Area of Practice
Trust and Estate Administration
Administration of an estate or trust is the procedure through which a deceased person’s financial affairs are settled and their property and assets are divided. The time required to administer the estate can vary depending on the state of the legal instruments, the value and scope of the estate’s assets, and the number of beneficiaries.
Our Services Include:
- Probate administration
- Trust Administration
- Federal estate tax and gift tax preparation
- Federal estate tax and gift tax audit defense
- Determination of inheritance taxes
We work with you throughout the entirety of the trust and estate administration process, employing tactics that reduce income taxes and other unwelcome litigation. This includes probate proceedings at the county court, document interpretation, preparing estate and inheritance tax returns, working with tax authorities, post-death tax planning opportunities, and estate settlement and distribution.
Trust and Estate Administration FAQs
1
Do I need to hire a CPA?
Yes, it is recommended. At Endacott Timmer, we help you navigate the legal complexities associated with estate and trust administration. We recommend that you partner with a CPA to navigate the financial complexities of these efforts. CPAs help ensure that all financial aspects are accounted for and optimized. Beyond that—their expertise assists with the following:
- Estates and trusts are subject to various tax responsibilities.
- Trust and estate income regulations are quite complex.
- Determining the value of the trust or estate’s assets is a vital aspect of tax planning.
- If personal representatives or trustees skip tax reporting dates or fail to pay owing taxes, they may be accused of misconduct.
- There are potential discounts, credits, or deductions that may be applied to save the trust or significant estate amounts of money.
- If the IRS has issues regarding specific estate or trust tax matters, your CPA can engage directly with the interested agent.
2
How long will it take?
Depending on the size of the estate, the presence of creditors or contested claims, the complexity of tax, and other relevant issues, probate can take anywhere from several months to several years to complete.
Case Study: Trust and Estate Administration
Introduction
Our client’s father passed away, survived by his wife of a second marriage. The father was wealthy, owning several parcels of real estate, family business interests, and large investment accounts. He left a revocable trust that contained complicated tax planning provisions and created additional trusts after his death. Our client is named as the successor trustee under the revocable trust and the personal representative under his father’s will.
Problem
What to do and how to do it?
Solution
The administration of an estate (probate) or a revocable trust, after someone dies, is a legal process with several formal requirements. In all but a few situations, the same general process is followed, regardless of the size of the decedent’s estate. However, while the same general process is followed in each case, the steps to be taken and the decisions and elections to be made can lead to significantly different results. With our knowledge and experience in advising clients with complicated estates, we were able to assist our client with the successful administration of his father’s trust. Some of the important steps included:
- Making an IRC §645 election to allow some income tax to be deferred into the next tax year and allow some extra time to make decisions and file the tax returns.
- Making the “Clayton QTIP” election on the appropriate assets under IRC §2056. These assets passed in trust to the surviving spouse and qualified for an estate tax marital deduction. Careful thought was given to the assets chosen for QTIP treatment which avoided family conflict and management problems for the family business. The marital deduction helped to avoid federal estate tax in the decedent’s estate.
- Making a “reverse QTIP” election under IRC §2652 to make the QTIP Trust GST tax-exempt and thus avoiding generation-skipping transfer taxes when the assets are distributed to the decedent’s grandchildren upon the surviving wife’s death.
- Obtaining accurate values of the business interests and real estate by working with experienced business and real estate appraisers. The proper valuation reductions were used because the decedent had minimal ownership stakes in the main firm.
- Working closely with the decedent’s CPA and the business CPA to be sure all income was properly reported on all required tax returns and that the deductions yielded the most benefit.
- Keeping all of the family members informed of the steps taken and important decisions to be made.