Joe says his mom passed away and left behind timeshares. Joe inherited those, and they are all paid for. He isn't sure what to do with them now as the executor of the estate. Dave explains how to handle it.Show Transcript
Ann wants to know when to create a revocable trust, especially if you own real estate. Dave doesn't believe Ann needs one even though it does provide some liability protection.Show Transcript
QUESTION: Ann in Washington wants to know when to create a revocable trust, especially if you own real estate. Ann believes it would be easy to have everything in one place and beneficiaries to leave assets to. Dave doesn’t believe Ann needs one even though it does provide some liability protection.
ANSWER: You can form a revocable trust if you’ve got estate tax problems. There are some things you can do there. If your estate isn’t over $5 million, you probably don’t have any situation that the revocable trust is going to be needed for with the exception of sometimes we’re dealing with folks who are “famous” and in the limelight, and they often will put their homes in a trust a little more for a privacy thing. But there’s not any real huge tax advantage for being in a trust. It’s just a pain in the butt.
It does give you a little bit of liability protection in those situations. If you have a large, large number of assets to where you’re a target, a trust on your home makes sense. If you’re a rock star of some kind, it makes sense from a privacy standpoint. If you’re using it for some kind of an estate planning tool, it might be there. But just for convenience, it’s not convenient. It’s inconvenient. Just for the purposes of estate planning, you can just name that in a will and it’s fine.
It does avoid probate. If you’re in an area where probate’s really, really expensive, you can do it. I wouldn’t move your home into a trust unless you know that you know you’re going to be there a long time. You’ve got to file tax returns on it every year. Any time you get ready to do something, the trustee has to be involved because you no longer own the property. The trust owns the property. It sounds like it’s some kind of a sexy estate planning tool, but honestly, I don’t recommend them. I don’t use them. I’ve got some revocable trusts and things of different types in our estate plan, but it’s because of the size of it and the complication of it—not because it’s just the convenience of it. There is definitely nothing convenient about it.
Lisa discovered an art and coin collection her father owned. She isn't sure what to do with this collection. Does Dave have any ideas?Show Transcript
QUESTION: Lisa in Omaha discovered an art and coin collection her father owned. She isn’t sure what to do with this collection. Does Dave have any ideas?
ANSWER: The first thing you do is have it appraised by a reputable coin dealer and art dealer. You find out what it’s worth.
Let’s pretend it’s worth $200,000. Here’s what you do from there. Are you in any way sentimental about this because it was your dad’s? That’s the way I would look at it. I would say I would pick out a couple of those that meant something to me and reminded me of him, and I’d keep a couple. And I’d keep a few coins and things maybe to pass down to another generation—nieces and nephews or kids or whatever.
The rest of it, I’m going to look at it, and then the way you analyze it is this: You say this is worth $200,000. If I had $200,000 cash in my hand, what would I do with it? Would I buy art and coins, or would I do something else with it? If the answer is I would not buy art and coins, then you would sell the art and coins, which is, by the way, the conclusion I would come to in my personal life. I’m not interested in collecting art or coins personally.
Unless you really learn something about that world, it generally turns out not be a good investment. The only way it’s a good investment to invest in what we call collectibles as a category is if you make it a hobby and you learn something about the collectibles. An example of that would be I have a fairly large gun collection, and I am a gun guy. I do know a little bit about that, so I’m buying guns very strategically to be part of that—not really as an investment program—but at least I will make money on them as a part of my hobby.
To find a reputable dealer, I would probably have to jump online and start some research in your area. The good news is on something like art, there are people that will specialize—you’re about to learn everything I know about this, which is not much—in types of artists—the grand masters, North American artists of a certain timeframe, those kinds of things, so you need to find someone who knows something about this particular type of art.
The same thing might be true of coins, although coins are probably a little bit easier to put some value on depending on the type of coin it is.
I would be stuck, personally, with going online and doing some research. Or if I knew somebody—I actually know two people in the art world, and I probably know about six people that are in the coin world—and I would probably call them and ask them for recommendations as to who might give me an accurate appraisal. That’s a market value appraisal, not an insurance appraisal, meaning what can I actually sell this stuff for? Then you can look at that and say, if I had that much money in my hand, would I keep it in art? Would I buy art and coins? If the answer is no, sell it other than the keepsakes that you choose to hang on to.
Melinda's husband who died eight years ago. She didn't probate the estate, and he did not have a will. She is trying to deal with this again but is being given the runaround.Show Transcript
QUESTION: Melinda in Washington had a husband who died eight years ago. She never closed his bank accounts, which were opened in another state. She didn’t probate the estate, and he did not have a will. All these years later, she is trying to deal with this again but is being given the runaround. She needs Dave’s help in figuring out what to do.
ANSWER: Go see an attorney who does estate planning, pay them $250 to get this done, and they’ll get it taken care of for you. If the accounts were opened in Florida and you lived in Oregon at the time, technically the estate would be probated in Oregon. That may be what has to happen. Then the judge appoints you as the executor of the estate, and as the executor you can close the accounts and disperse the money to the heirs, which is you.
But that may take $250 to $500 in attorney fees and court costs to get that done. Or you may just be able to get a simple motion from the court and it may not cost hardly anything. But see an estate planning attorney who knows something about Oregon law and can deal with this.
Estate law or probate law is different from state to state. Florida and California have some very weird real estate laws and estate laws as well. They cannot just turn this loose to you.
What if I walked in there with a death certificate and said I’m his brother and they gave me the money? I can get a death certificate from the state because it’s public record. I can pay $8 and get a death certificate on your husband. Then I can just walk into the bank and claim that I’m his heir. That’s why they can’t do it. They have to have a court document of some kind to keep them from being liable to the real heirs.
Don’t wait another eight years, or the money is going to be gone. They are going to throw this money back to the estate saying it’s an inactive account and the person is deceased and there’s nothing they can do with it. They have to turn it over to the estate after so long. Make sure you deal with it this time, or forget it for the rest of your life and don’t worry about it. But I would take care of it and get it wrapped up.