So if you were the IRS...

[jackskellingtonsgirl]

What would you do in this situation?

My father died without a will a week or so ago. My sister had Power of Attorney so she took all of his money. She announced to my mother yesterday that she and her worthless DH are buying a house so they don't have to live with the in-laws anymore. Father never filed his taxes for 2004 or 2005. If you were the IRS would you take her house and auction it to settle the tax liability? There will be a paper trail from the financial institution holding the IRA that cut my sister a check, so the IRS can see exactly who took the money that should have remained in the estate until outstanding debts were paid. Any thoughts?

FWIW there are 3 of us that should have had equal claim to the estate. I am suing the sister that took all the money because I want to teach her a lesson. While she was supposed to be paying all of Father's bills she allowed Mother's child support to fall into arrears, so our 14 yo sister is getting shafted. My mother refuses to take any legal action. By the time she decides that MAYBE she should try to get her support payments there won't be any money left. NONE of us should have ended up with money from the estate because his debts were astronomical, but child support is the absolute FIRST debt that should have been paid. Greedy sister needs to be punished, so I think suing her will accomplish that. Or maybe the IRS will come after her...

 

[SplshMtn99]

Well, you got it right when you said she HAD power of atty. POA is void upon death. So...... HOW did she withdraw the $? I think the bank screwed up here.

Sorry to hear about your dad..........and your sister.

 

[Tjaleks]

Don't ya just love family? Unfortunately, we don't get to choose them. Only you know what is best in this situation for you and your little sister. It sounds like this has been going on for a while, (all this anger and bitterness). Personally, I would do whatever I had to do to make sure that little sis is taken care of, even if that means boths suing and dropping a line to the IRS. (Though, I probably would do both as a last option.) I do hope that you can come to some peaceful resolution for your sake. The emotional toll this is going to take will probably be extreme.

Since your little sis is 14 can't she get some social security from your dad passing?

 

[Marseeya]

OMG, I didn't know your father passed.

I'm so sorry. I need to catch up on what has happened.

 

[bcvgal]

I might be wrong but when my dad died he had an Ira and I was sole beneficiary. I was told that since i wasn't 50 something and a half the IRS would tax the proceeds pretty heavy. Grant it was a very small amt IRA so it really doesn't matter but if you have a large amt you can bet she'll have to pay taxes on it. So sorry about your Dad- I know the pain is bad right now.

 

[tiggersmom2]

Didn't you post a while back that you had NO relationship with your father and didn't really care that he died? In that case I don't think you would be entitled to the same share as the sister who took care of him and had a realtionship with him.


I think it is a horrible idea to sue her......it will just be one more relationship in your life that is down the tubes...or maybe you don't care about that.

Anyway, good luck

 

[LoraJ]

You definitely need to contact a lawyer. I would think that money would have to be used to settle his estate first. Although, I'm not sure if the IRS could seize her home. If he owes money for taxes, I doubt he owes enough to seize a home. Your Aunt is the executor right? I think it would be her responsibility to make sure his taxes get filed. I still don't know how your sister managed to get all of the money when she isn't even executor. You may have to sue your Aunt actually.

Where was your father living? Was he renting a place? nursing home?

So sorry you are going through all of this. Going through something similar with my boyfriend's dad. He doesn't have a will yet, I have one drawn up but he needs to sign it still. But at this point I'm not sure it would even make a difference since he has nothing. No life insurance, -40 in the bank and tons of doctor bills, no property. We're trying to get medicaid and now not sure if we will be able to get ssi disability if he does get medicaid. From your last thread I was reading that the ss can help take care of my bf's sister. Although she turns 18 in November. It would be nice that she could get something out of it. I hope we can sort this all out. And I sure hope you can sort it all out too.


ETA:
I thought I had read somewhere that money from an IRA that has a beneficiary may not be part of the estate. It may be possible that she is entitled to that money. ??????? IS that true?

 

[brerrabbit]

Sorry to hear about you loss.

As to the other situation its very complicated. As a previous poster said, the POA is rendered void upon the death of the grantor, in this case your Father. At death most of the assets will become the possesion of his surviving spouse in this case your Mother. If he had assets that did not name your Mother as benificiary then those assets are subject to the provisions of the will. Your sister will be in deep do do if she has spent the money. The IRS will and does have first claim on any moneys owed them from the 2004 and 2005 tax years, and they will get it including penalties and interest. Additionally as another poster mentioned if there were large amounts of money in IRA's then they will want proof that that money was left to a benificiary and that benificiary will have to roll the money into a qualified plan such as a self directed IRA or face paying taxes on the money as well as a 10% penalty. Since money goes into IRA's tax free they want their taxes when it comes out, however it comes out. Further if the proceeds of the estate were not left to your Mother and are subject to the provisions of the will then the will has to go through probate. In essence what probate is is an accounting of all your Fathers assets and liabilities. Once determined all liabilities are paid from the assets and the left over assets are then divided subject to the will. The first order of a judge in a probate case is to freeze all assets until a thurow accounting is submitted. Notice is then posted to allow and creditors the right to make a claim against the estate. Once the notice period has passed and all debts settled then the assets can be divided among the heirs.

