US taxes and death

[GaryC]

Slightly off topic perhaps but I think we have several US folk on here, so I thought I would ask...

My mother-in-law is 91 and increasingly frail, so the evil day is approaching when she passes away. She has lived most of her life in the US and taken citizenship. She resides in New York. Her estate will be small and simple - personal belongings, some cash in the bank and (I think) some sort of "deposit" scheme relating to her apartment. If the estate tops $100k I would be surprised.

I have a tax background, so am trying to figure out a) what needs to be considered/done and b) whether I can do it...

For the year of death we will need to file a final federal Income Tax return (1040-SR?) and potentially one for New York State, though I am still sketchy on that.

Then there may be a need for a federal Estate Return and Estate Taxes but as the estate is way under $13m I think that falls away, as does any NY Estate Tax as the estate is also going to be way under $6m. Am I on track here?

Finally, there would be a federal Trusts and Estates Tax Return if the estate generates income of more than $600 per annum - probably unlikely but could happen if there is enough in some interest-bearing savings account. And would there be a NY State version of such a return? I haven't managed to track that down yet...

Overall, am I on the right track here and are there any pointers that will help/guide me?

At the end of the day I might bottle it and get professional help but I would at least like to be able to ask educated questions and understand the answers.

Thanks all...

[Fraufruit]

Does she have a will? Is your wife the executor?

We can start there.

[bethannbitt]

My MIL, a German citizen with a green card, died in NY state too, in 2017, with only her small condo left and about $150K. It wasn’t complicated at all and my BIL had two years to file things as I recall. And yes, there isn’t estate tax on what you described.

I will say that it’s very smooth if someone is a co-signer on bank accounts and if beneficiaries on retirement accounts are named wherever possible. Then a will is just a backup document and probate court is avoided. Been there and done it, and it’s what our lawyer recommended too. I didn’t even need to file anything for my dad (not in NY state though), but I needed to contact Social Security right away to cease benefits. Do contact them pronto in order to avoid receiving benefits and having to reimburse them later. It’ll cease Medicare benefits too.

[GaryC]

Does she have a will? Is your wife the executor?

We can start there.

A will yes (took us 20 years to convince her that doing that would not lead to an early demise) but we have not seen it, so not sure who she has named as executor(s) - hopefully not something stupid like her favourite grandchild...

For Probate purposes the estate might (hopefully) qualify as a small estate, which will simplify things.

[Fraufruit]

I don't think that your wife can do anything before the will is read and the executor appointed. She'll have to wait and see. Does she have siblings?

[GaryC]

My MIL, a German citizen with a green card, died in NY state too, in 2017, with only her small condo left and about $150K. It wasn’t complicated at all and my BIL had two years to file things as I recall. And yes, there isn’t estate tax on what you described.

I will say that it’s very smooth if someone is a co-signer on bank accounts and if beneficiaries on retirement accounts are named wherever possible. Then a will is just a backup document and probate court is avoided. Been there and done it, and it’s what our lawyer recommended too. I didn’t even need to file anything for my dad (not in NY state though), but I needed to contact Social Security right away to cease benefits. Do contact them pronto in order to avoid receiving benefits and having to reimburse them later. It’ll cease Medicare benefits too.

Thanks, first paragraph is good to hear.

I fear the boat may have sailed re co-signers on bank etc accounts but at least there is a will. And yes, contacting pension and social security are on the to-do list. That part is similar in the UK too, as are cancelling passport and the like. I have had the "pleasure" of going through it for my parents and, more recently, a friend whose husband died young. This prompted me to prepare a document for those who have to deal with my/our affairs in due course, with explanations and links to govt websites etc.

[GaryC]

I don't think that your wife can do anything before the will is read and the executor appointed. She'll have to wait and see. Does she have siblings?

Yes, I thought that would be the case. There are no siblings, just her, so yes, a waiting game. We know there the will is, or should be, and have a key to access it, but MIL is of the generation that keeps these things overly private, as it were...

[Fraufruit]

I guess it's her business until it isn't. Just respect her wishes.

[GaryC]

Indeed. It's not something to push at all, not least when someone has reached her position. It will be what it will be, but the planner in me needs to work out how to deal with whatever comes at us from a foreign country and its rules and processes...

[bethannbitt]

I don't think that your wife can do anything before the will is read and the executor appointed. She'll have to wait and see. Does she have siblings?

Yes, I thought that would be the case. There are no siblings, just her, so yes, a waiting game. We know there the will is, or should be, and have a key to access it, but MIL is of the generation that keeps these things overly private, as it were...

An executor is really only needed if there’s something to be distributed, and frankly often doesn’t come into play unless there’s a fight about it. I never even had to do that for my dad. My Mom‘s current will (in Colorado) just states that my sister and I are entitled to everything (which isn’t too much) and we can divide and distribute things as we see fit. No executor will even be needed. Until you see her will and know exactly what there is to be distributed and whether or not she’s appointed an executor I think it’s hard to predict what will be involved. Hopefully she has made things very simple.

[bethannbitt]

Indeed. It's not something to push at all, not least when someone has reached her position. It will be what it will be, but the planner in me needs to work out how to deal with whatever comes at us from a foreign country and its rules and processes...

Well. We have Editor L to thank for giving us this lovely online community room so that when such things happen we can all support each other. Feel free to PM me at any point if you need want specific NY state info and I’ll even put you in touch with my BIL.

[GaryC]

The US system may be a little different but in the UK an executor is normally included in a will and the person with legal right to access and realise assets and of course distribute in accordance with the will. That doesn't have to be overly formal but the person has duties such as obtaining Probate if it is needed and accounting for any taxes on the estate/final tax return of the deceased. If there is no will, someone gets appointed as administrator.

But whatever the rules on executors in the US, someone has to pick up the job of administering the estate, however simple it is, surely.

[GaryC]

Indeed. It's not something to push at all, not least when someone has reached her position. It will be what it will be, but the planner in me needs to work out how to deal with whatever comes at us from a foreign country and its rules and processes...

Well. We have Editor L to thank for giving us this lovely online community room so that when such things happen we can all support each other. Feel free to PM me at any point if you need want specific NY state info and I’ll even put you in touch with my BIL.

Thank you - I will almost certainly take you up on that as this all progresses. MIL could of course pick up again and outlive the lot of us!

[bethannbitt]

Yes, my maternal grandfather was a trained mathematician and cleverly planned for my great-grandmother’s resources not to be exhausted until she turned 100. She buried him when he was shy of 80 and went on to live to be 111! She was of Scottish-Irish stock BTW.

[GaryC]

Love it!