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Services
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Post Death/Trust Administration
Following the death of a parent or spouse,
there are certain administrative matters that must be addressed before
the decedent’s property may be distributed to his or her heirs.
The following outline is a guide for understanding the activities
and legal necessities inherent in the process of transferring the
decedent’s property to the rightful heirs.
- Probate: If $100,000 or more of the value of
the decedent’s assets are not in a joint account, a Trust, and/or the heir(s)
is named as a beneficiary on the account, then the property of the decedent
must be administered through the Probate process, which is a court proceeding
that occurs before the assets may be distributed to the heir(s). This process
is expensive and time consuming.
- Revocable Living Trust (RLT): While it is clear
that assets properly placed or titled in the RLT avoid probate, we have found
that many of our clients have inadvertently left a portion of their estates outside
of their RLT, which has either resulted in an unnecessary Probate (or mini-Probate)
and/or an under-funding of the Bypass Trust (Credit Shelter Trust).
Surviving spouses who have children from a prior marriage or are fearful of trusts
in general, sometimes elect to not fund or "create" the Bypass Trust on the
death of their spouse. In most cases, this is a direct breach of their
agreement with the deceased spouse and is cause for action by the heirs of the
deceased spouse.
Even though some time has passed, the surviving spouse and/or the heirs of the
spouses still may fund the bypass trust if properly counseled.
In other cases, we have found that trusts administered by a surviving spouse
alone and without the counsel of qualified tax professionals and/or
who have delegated their fiduciary duties to non-qualified attorneys
or accountants, have failed to:
- Properly administer the trust estate of the decedent spouse
by a failure to fund and/or inappropriate funding of the decedent’s sub trusts
- Execute qualified disclaimers
- Effectuate post death planning for deferring income taxation on the
decedent’s retirement and IRA Plans
- Elections:Consider making or not making the following elections:
- QTIP (Qualified Terminal Interest Property) and/or Reverse QTIP
- Alternate Valuation
- Special Use Valuation
- IRC Section 6166
- Equitable Adjustments
- QFOBE (Qualified Family Business Owned Exclusion)
- IRC 754 Basis Adjustment
- Community Property Basis Adjustment
- Section 303 Redemption
- Allocation of GST Exemption
- QSST or ESBT
- Extension for Filing 706 (15 mos.)
Without expert tax and trust counseling in the
post death administration of a decedent’s estates, the individual successor
Trustee of the RLT will not only place him or herself at risk legally and
financially, but could very well defeat the estate planning, creditor
protection, and tax objectives of the decedent.
- Beneficiary Designations: Life Insurance,
Annuities, Pension Plans, IRA’s, etc., have beneficiary designations and avoid
probate to the extent that the estate of the decedent is not named as the
designated beneficiary.
- Proper planning: Successor Trustees/Executors
may minimize the income tax liability on such accounts by dividing the account(s)
into separate shares for the residuary beneficiaries of the estate, or into
separate trusts for such beneficiaries.
- If necessary: Funding of the Bypass or
Qtip Trust, with such accounts or portions thereof, may be available at a
lower or deferred income tax cost employing the newly proposed regulations.
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