Your sister has some serious explaining to do if she used the expired POA to spend any money from the estate and has broken several laws which she could be convicted for violating. In most states those laws carry both financial and possible jail time penalties. Further she would be responsible for restitution of all funds to effected parties, ie you and your Mother as well as any other effected heirs.

 

[jackskellingtonsgirl]

I had heard that POA ended at death. She asked for the IRA to be disbursed to her before he died, but the bank told her "no", so I don't know HOW she managed to get it UNLESS she was indeed named as beneficiary. If she was beneficiary all she needs to do is provide proof of that to my attorney and I will back off.

My 14yo sister will get SS benefits, which will be higher than the child support, so that is good.

Marseeya - Welcome back! Hope you had a great trip!

I did not have a relationship with my father. I don't want anything from the estate, I want to punish my sister for stomping on our 14yo sister who has no way to stand up for herself since she is a minor. The only way for me to help my sister is to put a claim to the estate for myself because I don't have legal standing to claim anything on my 14 yo sister's behalf. There was no will, so by state law all the shares are equal. Besides, I am suing to force her to disclose information, not to get money. Had she paid the creditors properly there wouldn't BE any money. The sister with POA never took care of Father. He was in the hospital, he got out, my MOTHER took care of him for a few days, he went back to the hospital, he went to a nursing home for a few days, then back to the hospital where he died. 2 months from start to finish and my sister never did more than drain money out of the account. She maintained a relationship with him because she always needs money and sometimes he would give her some.

Like I said, IF she was beneficiary on the IRA then good for her. I do imagine there will be tax penalties, but maybe not. Either way, she owes my mother $1000 in child support that she didn't bother to pay when she was in charge of the accounts before Father died.

I'm not quite sure how Aunt Executor plays into all this. There is nothing in writing naming her executor, so I don't know if she is serving in that capacity or not. Last I heard she was camped out in Father's apartment not doing much of anything. My attorney figures we can send copies of whatever we send to my sister to Aunt Executor as well.

 

[LoraJ]

Not sure how it is in TX, but in NJ, all family members can apply for letter of administration where you can become administrator of the estate. This has to happen within the first 10 days. Could your aunt have done this?

 

[jackskellingtonsgirl]

My parents were divorced. There was no will, and as far as I know the estate isn't being put through probate becasue the assets are low enough that probate isn't mandatory.

The divorce decree states that 2004 will be a joint tax return, to be submitted by Father. He never did that. He also never submitted 2005. He was using money out of the IRA to live on since he had virtually no income. He drank continuously so it was impossible for him to do enough work to bring in much money. He was 61, so there will be penalties for pulling money out repeatedly during '04 & '05.

My sister has the money that was remaining in the IRA, and she is spending a huge chunk of it on her new house. Obviously she didn't roll it into a qualifying account of any sort.

My mother is willing to just slink off under a rock and pretend that the middle sister never did any of this. I am not willing to do that. My sister needs to be held accountable, and if I am the only one with enough guts to force the issue than that's fine. This may all work out just the way she wants it in the end, but I am determined that it will not be easy for her. It will be hard, and there will be many times in the process where she will question if it was worth it. I'm not looking to gain anything, so I have nothing to lose except time and some court costs. Totally worth it for me.

 

[barkley]

don't know about the irs issues, but re. child support-if she was poa and failed to pay c/s, and the monies are issued via a state or local agency (where you send money to agency, agency cuts check to mom)-you can make a call to that agency and advise them of the remaining funds from the estate that should have been used to cover the arrerage. if given the information about the previous poa's siezure of funds that existed prior to dad's death, and any bank info. re. where the funds may currently be-there is the possibility that they could freeze the new accounts until an accounting is done. if they learn she will be purchasing a home with the funds there is the possibility that they could throw up a road block to her purchasing (and if not-place a lein on the house to determine what portion was paid from dad's assetts and force a payout for those monies).

child support debts are the highest priority when it comes to collection-in the case of tax refunds, they are taken first (student loans second). in the case of an estate paying existing debts, even an older debt does not have priority.

i think "d"s is gonna be up the creek-when you take on poa you take on the liability to act as if the indebtedness was your own. you are to act on the person's best behalf-but you carry the penalties if you take illegal action of any kind.

 

[jackskellingtonsgirl]

Not sure how it is in TX, but in NJ, all family members can apply for letter of administration where you can become administrator of the estate. This has to happen within the first 10 days. Could your aunt have done this?

