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My parents passed away recently; father in December and mother in March. I am the only child. I found their will and it leaves the "residual estate" to me and my daughter (50-50). My parents had several annuities of which I am the sole beneficiary. My parents and I were co-owners of a few savings accounts. The funds in these accounts go to the surviving owner, which is me. I consulted an attorney and she said that the annuities and the savings accounts are not part of the "residual estate." The policies that have no beneficiaries need to be shared through probate. So in essence I legally inherit the bulk of the estate. How do I share some of the money with my daughter?

I am in the thick of it right now. I am executor and I asked the person to have my name removed from any account, but, too late, the task was not completed. The beneficiaries are my children. There were some unbalanced annuities. My name was on a joint tenency for a stock and a bank account( so that I could assist as executor and pay off any bills) I also had to file in probate to get some funds released.

When all is said and done, plus the beneficiaries agree, some of the bank account will be held for next year to pay taxes. My stock will be portioned to them when cashed out. The bank account now in my name, will partly be distributed to them with some witheld for a year.The stocks are considered non taxable inheritance. For any other unbalanced assets, the beneficiaries agreed to make it work. If they chose not to do that, they know that I would disburse my inheritance any way I choose. I would tell then why if they had to ask.

Ten years ago, I worked it out with my sibling to balance an inheritance with my aunt. My aunt had 2 joint accounts with another sibling and for those accounts, we just transferred to aunty's sibling. Brother and I amicably rebalance on our own.

You should consult a tax accountant including the advisor for the annuity for options.
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Reply to MACinCT
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I'm so sorry for the loss of your parents.
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Reply to shad250
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The website Nolo has some good, easy to understand examples.
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Reply to BarbBrooklyn
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Demstress, the lawyer you are paying (out of the estate's money) should explain this again if you are not wrapping your head around it yet ( I totally get that! Your caregiving journey was so difficult!).

Go back to her and ask her to tell you exactly which accounts contain monies that need to be shared and how to best disburse the money to your daughter.

In the case of my moms estate, my brother was the executor and he was advised to open a checking account that was titled with the estates name i.e. The estate of Jane Doe. All of mom's other cds and savings were liquidated and placed into this account and all legal fees, taxes and inheritances were paid from this account.

I think that's what you are asking, yes?

Make sure that you engage a tax advisor (paid for by the estate) to prepare all the tax forms that need to be filed. And make sure that your daughter and you set aside and prepay income tax on any inheritance that is taxable. This varies from state to state and is also dependent upon whether any of the money was in tax deferred accounts.

Paying for legal and tax advice is the right thing to do. This is not a do it yourself project!!

If the estate is sizable and your daughter (or you) need investment advice, there is a wonderful site at www.bogleheads.org.
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Reply to BarbBrooklyn
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The annuities are yours legally because you were the beneficiary. The bank account money is yours legally because you were joint owners with your parents, and a joint owner automatically becomes a sole owner if the other joint owner dies. The policies that have no beneficiaries are all that remains in the residuary estate, unless there is anything else that your parents owned (eg a house). So that must be shared between you and your daughter because you share it 50-50 under the will. Whether you need to get probate may depend on how much money is involved in these policies with no beneficiaries – many institutions have simpler requirements for small amounts. You could find that out for yourself, or get the attorney to find out for you. You will share it 50-50 with your daughter in either case ie whether or not getting probate is essential. There is no way to change this.

Make a list of what and how much you are going to get because you now own it automatically, and what and how much you will share with your daughter from the policies with no beneficiaries. If you want more to go to your daughter, it is not an issue under the estate, it is a quite separate matter of how and when you give it to her. For example, your attorney might suggest that it would be more economic to put it into a trust rather than giving it to her outright, or you might decide that the gift tax is not enough to bother about and just make it a straight gift. It all depends on the $. If you want some to go to your daughter immediately, perhaps you could make it a loan from you to be repaid out of the amount that your daughter will inherit from the policies with no beneficiaries. Probate can take a long time!

