trust issues again

[out of the loop]

What is the name of your state? Illinois

I have a few questions..
1. If an investment company transfers IRA money into a cash account without the approval of the Trusts Trustee can they be held liable for the income taxes incrued? (they totaled over $175,000), they were supposed to roll-over the money into seperate accounts for the beneficiaries.

2. Can the accountant really request that the IRS give this money back due to it being a mistake made by the Investment Company?

3. If the funds can be recovered what kind of taxes will the beneficiary be held accountable for if they spend the money that was IRA funds? would it be taxed as income or inheritance? what is the difference in tax %.

4. My mom took my dad in when he suffered a brain stem stroke ( they divorced in the 70's), my dad amended his will after the stroke to include her as 1/5 of his estate ( my brother is trustee and took over at that time as power of attorney) she asked my dads credit card company for a card with her name on it and proceeded to charge over $4000.00 monthly to the charge card and my brother paid it for two years, should she have to refund the estate this money since it wasn't used for my fathers benefit or care? she just charged stuff for herself. I have print outs of the check register showing what was paid and to whom as proof.

5. My mom also has all my dads personal possessions that he was awarded during their divorce and the attorney for the estate (who happens to also be my moms other ex husband that she married after she divorced my dad, I stated that this was a conflict of interest but my brother didn't think so!) says that these were gifts to her, she will have control over them. This includes my fathers family silver, his Doctor degrees and several pieces of furniture.

6. Most important question... What should I do??

 

[Dandy Don]

An accountant or CPA who is experienced with IRA issues will need to examine what has happened here to get your questions answered.

The real question is--were there other accounts that the investment firm could have gotten the tax money from to pay this bill instead of transferring the IRA money out? Was the IRS asking the investment firm to pay the taxes or did they just do this on their own without consulting the trustee?

What is the trustee doing about this?

Is the investment firm a co-trustee of the trust or not?

If a refund is due from the IRS, it would be possible to get one but it will take a long time, but since the taxes are apparently due it doesn't appear that this would be an option for you to pursue.

 

[out of the loop]

Thank you Don for the reply! Investment firm isn't co trustee.....
The investment company didn't cash in the IRA accounts to pay taxes, they cashed it in to make accounts for the benificiaries and instead of rolling them over into 4 seperate accounts they put it all into one cash account thus they incrued income tax. The trustee isn't doing much.. checking with the accountant periodically to see what is going on and telling all of us that they are pretty sure that the money will be returned. You said that the return would take a long time, They aren't coming across that way, the trustee (my brother) is acting like it would be a few weeks. They have already distributed the non ira money this week and the majority of that went to my mom (wasn't married to my dad at the timeof death) so they couldn't use that to pay the taxes. IF we do get this money back what kind of taxes could I have to pay on it? inheritance tax?? Oh and before I close this what do you think about the Estate Lawyer being my mothers other ex husband?? Conflict or not? Sorry I have one more question I thought of, My brother (the trustee) wrote my mom a check for $15000.00 at the time of my dads death to "get her through" and then told us that she would pay that back when we settled the estate, now he is only taking out the amount that she got after she paid taxes on the 15k, does that seem right? to go along with that she ownes 10% of an suv and my dad owned 90% it is in the estate tax forms, I suggested that she buy us out of dads share if she wants to keep it and brother (trustee) says that she only needs to pay the value after estate taxes? What is this after tax crap, does it sound fair to you? I am only concerned with keeping this fair and just for everyone!

 

[Dandy Don]

After the investment firm corrects this situation, the IRS will probably be sending the beneficiaries any notice about any taxes that may be due, but you would want to double check that liability with a local CPA or tax accountant to make sure what you have been told is correct.

Do you have a copy of the trust? What type of trust is this?

What brother has told you is fair. He is being sympathetic to a lady who has lost her husband--you all need to stop nickel and diming her about the car--you will be lucky to get anything for that.

 

[out of the loop]

I have a copy of the trust it is a Revokable living trust. My brother is being too sympathetic in my opinion to a potential lawsuit degree! in my past posts I have stated our mother was NOT married to my father, she has been divorced since the 70's from him and she has made taking things that are not hers the story of her life, she did this crap to her brothers and sisters and now she is doing it to her own children, I am just one of them that won't put up with it. I have children of my own and would never cut myself into their inheritance... she was added AFTER my father suffered a brain stem stoke, one month before he told me she would only get a house as payment for care to him, nothing else since she took him for alot when they divorced all those years ago,and I believe that she got her lawyer ex husband (the estate lawyer for my dads trust as it just so happens) to help her with the plan. She has all my dads personal possessions that he won from his divorce from her and the estate lawyer (her ex husband, after my dad) said that they were gifts from my dad even though in the will it clearly stated all tangible nonfinacial property be split between my siblings and myself!!!!!! Forgive me if I sound less than sympathetic but when they removed blood from my fathers brain to make him more comfortable all she could talk about was whether or not he would be able to sign the papers to amend his trust and add her as 1/5 . The only reason she had any power over anything was because she begged my dad to buy a house she couldn't live without in return when he couldn't care for himself anymore he could live with her... two years and $300,000 later my dad is dead and I am the only one who cares that everything comes out fair and honorable. my sister has washed her hands of the situation for her own sanity, our mother even had the nerve to ask the Investment broker how much control she had over her portion of the funds right in front of my fathers casket for myself, my wife and my siblings to hear! then joked the day of the funeral that she was in love with the Investment broker... no he was in love with her and that she hoped that he called for a date with her before the funeral! she is sick!

