June 2024:

The MLO Minute: “Storing Excess Cash at Home Can Spell Trouble for Your Estate” 

By Dennis McAndrews, Esq., and Jennifer Simons, Esq. — 

We’ve all heard the stories. Persons distrustful of financial institutions, gamblers, employers who pay under the table, and people who just like to have a lot of cash around have been well chronicled. Their heirs find tens of thousands of dollars stashed away in books, toilet tanks, mattresses, sock drawers, and in coat pockets. Besides being a target for theft or misplacement, what happens to all that cash when the owner dies?

Where this issue is known to family members, extraordinary effort must be taken to locate the hidden cash in hundreds of books, envelopes, and hiding places. Of course, when the family descends upon the home, there’s no guarantee that everyone will account for the hidden cash they locate. The potential for misunderstanding and tension among survivors is very real and may occur even if no misappropriation has taken place. Even if there’s a well-intentioned caregiver or adult child in the mix, a great deal of skepticism can arise between siblings and other family members. The lost interest, dividends and appreciation for money kept under a mattress robs the owner and survivors of significant economic benefits.

The IRS has multiple tools to track down potentially taxable wealth, and auditors frequently look at homeowners insurance policies for riders which ensure excess amounts of personal property. Unusual collections can also be identified by auditors in that manner where the goal was to conceal them from death taxes.

The executor is personally responsible to account for all assets of an estate, and failure to do so can, if intentional, result in surcharge against the executor personally, and in serious matters could even involve violations of the criminal law. Therefore, a great deal of caution must be taken where the temptation exists to keep large amounts of cash at home or at a place of business. It behooves family members to have a forthright and compassionate discussion about this topic with persons who maintain such large amounts of cash and it is often wise to involve the family’s estate planning attorney in these discussions.