It’s usually best to close an estate sooner rather than later
Q: My 93-year-old father owns four 30-year notes on homes he sold. All have 15 years or more before they are paid off. He wantsme, as executor, to keep his estate open and continue collecting the payments and distributing the money to his beneficiaries until the notes are paid in full. Does the IRS restrict how long this can be done? I suggested he place his assets in a trust to allowme to manage them easier and without probate, but he refuses because of the high cost.
A: You can keep an estate open for years, but it’s typically not a good idea. You could die, meaning another beneficiary would have to go back to court to get a new executor named. Or one or more of the other beneficiaries could die, thus creating problems for you with regard to who gets the distributions. And you would need to maintain an estate bank account and file annual tax returns.
It’s usually best to close an estate sooner than later.
Your father could create an LLC and assign the notes to it before he dies. That way, after his death, each of the beneficiaries would be an owner of an interest in the LLC. That would be much easier for you, but it does mean legal and filing fees.
You and your siblings (or the estate’s other beneficiaries) could also create an LLC after he dies for the same purpose. Of course, that would entail extra costs and the need for all of you to agree on the plan.
Your idea of a trust is also good. If your father owns other assets or accounts, the trust could save money following his death even though it would cost him more now.
It might also be possible to allocate one note to each beneficiary after his death. Any differences in value could be settled with cash payments between the beneficiaries, or by the division of other assets in your father’s estate.
Q: What do I need to do to get my name on my dad’s house? He passed away in 2012 without a will, and I amthe only living heir. My only sister passed in 2008, and she had one daughter who wants no part of the house.
A: First, you would need to do some sort of probate for your father’s house. What is easiest is not clear, but it seems like a Small Estate Affidavit should work.
Next, you would need to be sure your sister’s estate was properly probated; otherwise, your niece will not have clear title yet.
Then you can ask your niece to give you her half of the house, and she would do that by signing a deed transferring her ownership interest to you.
Given the complexity of this matter, you should hire an attorney to help you.
The information in this column is intended to provide a general understanding of the law, not legal advice. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances. Ronald Lipman of the Houston law firm Lipman & Associates is board-certified in estate planning and probate law by the Texas Board of Legal Specialization. Email questions to stateyourcase@lipmanpc.com.