 

[dmode101]

What is the name of your state? Illinois

I have a few questions..
1. If an investment company transfers IRA money into a cash account without the approval of the Trusts Trustee can they be held liable for the income taxes incrued? (they totaled over $175,000), they were supposed to roll-over the money into seperate accounts for the beneficiaries.

2. Can the accountant really request that the IRS give this money back due to it being a mistake made by the Investment Company?

3. If the funds can be recovered what kind of taxes will the beneficiary be held accountable for if they spend the money that was IRA funds? would it be taxed as income or inheritance? what is the difference in tax %.

4. My mom took my dad in when he suffered a brain stem stroke ( they divorced in the 70's), my dad amended his will after the stroke to include her as 1/5 of his estate ( my brother is trustee and took over at that time as power of attorney) she asked my dads credit card company for a card with her name on it and proceeded to charge over $4000.00 monthly to the charge card and my brother paid it for two years, should she have to refund the estate this money since it wasn't used for my fathers benefit or care? she just charged stuff for herself. I have print outs of the check register showing what was paid and to whom as proof.

5. My mom also has all my dads personal possessions that he was awarded during their divorce and the attorney for the estate (who happens to also be my moms other ex husband that she married after she divorced my dad, I stated that this was a conflict of interest but my brother didn't think so!) says that these were gifts to her, she will have control over them. This includes my fathers family silver, his Doctor degrees and several pieces of furniture.

6. Most important question... What should I do??

Sounds like you have a quite a mess on your hands. To really adress all the issues you probably need legal representation to protect your interests. I'll try to answer your questions generally:
1-3. If it was the fault of the investment company, I believe it can be reversed without taxes due. Yu'd need to request relief from the IRS, but I think it should be granted if what you say is true
4. I'm confused, if your mother's name is on it and your brother was paying it, where does the estate come in? Certainly your father's estate should not be paying your mother's bills if that is what is happening. Someone may need to bring this to the court's attention.
5. Well, this is a factual questionas to whether they were gifted to your mother. If the attorney for the estate is not pursuing this then you may have to yourself if you feel strongly about it.
6. Consider contacting an attorney, but you need to decide how much justice you want to buy.

 

[out of the loop]

Thank you for your suggestions to this complicated mess. I am trying to explain things so that it is easy to understand even though some of it might make no sense it is just that complicated! My mother obtained a credit card with her name on it (last name is not mine anymore, divorced dad in 70's, remarried, divorced that guy but kept his last name) but it was still my dads account,she used it to buy god knows what (over $36,000 worth, I have the check register statements) and because it was my dads account my brother paid the bills, I hope that it a little bit easier to understand.
The Lawyer for the Estate isn't going to pursue getting my dads nonfinancial, tangible items owned by him at the time of death because then that would be taking away from my mom, his ex-wife. See what I am saying??? she has the lawyer in her pocket she has the trustee in her pocket and there doesn't seem to be much I can do other than pursue a legal suit against them all? could their be consiquences for the Lawyer for taking this case to begin with since he was married to one of the heirs at one time and myself and one other sibling had a problem with him taking the on the Estate case due to this? isn't this a conflict? He was coming over the the house for petes sake when my father was on his death bed bringing my mom flowers, beer, and rubbing her feet, taking her out to dinner, shopping for christmas gifts with my father's credit card (the one with her name on it)... I could go on and on with the crap that has happened but I think you all get the point, I guess I just need to shut up and get a Lawyer!!!!!

 

[Dandy Don]

Exactly WHO WAS IT that amended the trust to add mother's name to it?

Are all of the estate assets put in to the trust or is there also a will with other assets that is being probated separately?

 

[out of the loop]

My father came home from the hospital after they removed blood from his brain (he suffered a brain stem stroke) and a few days later my brother came and picked him up, took him to the Lawyers office and my dad signed the papers amending the trust. I have a copy of the amendment, my dads signature isn't even on the line. The Investments and Land were are in the trust, there was a seperate Will that directed where his non financial, tangible assets were to go, although I haven't gotten anything.. it stated that my siblings and myself were to get those things and like I said before moms other ex, the Lawyer for the Estate said that all of it was gifts to my mom. Everything (trust too because they wouldn't make a distrubution until this period was up) went through the 6month claims period and that has been up for 8 months.

 

[Dandy Don]

What is the name of your state?

You might have a case to charge undue influence/duress if you can get his medical records to show that at the date that he went to the lawyer's office that he was under medication that might have impaired his judgement.

Yes, you are right to be concerned about a conflict of interest, but that is not illegal, and as of right now you seem to not have documented proof of anything illegal occurring. If father approved the revisions of his trust and his will to include the ex-wife, then you have no legal grounds to contest. Are you going to spend your inheritance on lawyer's fees to defend a suit that you might not win?