There is something about the heirs having to sign off to allow a family member to act as administrator. A family law attorney told me I could apply to do the estate myself, but my sister would have to sign off on it. We can petition to have a third party appointed by the court to do it and none of the family can block that, but that costs several thousand dollars and there's really no point in that now. No need to bring in a third party to look at all the debt that will never be paid. Mother said my sister and Aunt Executor are going to pack up Father's things and put them in storage. HA! They are going to move it all straight into Greedy Sister's new house. Which is neither here nor there, but I think it is funny how they keep lying about things. If they were going to sell his stuff to get money to pay debts (which is what they told Mother) then they wouldn't have moved it to storage first. The really tacky thing is they were VERY mean to the 14yo when she asked to take some of the belongings from Father's apartment. If they are just keeping everything then WHY does it matter if she takes some things? Oh, I see! Because the things the 14yo asked for were things the Greedy one wanted for herself. In the end the 14yo was allowed to take the things she asked for, but they made sure it was as unpleasant as they could possibly make it for her to take them.

 

[jackskellingtonsgirl]

I called Child Support Enforcement this morning. They said their involvement ends at death, and it is now my mother's deal to pursue the payments from my sister. I explained that this claim is for monies that should have been paid BEFORE he died, but they said it doesn't matter. They will not pursue the arrearage since Father is dead.

Mother called the office yesterday but she was getting in such a twist I thought she misunderstood. The info I got today seems consistant with the info she got. And since she isn't willing to fight for anything she will probably never see that money.

 

[brerrabbit]

If the only place your Father had any money was in the IRA and he had named your sister as benificiary then there would be no need to probate anything. Trouble is your sister had to have gotten the money out of the IRA using the POA because once your Father died she would be unable to get anything as benificiary until she provided a death certificate. Regardless of all that if he owed the IRS anything at all from 2004 or 2005 then they will come seeking their money and there is very little to stop them from getting it. Also even though the divorce decree said that he would file the joint tax return for 2004 the fact that he did not could come back to haunt your Mother since she is still alive. You might want to check on that because she could become liable for any taxes or penalties owed for 2004. The IRS has a nasty habit of going after people so it may be in her best interest to file 2004 just to be safe.

 

[jackskellingtonsgirl]

Wow! Excellent point about needing a death certificate to claim the IRA if she WAS named beneficiary! They paid the IRA to her AFTER his death (so POA was null) and BEFORE having a death certificate.

Mother has every intention of trying to file the 2004 taxes. I am HOPING she can seek protection under innocent spouse because at that point they hadn't lived in the same house for 4 years and she had no idea what he was doing. She went over to Father's apartment on Saturday to TRY to find the info/documents/etc. that she would need to file, but I don't know if she found them. She is very peculiar about telling me things - she wants to protect Greedy, but at the same time I think she is hoping I will do something! I have explained to her (and so has my attorney) that I CAN NOT act on behalf of my 14yo sister because I do not have custody of her. Mother waffles back and forth. I will handle the fees involved, Mother just has to sign the retainer agreement saying the attorney has permission to represent them. But NO, Mother won't sign anything.

If DH divorced me and left me to raise a minor child by myself so he could drink and look at internet porn all day I would be pretty angry. If he then died and another one of my children, OVER the age of 18, stole all of the money out of the estate when I had more child support owed to me, I would be homocidal. Mother is just frozen. She wanders around crying and going over the options she WOULD have had if she had made different choices a long time ago. Hello? Too late! She is mentally unstable, but that's another issue entirely.

Greedy needs to be aware that this is NOT going to just go away. She is not going to take all that money unopposed and go on her happy little way. She will have to provide documentation to the court of how she spent that money and WHY she didn't pay the debts properly, before OR after Father's death. That may be an angle to get her in trouble for the child support. It isn't MY money, but it is money that she failed to pay when she was in charge of the finances, so in a case dealing with breach of fiduciary responsibility a judge might ask Greedy just WHY she felt it was OK to skip the child support but continue to pay rent on an apartment Father was never returning to. She paid his June rent even though by June 1 he was in hospice and was absolutely NOT coming back. That worked well for Aunt Executor because she has a free place to stay. But Greedy paid June rent after April and May child support went UNpaid. She needs to answer to somebody for that.

 

[Chicago526]

Wow! Excellent point about needing a death certificate to claim the IRA if she WAS named beneficiary! They paid the IRA to her AFTER his death (so POA was null) and BEFORE having a death certificate.

Mother has every intention of trying to file the 2004 taxes. I am HOPING she can seek protection under innocent spouse because at that point they hadn't lived in the same house for 4 years and she had no idea what he was doing.

No way to know for sure of course, but my first thought was that your mom should be okay under the injured spouse provisions, although I'd think she would need to prove it to the IRS. She should see a tax attorney and find out what she needs to do.

I'm glad you aren't letting your greedy sister get away with this. Even if she is 100% entitled to the IRA money, and you, your mom and younger sister are entitled to nothing, she still needs to pay taxes and penalties on it. I hate nothing more in the world than a tax cheat!