Mother had revocable living trust. Resident of GA with no property. Passed away and I found only item NOT in trust is an IRA under 18000. Fi...

Question

Mother had revocable living trust. Resident of GA with no property. Passed away and I found only item NOT in trust is an IRA under 18000. Financial institution wants me to probate. Is there away around this? She had a pour over will instructing me to put anything left out of trust into the trust.

If i can't get around this and I have to go thru probate is there a simplified, cost effective way to achieve this from out of state?

Thank you!

Answer

A properly set up IRA would NOT be in a trust but should have a named beneficiary, who would get the IRA without probate. Are you sure that's not the case?

Answer

Your mother should not have an IRA in her trust. If her trust was the beneficiary, then if this is a regular IRA, you cannot stretch this out and must take a payout over a maximum of 5 years.

For this reason, I don't recommend that clients put IRAs into revocable living trusts. Instead, there should be a designated beneficiary of the IRA. Where there is a named designated beneficiary, the IRA is a non-probate asset. The beneficiary just files a claim with the company holding the IRA. If you know the name of the financial institution holding the money, check again to make sure that there is no living beneficiary.

If thee is no living beneficiary, then yes, I am afraid that you will have to probate this. In that case, you would apply to the court to be the personal representative and file a probate petition. Once appointed, you can show a copy of the order granting letters to the financial institution and they will pay the money over to your mother's estate. The IRA, if no taxes were paid, will be taxable and available to pay any other creditor's claims or probate expenses. The balance will then be distributed as per your mother's will. If she had a trust, she probably had what is called a pour-over will (as you indicate) providing that any assets which were not in your mother's trust pour-over into her trust after probate is complete. If there is a pour-over will, any net assets remaining will be distributed as per the trust. If there is no pour-over a will, then the assets are distributed as per a regular will, if any, and if no will, then according to the intestacy laws of the state where your mother's estate is probated.

If your mother failed to name a beneficiary and contingent beneficiary on her IRA, this was really dumb - as your mother defeated one of the purposes of having a trust - which is to avoid probate.

Finally, there is a process for "small" estates. Generally, if the estate is under $10,000, then the personal representative can use an affidavit (which can be obtained from the probate court) to collect assets. Otherwise, you will have to go through regular probate.

Since you are out of state, I suggest that you get a probate attorney who practices in the county/state where your mother's estate is or will be probated.