This is all much less complicated than it sounds. Just work out the figures, and don’t feel pressured. Unless there is personal estate that is really valuable (eg a collection of famous paintings), or a family fighting for every last penny, an executor normally agrees how to deal with the bits and pieces left behind – gifts to family members and friends, the rest goes to an auction house and the proceeds go into the estate, and what the auction house won't take goes to charity. You have enough on your plate to deal with the deaths of your parents, for which I give you my sympathy. There is no great hurry. Best wishes, Margaret
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Reply to MargaretMcKen
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How old is your daughter? Depending on her age you can set up a trust for her. If she's a minor you can do that easily with a financial advisor.
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Reply to mmcmahon12000
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First, I am so sorry you have lost both of your parents so close together. Your head must be spinning with all of the details. “Residual” means left over. A residual estate will contain any assets not already disposed of. The annuities and the bank accounts have already been disposed of — you inherited all of that. The residual estate will be any asset that has to go thru probate. This is what your parent’s will is telling you to split with your daughter 50/50. It seems from your question that you may be feeling like you need to split the assets left solely to you with your daughter, also. You can certainly gift her whatever amount you see fit. But consider this: Your parents left those assets to you alone. They could have added other beneficiaries on the accounts, but they didn’t. Having just been thru the caretaking process with both parents, you probably have a very clear understanding of the amount of money it takes to age in place. While splitting this extra money with your daughter is an honorable desire, I think it’s also very responsible to hold onto it for YOUR future care needs. Planning for YOUR financial future benefits your daughter, in that she will not have to carry that financial burden. Any assets remaining from your care can then be passed down to your daughter.
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Reply to FarmJelly
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Are you asking how to share the annuities and the savings accounts with your daughter? If so, does your attorney have an LLM in tax? If not, please talk to an accountant/ tax advisor. Sharing the money which is now your money can raise gift tax issues; maybe not enough to be taxable but probably reportable. And, what kind of annuities? Can the beneficiary be changed by you so that your daughter is a 50% beneficiary? Bring the paperwork on them to the accountant.
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Reply to anonymous903302
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I would go with what the attorney says. She knows your case in particular and can speak directly to your circumstances. For tax purposes, you want to be certain to cross all your t’s and dot all your i’s ,
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Reply to Ahmijoy
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anonymous903302 May 19, 2019
I agree.

Basically, the residual estate is really just anything that has not, legally, already, in writing, been designated to go to someone specific.

So, for a very simple example: if you had an IRA Account, you would have been asked, when you established it, to designate a beneficiary and, when you die, the beneficiary would bring a certified copy of the death certificate to the bank (or brokerage firm) and the IRA account would be transferred to the beneficiary; outside of probate.

I have some advice for you. Get the estate through probate, and then wait 6 months before doing anything about "sharing." Unless, of course, there is personal property to be divided. Take a break. Ideally, don't do anything about "sharing" until 2020, because that's a new tax year. Make life easier for yourself.

If your daughter needs funds and you want to "share" to help her, then ask your attorney how to do that, with your daughter, in writing, so that it's not a "gift." Not that you would absolutely trigger a gift tax, but a gift would be reportable.
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Geeez that all sounds complicated. I looked up residual estate and residuary estate came up:

"A residuary estate, in the law of wills, is any portion of the testator's estate that is not specifically devised to someone in the will, or any property that is part of such a specific devise that fails. It is also known as a residual estate or simply residue.
The will may identify the taker of the residuary estate through a residuary clause or residuary bequest. The person identified in such a clause is called the residuary taker, residuary beneficiary, or residuary legatee. Such a clause may state that, in the event all other heirs predecease the testator, the estate would pass to a charity (that would, presumably, have remained in existence). If no such clause is present, however, the residuary estate will pass to the testator's heirs by intestacy. At common law, if the residuary estate was divided between two or more beneficiaries, and one of those beneficiaries was unable to take, the share that would have gone to that beneficiary would instead pass by intestacy, under the doctrine that there was no residuary of a residuary. The modern rule, however, is that the failure of a residuary gift to one beneficiary causes that beneficiary's share to be divided among the remaining residuary takers."

I don't really understand any of that, but I hope someone comes along who does.

My deepest sympathies, Demstress. May the memory of your mother and father be a blessing to you and your daughter.
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Reply to NYDaughterInLaw
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demstress May 19, 2019
Dear NYDaughterInLaw,

Thank you for your expression of sympathy. My parents are always in my thoughts and prayers. They lived with me so it is hard.
Now I have to deal with the legal aspect of their estate. No matter how many times I read what a residual estate is, I just don't understand it. The attorney was clear in her explanation but then I read what it says above and I get confused again.
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