Dear Liza: My father just died. He left his Roth IRA to ten family members, thrilled to be leaving us with a long-term retirement investment. But two of the beneficiaries are under 18, and our credit union is saying that the minors can’t keep the Roth IRA, but have to cash out their shares and open custodial accounts. That’s not what my Dad would have wanted. Are they right? Yes, most likely. Here’s the deal: a minor can inherit property, but under state law, minors can’t control that property until they’re legal adults. In California, where I practice, a minor cannot own more than $5,000 without some form of legal control and management by an adult, like a property guardianship, a custodial account, or a trust for that minor’s benefit. A property guardian is appointed by the court, and may be a child’s parent or any person nominated by the parent. The guardianship terminates when the child becomes a legal adult — 18 in my state, but this varies by state law as well. So, check with your credit union to see if they’d permit you to keep those accounts under a property guardianship to age 18. If so, it may be worth it to you get yourself appointed as property guardian. Alternatively, cash those accounts out, open up a custodial account at the credit union, and don’t let those kids touch that money. When the custodial accounts end (25 in my state; varies by state law), make them open up IRA’s with the money because that was your father’s wish. You can’t legally require that they do so, but you can make them feel really, really guilty if they don’t.
Tag Archives: death
Dear Liza: My Mother’s Will left ½ to me, ½ to my sister. I am married with no children; my sister is survived by her husband and two grown children. The probate attorney said my sister’s share will go to her two children, but that her husband would inherit nothing. If that’s true, why does my attorney want my sister’s husband to sign a Quit Claim deed? As a general matter, unless a Will or trust states otherwise, a parent’s inherited share is passed to their surviving issue (children, grandchildren) and not to a surviving spouse. Of course, your mother could have left your sister’s share to your sister’s husband if she wanted to. Without reading the Will and without reviewing probate rules for your state, I can only offer you some general thoughts. It sounds as if your attorney is just being extra careful to make sure that title to the house is clear–if you ever sell that house, the chain of title must be documented and cleared before the sale. A Quit Claim Deed documents that your brother-in-law has no claim on the property, which sounds true. Your brother-in-law may feel more comfortable signing the Quit Claim deed if he gets his own attorney to make sure that nothing fishy is going on.
Dear Liza: My brother died recently. He owned community property with his Wife. Is she now responsible for his debts?
Most likely, yes. In community property states, debts incurred during the marriage are the responsibility of the community. So, after the death of a spouse, the surviving spouse is liable for those debts. I can’t tell from the question whether or not your brother lived in a community property state, or in a state with common law rules, and signed an agreement making their property community. If so, it depends on what that Agreement actually says–sometimes Agreements specifically keep debt separate.
The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. (In Alaska, spouses can sign an agreement making their assets community property, but few people choose to do this.) The common law states are everywhere else. Nolo has a great article on this: “Debt and Marriage.” Here’s a helpful excerpt :
In states that follow “common law” property rules, debts incurred by one spouse are usually that spouse’s debts alone, unless the debt was for a family necessity, such as food or shelter for the family or tuition for the kids. (These are general rules; some states have subtle variations in how they treat joint and separate debts.)