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RayAnswers, Attorney
Category: Estate Law
Satisfied Customers: 36396
Experience:  Texas lawyer for 30 years in Estate law
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My father has terminal cancer, since we know his days are numbered

Customer Question

My father has terminal cancer, since we know his days are numbered my two brothers and I are trying to get his affairs in order. My parents set up a trust many, many years ago which indicated that at the time of their death, their home was to be sold and the proceeds and other assets were to be split between the 3 of us. My older brother has lived at home, not worked for 20 years and is on SS disability. Since he is terrible with managing money we were going to put his portion into some sort of trust that would pay him an annual sum to supplement his disability income, otherwise he would spend it within a few months. We have recently found out the older brother has a $98K IRS lien for back taxes. My question is: could my younger brother, who is the executor, be committing tax fraud by placing the money into a trust account without paying the tax lien first? We have also looked at purchasing my older brother an inexpensive home with trust money, but when everything was settled we would deduct the sale price from his share of the original trust proceeds and put the title for the house into my older brothers trust. Is the above board or it this possibly tax fraud too?
Submitted: 6 months ago.
Category: Estate Law
Expert:  RayAnswers replied 6 months ago.
Hi and welcome to JA. Ray here to help you tonight. The executor here is duty bound to carry out the terms of the will.If a Special Needs Trust were set up the brother's share by agreement can be paid into such a trust directly bypassing medicaid. This has to be set up by a specialist in Estate Planning and government benefits.You can find one of those here.. And the IRS here may file a creditor claim during probate and creditors are paid ahead of heirs.So they will get first crack at the brother's share with the IRS debt.They will seek to claim his share here. I appreciate the chance to help you tonight.Please let me know if you have more follow up.Thanks again.
Customer: replied 6 months ago.
If my parents estate is in a trust, won't it avoid probate?
Expert:  RayAnswers replied 6 months ago.
Yes if they are able to set up a trust the trustee holds title to property for the benefit of the beneficiaries.And yes it would avoid probate here.They need to have placed all assets into the trust by deed or other means.If they have done this the trustee decides when to pay here under terms of trust. Thanks for the follow up.
Customer: replied 6 months ago.
So he doesn't necessarily have to pay the lien before placing the money in my older brother's trust. We are trying to figure out a way to get him to pay the lien, because we think it's the right thing, but the older brother is sly as s fox (at least he thinks he is).
Expert:  RayAnswers replied 6 months ago.
Not unless the IRS here gets a court order requiring him to pay.Otherwise he si free to pay him without fear of liability as long as he is complying with terms of the trust. Thanks again for the follow up. If you can leave a positive rating it is always much appreciated.Thanks again.
Customer: replied 6 months ago.
Thank you I elk defi stent give you a good rating. I appreciate the fast response.
Expert:  RayAnswers replied 6 months ago.
You are so welcome.Have a great evening.