For this kind of thing, you better talk with an attorney. But don't do anything to claim the joint account before you talk with that lawyer.
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solarado
  |     |   89 posts since 2018
Yes, you probably need legal advice, especially because these things vary state to state. But I can add my experience to the discussion. My sister finagled herself as account co-owner before my mother died, even though I was executor of the estate. Then she tried to claim the account as hers. But the court saw her co-ownership was only for the convenience of paying my mother's bills, and ruled the account an estate asset. In your case, it seems you can get the account declared an estate asset, so that payments come from the estate, not you. You still might need to open a separate "estate account" for the purpose of distributing assets, but an attorney and a good banker can help you with that. Good luck.
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me1004
  |     |   1,379 posts since 2010
As you say, solarado, it can be best to ask lawyer. Actually, the money in a joint account can be owned in different amounts by the joint account holders. The 1099 will be issued on only one of those account holders, but if any of the money in the account were that of the other joint account holder, the first one is supposed to issue a 1099 to the second one for the amount of income on their amount of money. That is, the two amounts are in the joint account as a total, and each joint owner can access all of it, but parts of the total can still be separately owned.

So, that is basically what the court in your case decided, that it was all owned by the deceased, decided by the evidence in that case, and that the deceased had never issued a 1099 to the other joint owner could have been one piece of the evidence. Of course, if there were an amount in the account when the second person came on as joint owner, and nothing more were added other than maybe from direct deposits for the first owner such as Social Security, then that also certainly would have supported that all the money in the account was that of the deceased.

But the OP does not seem to have to deal with these issues.
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Ricochet
  |     |   522 posts since 2010
Who does that? A 1099 to spouse or kid for that matter.
Help me with this. If a wife or child was joint on an account that never put money into it, who owns the money when you pass away. The tax on the acct is accountable to the primary owner up to their death. A new account opens for the joint holder.
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me1004
  |     |   1,379 posts since 2010
It doesn't matter if people follow the law or not, that is what the law says, and the court will care what the law says. And aside from solardo's example, the OP is talking of probate court, and that court will want to know too.

But as I noted, the evidence is not solely whether the primary account holder getting the 1099 from the bank provided one to the other account holder for their part, that is only one thing but I mentioned it to point out the money in the account is not automatically equally owned, it might or might not be. And mind you, the joint owner does not even have to be a relative. And when you mention spouse, there are other laws about spousal property involved too.

Where's that lawyer solarado referred to?
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solarado
  |     |   89 posts since 2018
Nobody likes to pay legal fees, but I agree with me1004 that this is one of those times a lawyer can really help. The "estate" becomes its own legal entity, with its own tax ID number and probably its own bank account which all the money should be funneled through for distribution. Hank, you want this done right, above board, and documented!
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solarado
  |     |   89 posts since 2018
As me1004 said, it is the evidence which can override even the titling of the account, as it did for me. We subpoenaed all the bank records, which showed deposits only from the decedent, and withdrawals only for the decedent's expenses in the previous 5 years. And the will divided everything even-Steven. In the end, my sibling had to pay for all the expenses (5 figures!) the estate incurred for attempting to claim the account for herself. That said, I think Ricochet is correct in that this dual ownership or Payable-on-death titling can keep assets out of the probate process. But for original poster hank, it seems he recognizes this account as an estate asset, and simply wants to handle it correctly so as not to trigger any unnecessary gift taxes from the paper trail. I hope his situation is less contentious than mine.
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hank
  |     |   110 posts since 2016
that's right . I want to avoid any gift taxes or inheritance taxes. Since I don't have a clear answer, I think I will divide it into a joint account and an account only in my dad's name so the money will pass without a problem
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Ally6770
  |     |   4,294 posts since 2010
Make sure that beneficiaries are put on the account so that it does not go through probate. All the beneficiaries would need would be a death certificate to be presented to the bank to receive the money.
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hank
  |     |   110 posts since 2016
I want it to go through probate so they get the money that is stipulated in the will.
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Ally6770
  |     |   4,294 posts since 2010
The beneficiaries can be the same as the will. Most things that go through probate are unsupervised anyway. The reason of not going through probate is that the larger the estate the more probate charges (at least in my state). I was the executrix of 3 estates. I just sent a copy of the will to each of the 27 people left in one of the wills. I had a spreadsheet that stated income and disbursements and sent a copy to the 27 people each month until the home was sold and the last of the money disbursed. That way no one has questions etc. I never charged for my time, gas, mowing or even the stamps etc. as the will stated I would be reimbursed.
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hank
  |     |   110 posts since 2016
thanks for the info. I have not yet and never before been an executor. I did find a website called estateexec.com which was reviewed in the NY Times and it walks you through everything . Did you, by any chance, use this or a similar site?
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me1004
  |     |   1,379 posts since 2010
Hank, your state probate courts (or whatever they are called in your state -- for instance, in New Jersey, I know they are called Surrogate rather than Probate) should provide you all the info you need, probably in a step-by-step format. That would be even more certain than some non-court third party generalizing from state to state.

If what you are dealing with has significant complications, an attorney would be advisable, but if it is more routine, you should be able to do it yourself.
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CuriousDave
  |     |   233 posts since 2018
If you and your father are are shown as "joint tenants" on the account then YOU are the sole beneficiary of THAT account. Joint tenancy property by-passes your father's will (the provisions of a will cannot override a joint tenancy - check it out with an attorney who has expertise in estate planning). Note that property that passes to a beneficiary under joint tenancy does NOT go through probate.
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me1004
  |     |   1,379 posts since 2010
Yes, as I pointed out above. But the one possibility he would have is to turn down that inheritance in that account. A lawyer would have to explain how to do that. But once done, I think then it could be distributed as part of the will.

And depending on how much money is involved here and how many people it would be divided among, maybe he could simply do it himself by giving up to the annual amount allowed without any gift tax consideration. And maybe double that, giving half now in 2018, and the other half in January 2019. I don't offhand know this year's level for that, but up around $15,000. If divided among four, that would be $60,000 this year, and another $60,000 in January. So, it might get it done.
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