My grandfather passed away in 2016. In his Will, he had 3 beneficiaries listed. The significant amount of monies that was held in a Trust was distributed to those heirs, 1/3 to each, the following month after his passing. That account was then closed. The Executor of his estate/trust has since passed. Apparently there were mineral interests and royalties not distributed and just left untouched in another Bank/Trust Account. There were funds that have been in a suspended account for several years now with several operators. COA and updated Trustee added to another Bank/Trust Acct. Apparently, one company was acquired and there is a name change.
There is both a Will and a Trust. The Will indicates that my grandfathers estate will be divided among 3 beneficiaries as what was done back in 2016. The Trust indicates a pecuniary gift of $50k to a granddaughter. This account was apparently left open and some of the royalties or interests were being automatically deposited these past several years, and have just been sitting there. The additional suspended interests are being processed to be released to that account.
The interests with 3 Operators were just sold at an agreed upon price. So, how is this now to be distributed. The Will mentions 3 beneficiaries at a 1/3 a piece, with the Trust saying a pecuniary gift of $50k to a granddaughter.
Can anyone shed some light on this as the total amount for all is approximately $70k and needs to be distributed.
There are a lot of moving parts here. You should seek legal counsel. If an estate has been started, then that attorney is the first one to contact.
Counsel should be sought in the state where the minerals are located.
An estates and trust attorney needs to review the documents, including title records and bank accounts. Was the trust set up before death and what assets were placed in the trust? Are some of the lands owned by the trust or only owned by the estate? What is the legal effect of commingling the revenues of the trust with the estate. Is the trustee appointed for the trust, the estate or both? The trustee will have legal responsibility for something here. How has the royalty and other income been reported for tax purposes and by which entity? Or has none of the income been reported? Are the trust, estate and minerals in the same or different states?
@tim_dowd Thank you for your response. There are a lot of moving parts. It’s essentially complete, although there’s confusion as to the distribution of the remaining assets in the bank. This process went thru probate with an attorney where the deceased passed. The mineral interests were just sold, although the land person was/is wanting to distribute those individually to 3 of the beneficiaries per the Will and NOT run thru the Trust. I’m being told they are assets held outside of the Trust, yet the monies made by these was being deposited into a Bank Account/Trust that was never closed.
With that said, if the interests or monies are distributed to the 3 beneficiaries per the Will, that negates the granddaughter where a monetary pecuniary gift was left to her. Honestly, this all should be run thru the Trust. The Trust doesn’t specify the same thing as the Will. I imagine this sounds confusing. One beneficiary is being left out.
All in all, the mineral interests were a part of the deceased overall estate, then those were deposited into a Bank/Trust Account.
With selling and dispersing the amounts a 1/3rd to each beneficiary and not following the Trust, it’s excluding one specific beneficiary. Does that make sense?
This isn’t being handled properly, and the land company is only interested in selling them. A lot of time has passed, and this has become a drawn-out mess.
The family is not going to obtain another attorney where these were held. At this point there’s no longer any interests.
The only thing left to distribute is what’s left in this one bank account from these mineral interest deposits.
@TennisDaze
The Trust was set up years before the deceased and monies or interests from mineral rights were being automatically deposited into said Bank/Account.
The Lands (Operators) were in the held in the Trusts name. Part of the overall estate but in the Trusts name. There was a Co-Trustee added to these accounts with the Operators and Change of Address after the passing of both parties, as well as the Bank/Trust Account. Taxes have been paid by the Co-Trustee out of her own personal bank account and Not the Trust Bank Account as what had been done previously for years.
Trust was set up initially in a state different from where the minerals were held. After several years going thru numerous documents and probate as this was never handled and just left out there it’s finally being settled. Honestly, given the amount of time and then probate and another 3 years, the land person just wanted it done! Flip flopped how to sell them and given the older ages of a couple of beneficiaries. Initially this was being handled thru the Trust, and in the end, 2 of the 3 beneficiaries sold their interests and the land person changed her mind as to how these were being sold.
The disbursement is what’s confusing, as the Trust specifically states a specific beneficiary is entitled to a specific pecuniary monetary amount, aside from 3 beneficiaries named in the Will only.
If the trust was a living trust set up while Grandpa was alive, then he most likely was reporting the income on his personal return and paying the taxes. After his death, the trust should have started filing federal tax returns, reporting the income from the original assets and from any assets added to the trust under the will. Was the trustee reporting the trust income as his own personal income on his tax return or paying the taxes with the federal trust return? There should have been 1099 forms for royalty, interest and other income sent to trust. Who is going to report the sale of the minerals to the IRS and pay capital gains? Your notes are confusing and you need to get this reviewed by legal and tax counsel. Especially as there seems to be a conflict among the potential beneficiaries as to who is entitled to the cash. It is a lesson for others to understand that becoming a trustee imposes a fiduciary responsibility to properly account for all revenues and assets and to obtain proper legal and tax advice to do this. Winging it on one’s own sets up bigger problems and family conflicts later.
If the minerals were NOT deeded to the Trust and the deed recorded prior to the death of the Grantor (your grandfather), then the minerals and any associated royalties will/should be distributed as per the Will.
It will depend on whether the will ordered the minerals to be added to the trust assets or to be distributed directly to specified beneficiaries or under the rest and remainder clause. Distributions of any assets of the trust, whether added before or after death, will be governed by the terms of the trust.
Thank you for responding again. The land person is/did not handle this correctly. Seemed it a big hurry to purchase and flip flopped on information shared. A lot of inconsistencies.
@TennisDaze To answer some of your questions to the best of my ability. Grandpa had a revocable trust in he and his wife’s name. She preceded his passing by many years. The royalties were automatically going into a Bank/Trust Account. They had several accounts apparently at one time. This one account remained opened, and royalites have been deposited for several years now. After the death of the executor, which he was put on the Bank/Trust Account his wife was appointed to be listed as a Trustee. After a very long process submitting the appropriate documents, she was added to both the Operators and the Bank/Trust Account. With 2 of the operators, she received 1099’s which were paid out of her personal bank account and Not the Bank/Trust as that hasn’t been touched by anyone since the deceased. The current Trustee is elderly, and this process was guided by an attorney at one time and a land person which became overwhelming confusing. We were able to locate and submit all the necessary documents, deeds, death certificates, all that was asked for by all parties.
Your question is good as to who is going to report to the IRS and pay capital gains. It was understood that she beneficiary would report the monies received from the mineral interests sold.
What is most strange in all of this is how the Land person went from handling this thru the Trust, as it specifically states, to selling them individually. Given the drawn-out process over years, she was frustrated and just wanted it done. In part, 2 of the beneficiaries are elderly with diminishing capacity.
The family is looking to have this completed accurately as per the wishes of the deceased grandparents, trust and will. Finally, after many years this can be resolved. How, is the question??
The trustee and parties need to act in accordance with the terms of the Trust for ALL trust assets, including any titled minerals and accumulated revenues. There is no way that anyone can give you sound advice without reviewing all the documents (trust, will, 1099, financial records). And yes you will have to pay an attorney and/or CPA to clear up this mess.