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Guru_Guy, Lawyer (JD)
Category: Legal
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Experience:  My specialties include Civil Rights and Constitutional law, as well as general practice issues.
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I recently had two parents pass away who left me as executor

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I recently had two parents pass away who left me as executor of their will. They have a home, property, as well as 401k, bank cd and life insurance. Do i need a lawyer to help disburse these items with my sister ( very amicable)? Also if i cash out the 401k rollover and split it with my sister per the will, are there penalties attached, even though i'm named beneficiary? Such as capital gains or withdrawal penalties?

Hello, and sorry to hear about your parents.

The 401(k) money is actually automatically yours and not part of the estate if you were listed as a beneficiary on the 401(k) account. The same with the life insurance. However, it is important that everything be divided properly. If the 401(k) money is to be divided among all siblings, keep in mind that that money is taxable as regular income the next time you file taxes. The estate must issue a 1099-R to each recipient to let them know how much taxable income they have received. There is no 10% penalty for inherited accounts, however. The rest of the estate and the insurance should be tax free (i.e. no need even to report it on your income taxes).

It is advisable to have an attorney help you with settling the estate, although you can agree to do most of the leg work yourself in order to keep the legal bills to a minimum. But there are a lot of technical details that need to be followed (advertising for creditors, transferring deeds, etc.) that an attorney's advice will save a LOT of time and aggravation sorting out.

I hope this helps!


Please keep in mind that information in this forum is for informational purposes only. It is not legal advice and does not constitute creation of an attorney client relationship. Before acting on any such information, you are always advised to consult with an attorney licensed to practice in your jurisdiction who can take the time to review all the facts and laws relevant to your situation.
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