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Funds to the beneficiary and creditor (estate of non-resident alien)

Discussion in 'Estate Administration & Probate Court' started by Su Bhat, Jul 20, 2019.

  1. Su Bhat

    Su Bhat Law Topic Starter New Member

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    Jurisdiction:
    Georgia
    Non-resident alien, who was not domiciled in the USA had money in a US bank account in GA. Upon his death (he died intestate), his account has been closed and a banker's check issued for his funds. I have been appointed as the administrator of his estate in the USA and now have the check. The court order comes from a court in the country of the deceased person's residence (India). I need to pay some creditors in the USA from those funds. I am unable to cash the check in the USA (or deposit it to an estate account in the deceased person's name). The bank I approached (CHASE) mentions that because the deceased person was not domiciled in the USA, and because the court order is not from a US-court, they cannot assist me (the administrator) in opening an estate account.

    The alternative that I am thinking of is to invite the beneficiary (a relative of mine) to visit me so she can receive the funds and pay the deceased person's debts. The question: Will the beneficiary be able to cash the check (made out to the deceased person's estate) in the USA? If yes, what documents will she need? The alternative to this seems to be to send the funds back to India to the beneficiary, convert them to local currency and have the beneficiary re-convert the funds owed to the creditor -- a highly lossy process considering the conversion rate. Are there other possibilities? Kindly advice.
     
  2. Zigner

    Zigner Well-Known Member

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    Did a US court appoint you as the administrator?
     
  3. Su Bhat

    Su Bhat Law Topic Starter New Member

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    Thanks for your message. No, an Indian court did. Because he did not reside in the USA, I was told that no US court can probate.
     
  4. Tax Counsel

    Tax Counsel Active Member

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    Probably not, but it's up to the bank. The problem is that the beneficiary is not the payee of the check, the estate is. So the bank takes a risk in cashing the check that it will be out that money if the drawing bank refuses to pay or if the estate later seeks those funds. Few banks will be willing to take that risk.

    But you should be able to open an ancillary probate proceeding in the US for the purpose of having the estate receive the check, and then the estate can take the check, get it cashed, and distribute the funds.
     
  5. Su Bhat

    Su Bhat Law Topic Starter New Member

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    Thank you for the suggestion.
    Will an ancillary probate we possible even though the deceased person was not domiciled in the USA ever? Which state would that be from, GA (where the account was held) or IL where I (the administrator) resides?
     
  6. Tax Counsel

    Tax Counsel Active Member

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    Yes. The purpose of ancillary probate is to provide a way for the estate of decedents who were not domiciled in the state to handle property of the decedent located in that state.

    Generally it is the state where the property is located that you'd do the ancillary probate. Here, if the account is in GA, you may be fortunate because GA does not require ancillary probate where there is already a personal representative appointed by the jurisdiction where the decedent had be domiciled. See Georgia Code section 53-5-42. The personal representative has the same powers in GA as he or she would if the personal representative had been appointed in GA. The last sentence of that law does require that the personal representative must be a U.S. citizen, however. That should be good enough to get a bank there to open an account for the estate so that you can deposit the check, though you may have to direct the bank to the statute so the bank officials can see you have the authority to act.
     
  7. Su Bhat

    Su Bhat Law Topic Starter New Member

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    Thanks again for your detailed response.

    What about the following, which I read on the web, considering that I am a US citizen and domiciled in Illinois? Also the amount in consideration is less than 100,000.

    Simplified Probate in Illinois

    Illinois has some procedures that make it easier for survivors to transfer property left by a person who has died which can save time, money and hassle.

    Illinois has a procedure that allows beneficiaries to skip probate altogether when the value of all the assets left behind is less than a certain amount (The out-of-court affidavit procedure is available in Illinois if the gross value of all of the deceased person's property that passes under a will or by state law, excluding real estate, is $100,000 or less. 755 Ill. Comp. Stat. § 5/25-1). All a beneficiary has to do is prepare and appropriately execute an affidavit stating that he or she is entitled to a certain asset given the language in the will or his or her relationship to the decedent. The affidavit is then presented, along with a death certificate to the person or financial institution holding the asset and the asset is then transferred to the entitled individual.

