{"id":942,"date":"2020-01-18T06:07:51","date_gmt":"2020-01-18T10:07:51","guid":{"rendered":"https:\/\/www.saudercpa.com\/blog\/?p=942"},"modified":"2020-01-10T18:14:17","modified_gmt":"2020-01-10T22:14:17","slug":"a-lesson-learned-by-an-executor-the-hard-way-segment-ii","status":"publish","type":"post","link":"https:\/\/www.saudercpa.com\/blog\/2020\/01\/18\/a-lesson-learned-by-an-executor-the-hard-way-segment-ii\/","title":{"rendered":"A Lesson Learned By An Executor\u2014The Hard Way (Segment II)"},"content":{"rendered":"

Preface: What executors don\u2019t know can come back to bite them because they can be held personally liable for mistakes in how an estate is handled.<\/em><\/p>\n

A Lesson Learned By An Executor\u2014The Hard Way (Segment II)<\/strong><\/p>\n

Mark wanted to be fair and do the right thing, so when he received the money from the checking account and his share of the investment account, he gave all that money to his siblings. That left only the farm, which was supposed to be transferred to Mark. Mark wondered if he should file the will at the courthouse and open a probate estate for his mother. But he wasn\u2019t sure how to handle all of steps of opening and closing an estate, and he had always heard that probate should be avoided because estate attorneys could be very expensive. <\/span><\/p>\n

\n

\u00a0As with many things in life, \u201ca little later\u201d can be a long time. About six years later, Mark was beginning to think about transferring the farm to his oldest son.<\/span><\/p>\n<\/blockquote>\n

He had given all of the cash he received from his mother\u2019s accounts to his siblings, and he didn\u2019t like the idea of borrowing money or asking his siblings for money to pay an attorney to help settle the estate. Also, he didn\u2019t see why it was necessary since all of his mother\u2019s accounts had been distributed, and all his siblings agreed that the farm was his. He knew that at some point he should update the deed to the farm, but decided that he would take care of that \u201ca little later.\u201d<\/span><\/p>\n

This was an unpleasant surprise for Mark. When his dad passed away there was no need to open an estate or file in inheritance tax return because Mark\u2019s mother and father had owned all their assets jointly,<\/span><\/p><\/blockquote>\n

\u00a0As with many things in life, \u201ca little later\u201d can be a long time. About six years later, Mark was beginning to think about transferring the farm to his oldest son. He remembered that the deed to the farm was still in the names of his parents and decided that it was past time to deal with that issue. He contacted an attorney to draft a new deed for him, but the attorney said that to transfer the property into Mark\u2019s name they would need to open a probate estate and have Mark appointed as the executor so that he would have legal authority to transfer the deed. Furthermore, the attorney informed Mark that an inheritance tax return should have been filed when his mother passed away.<\/span><\/span><\/p>\n

\n

But unfortunately, transferring the farm into Mark\u2019s name would require a probate proceeding, and all of his mother\u2019s assets were subject to inheritance tax when she died.<\/p>\n<\/blockquote>\n

This was an unpleasant surprise for Mark. When his dad passed away there was no need to open an estate or file in inheritance tax return because Mark\u2019s mother and father had owned all their assets jointly, and joint assets of spouses are generally not reportable for Pennsylvania inheritance tax purposes when the first spouse dies. But unfortunately, transferring the farm into Mark\u2019s name would require a probate proceeding, and all of his mother\u2019s assets were subject to inheritance tax when she died.<\/span><\/span><\/p>\n

If that information wasn\u2019t bad enough, Mark\u2019s attorney told him that if he had properly filed an inheritance tax return by the original due date (nine months after his mother died), he could have claimed a specific exemption from paying inheritance tax on the farm, which would have saved him 4.5% of the value of the farm. Now, the Pennsylvania Department of Revenue would require him to pay that tax on the value of the farm, in addition to requiring his siblings to pay tax on the $350,000 that they had received. And not just 4.5% tax on those assets, but tax, penalties, and interest!<\/span><\/span><\/p>\n

\u00a0Disclaimer: This article is general in nature and is not intended to provide specific legal or tax advice. Please contact Nevin or another attorney licensed in your state to discuss your specific legal questions. In order to protect confidentiality and provide a better illustration, names in the above story have been changed and some facts may have been changed or added. <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Preface: What executors don\u2019t know can come back to bite them because they can be held personally liable for mistakes in how an estate is handled. A Lesson Learned By An Executor\u2014The Hard Way (Segment II) Mark wanted to be fair and do the right thing, so when he received the money from the checking … Continue reading “A Lesson Learned By An Executor\u2014The Hard Way (Segment II)”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/posts\/942"}],"collection":[{"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/comments?post=942"}],"version-history":[{"count":2,"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/posts\/942\/revisions"}],"predecessor-version":[{"id":946,"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/posts\/942\/revisions\/946"}],"wp:attachment":[{"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/media?parent=942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/categories?post=942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saudercpa.com\/blog\/wp-json\/wp\/v2\/tags?post=942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}