Death of taxpayer timeline

[elfling]

Hello everyone who might still be hanging around . . .

A client dies on 1/12/08. She had/has mega bucks tied up in investments managed by Merrill Lynch. Her sons are upset that the ML is saying they cannot close the existing accounts without a final tax return. All the while the accounts remain open thousands of dollars in fees are being charged.

Typically, we file the final return for a decedent who was a calendar year filer on time which in this case is 4/15/09. Is there any proper way to file this return early? I wonder if preparing it, albeit on an obviously not valid form, would be enough to satisfy ML.

In 20+ years this is the first time anyone has asked for an early filing of a return. Go figure.

Elfling

[jainen]

>>they cannot close the existing accounts without a final tax return<<

The broker is stalling because he has violated federal banking regs that prohibit activity after he knew the account holder had died. He will of course need an official death certificate and proof of who the executor is, the same info needed for the tax return, but is not entitled to any particular information about the return itself. The sons will have to fight for it, but I expect eventually they will get the fees reversed and the money released (assuming, of course, that the ACTUAL executor agrees).

[bstaxes]

The executor would need the value of the stocks on the date of death unless they chose to do the 6 months after death value. In either case the broker would have those numbers. It seems with thousands of dollars in fees that the value of the stocks would be high and might need inheritance filed as well as estate filed. I know in NJ you need the state taxes filed in order to get certificates to close accounts or change names. Have the executor fight for the info to do the return. The last return would have dividends up to time of death 1/12/08, if dividends were issued. With the death being only 12 days into the year, how much income could there be? I have never sent final returns to any brokage house. All they need is death certificate. Good Luck.

[JRS]

I have never sent final returns to any brokage house. All they need is death certificate. Good Luck.

Though it has been a few years, I had two clients pass away with accounts at Merrill. They back out all charges, created a DOD account summary and requested a death certificate. The broker at the time, did all of this before he even had the death certificate. The actual paperwork was not released until it was received, but the broker sent "unofficial" copies to the executor. (Actually, hand carried them.) Maybe the high paid brokers of today don't believe in "customer service" after death!

[joelgilb]

Thinking Jainen is right on the money here.

How was the account titled? Was there a Will and was a Probate needed and if so filed? An Executor or Administer appointed?

Merrill Lynch can't require a final return, it is none of their business!

[elfling]

My thought from day 1 was that ML need never see a return. As far as I know they haven't in the past.

Yes, the amount of money involved is huge, well over a $2 million, spread over several accounts held by ML including 2 trusts set up by their father before he passed in the mid-70's. Those trusts included clauses that they are to be equally divided among the 3 sons households when mother died.

Brokerage activity may have ceased upon the date of death as a death certificate was sent immediately, so illegal activity may not be occurring. But I believe the trusts could continue accumulating dividends and interest until they are closed.

The 3 sons are listed in the will as joint executors. This just should not be as difficult as ML is making it. I'm going to have to dig for more details on this situation and stick to what I know is correct for the final return's timeline ~ as early as possible in January 09.

Thanks for the input!

[jainen]

>>The 3 sons are listed in the will as joint executors. This just should not be as difficult as ML is making it<<

Sounds pretty hard to me. Did you say a WILL, with only part of the millions in trust? Multiple executors? "Household" members whose PARENTS weren't even born when the trustor named his beneficiaries? Expect to wait a year or two for probate court to sign off. Meanwhile, send the broker a thank you note for being so thorough in protecting the estate.

[zeke]

I just have to take my stick & stir. I feel you would be well advised to suggest that the co-executors seek the advice of a probate attorney - soon.

Zeke