What are proper costs of estate?

[Catherine]

Hi folks --

I was asked a question by one member of a family:  are travel expenses to deal with issues surrounding the final illness of a loved one estate expenses?  

 

Three brothers are taking turns leaving their lives for a couple weeks at a time to travel to advocate for dying parent (the other parent died some years ago).  There are hospital/hospice meetings to attend/coordinate, and TONS of in-person care to administer as there has been trouble finding a private-duty nurse to hire, and lots more.  It's not like they are making a final trip out to say goodbye; they are each working full-time care-taking plus full-time administering plus full-time coordinating.  It sounds utterly exhausting.  

 

Frankly I don't know what to tell them.  If they had found a private duty nurse, those costs would be final medical costs.  If they hired an accountant to deal with the hours of sorting papers, finding checks that need depositing, paying bills, pitching charity solicitations, those costs would be fiduciary costs.  They aren't asking to be paid for their time or lost wages but rather reimbursed for the expenses of travel back and forth.  Yes, there is money to pay for those travel costs without draining the bank account.  

 

Opinions?  Advice?  Publications to reference? 

 

(I have looked but found nothing to the point which simply means the info is hiding until I admit defeat and ask for help.  I half-expect the answers to jump out of the screen at me as soon as I hit "post" on this topic.)

 

Thanks.

[rfassett]

Personal expenses - no deduction.  If there would be a deduction for those costs, then I would think the recipients would have to pick up those funds as taxable income.  And even then, you might bump into the assignment of income issues (or some such thing).  No site - just years and years of making an effort to try to make this stuff make sense. And further, all of these costs are for the living - therefore, they have nothing to do with the estate.  There is no decedent's estate based upon your statement of facts.  No one has, as of your posting, died.

The three brothers need to be commended for stepping up.  But I think that is where it stays.  If they do get "reimbursed" I would leave it for what it is - a gift in an effort to say "thanks".

You asked for opinions - those are mine.

[Catherine]

That is pretty much what I thought.  But they were pushing and I did not have a cite  handy myself.  There are certainly expenses that will be considered part of final medical expenses that they are paying and will be reimbursed for; those we have already discussed.  There are other fees that will become fiduciary fees once she passes that the executor is anticipating.

Thanks.

[jklcpa]

I agree with Ron and will go one step further. Deductible medical travel/transportation includes those expenses for the patient, and someone accompanying, for the patient to get medical care or treatment. In your case, the mom isn't traveling anywhere.  Also, specifically excluded from deductible medical travel expenses are those that are merely for the general improvement of one's health, so even if the travel we are discussing was the mom's travel, the travel to interview and hire specific caregivers (vs say, choosing an agency from recommendations or others' feedback) would more likely be related to generally improving mom's situation as opposed to receiving specific medical care or treatment.  The travel for sons to get to mom is personal commuting, nothing more. 

If mom wants to help the sons through her estate beyond their inheritance and reward one or more of them over other siblings or beneficiaries, she can bump up their share of the inheritance or increase the executor fee they might receive. Of course, any executor fee would be taxable income to the recipient.

[easytax]

Agree with all said above. 

Just a note on the executor fees (from a personal experience):  An attorney insisted that the estate pay an executor fee of over $50,000 to one of my clients (sole beneficiary). Since she was a direct descendent -- her inheritance tax would have been just 4.5% in this case vs. a 35% income tax, etc. on the $50,000.  Look at things through different lenses and from YOUR expertise ---- attorneys do not always know.

 

[jklcpa]

Agree with all said above. 

Just a note on the executor fees (from a personal experience):  An attorney insisted that the estate pay an executor fee of over $50,000 to one of my clients (sole beneficiary). Since she was a direct descendent -- her inheritance tax would have been just 4.5% in this case vs. a 35% income tax, etc. on the $50,000.  Look at things through different lenses and from YOUR expertise ---- attorneys do not always know.

 

It might have been stated in the will, either at a stated amount or percentage, but why didn't the executrix decline to take the fee? 

[SaraEA]

Catherine's original question was whether these travel expenses are estate expenses.  As rfassett said, there is no estate until someone dies so these expenses can't possibly be charged to the estate.  There is no reason why Mom, or whoever is handling her bills, can't reimburse her sons for their travel right now, right out of her checkbook.  No code or regs citations needed.  Like when I drove my mom across the state to a doctor, she'd give me some gas money.  Pretty much the same thing.  In this case, though, I'd be sure that receipts for the travel were given to whomever is handling the checkbook. It's sad how when there is money involved, even the closest families can get into feuds after a parent passes.

[easytax]

 

It might have been stated in the will, either at a stated amount or percentage, but why didn't the executrix decline to take the fee? 

Will was "standard" so to speak. Attorney just "always did it that way" supposedly to lower inheritance tax -- which would have done that   BUT never looked or considered the income tax implications.      Just an FYI  -- and I am NOT an attorney and NOT practicing law ---- the executrix did decline after we talked.  I do not believe (but do not know for sure either) that the "fee" was re-added to the estate inheritance tax --- so the attorney did not file with that amount included, etc..    Several other issues but the executrix just wanted it to be done  --- so no follow up, just closure.   She was happy and I was happy for her too. She had the documents and if questioned, it all would fall back on the attorney.