Q: Decedent had a CD with 2/5 children listed as beneficiaries and all 5 siblings agree to split it, court approval needed?
Since it’s technically not probate property as there were already designated beneficiaries, does this require court approval or does a family settlement agreement suffice?
A: While a family settlement agreement always seems like a good idea in probate/post-death matters, with the facts provided, I doubt that one is even necessary. The two named CD beneficiaries are free to share/dispose of their distributions however they like. No court approval seems necessary, on the facts provided.
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A: Not sure that a Family Settlement Agreement is appropriate here. There is no probate estate. However there will most likely be PA Inheritance Tax due on the account balance. Once the 2 beneficiaries receive the balance of the account and pay or set aside the PA Inheritance Tax they are free to share as much or as little of the account as they choose. Each of the designated beneficiaries at that time is making a gift to their other 3 siblings. You do not state the amount of the account, so in general each of the designated beneficiaries can make a gift of up to $17,000 to each of the other 3 siblings ($51,000) without any reporting. If the account is larger than that you will want to consult with an estate planning attorney to make sure there is proper reporting and you do not create any tax issues.
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