    If Transfer by Affidavit is not available for a particular estate, it may be possible for an executor to use a simplified probate procedure. To do so, an executor must file a request with the probate court requesting the procedure, but if approved, the executor will be permitted to proceed without continuous court involvement. This simplified procedure may be available if the gross value of property subject to probate in Illinois does not exceed $100,000 and all heirs and beneficiaries consent in writing. For additional detail, see 755 Ill. Comp. Stat. § 5/9-8.
     
  8. Su Bhat

    Su Bhat Law Topic Starter New Member

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    My brother died intestate and had an US account. He was non-domiciled in the state where he had the account (GA). With the letter of administration of his account from an Indian court (where he was domiciled), I was able to close his account and receive a cashier's check in the name of his estate. Now, my question is how do I cash this check and pay his creditors?

    I understand that I would need to open an estate checking account where I can deposit the check, but in order to open that I need an EIN. IRS Form SS4 asks for the decedent's SSN, which he did not have. How do I go about obtaining an Employer ID number as the administrator of his estate?

    No IRS page has been helpful in this regard. Please help, or direct me to further information.

    Thank you!
     
  9. Tax Counsel

    Tax Counsel Active Member

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    Then put "None - foreign decedent" on that line.
     
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  10. Su Bhat

    Su Bhat Law Topic Starter New Member

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    I see.. thank you very much!

    Now I have more questions:

    1. Line 10 asks for Reason for applying and I see myself choosing Banking purpose and entering checking account for estate account, but Others -> Estate administration seems equally likely. Which one would I do?

    2. What would I enter for Date business started or acquired (month, day, year), as applicable to the estate?

    3. And again, Closing month of accounting year -- what would this be?
     
  11. Su Bhat

    Su Bhat Law Topic Starter New Member

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    The bank honored my request and I was able to get the banker's check without probate (not sure why, but they said that they did not need a probate for my case and I didn't ask why). Now, the check is made out to the Estate of the deceased. So I have to deposit it to a bank account from which I need to pay his creditors.
     
  12. Tax Counsel

    Tax Counsel Active Member

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    According to the SS-4 instructions, you check the banking purpose box if banking is the ONLY reason for requesting the SS-4. In this instance if there is any chance that the estate may have to file a federal income tax return (e.g. it has more than $600 in gross income during any tax year) then select "other" and put in "ancillary probate". Ancillary probate is any probate proceeding that takes place outside of the jurisdiction where the decedent was domiciled at the time of his death. If really banking is all that the estate needs to do in U.S. then check the banking box.

    Leave that blank; this is an estate, not a business.

    Generally financial records are kept on an annual basis. Many people and businesses close their books at the end of the calendar year (December 31). Typically the accounting year will match the tax year. So for many people and entities their accounting tax years run from January 1 to December 31. For U.S. tax purposes, though, regular C corporations and estates are permitted to pick whichever month they want to have their tax year end; once selected they must stick with that unless they get permission from the IRS to change it. If the estate has an accounting period already for keeping its records then use that. Otherwise, you need to decide what the tax year will be. Chances are there is no real difference in tax to be had based on what month you end the tax year since the estate doesn't have much in the U.S. anyway, so if you aren't sure what to pick you are probably fine with just going with December 31. The main thing this entry does is set the due date for any returns the estate may need to file.
     
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  13. Su Bhat

    Su Bhat Law Topic Starter New Member

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    Tax Counsel, sincere thanks for your detailed explanations and counsel. This is what I was looking for! Truly appreciate your prompt, courteous and attention to detail. If there is any place I can leave a huge positive feedback for your help please let me know.
     

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