Full question:
My brother does not own real estate. He only owns a car and has about $450,000 in 401k & $100,000 in life insurance. I am the named beneficary of these 2 accounts. When he dies, will I have to go to court and pay probate costs on these funds (he has no will at this time? If yes, what are the probate costs? Would a living revocable trust avoid probate cost? Would a living revocable trust decrease or stop taxes from being taken out of theses funds when they are transfered to me as beneficiary?
- Category: Trusts
- Date:
- State: Virginia
Answer:
If you are the named beneficary of the 401K and the insurance policy, these pass outside his estate for purposes of transfer. An estate does not have to be open to collect life insurance proceeds or other things where there is a named pay on death or beneficiary named. Even if probate were necessary because of other assets, the cost should not be substantial because the assets you mention are not included in the probate. As for taxes I don't believe the insurance pass to you tax free. As for the 401K, I am unsure about what taxes would be paid by the beneficiary (i.e. whether the beneficiary would have to pay the deferred income tax due.) As for Federal estate taxes the amount is not enough to cause estate taxes to be due. Hope this helps.
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