Discussion:706 & Estate Planning

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Discussion Forum Index --> Advanced Tax Questions --> 706 & Estate Planning

Discussion Forum Index --> Tax Questions --> 706 & Estate Planning

Mld123 (talk|edits) said:

1 May 2014

I'll be preparing a 706 over the next few months for an estate that will be disbursed into a credit shelter trust and two marital trusts upon closing. Since this precious forum will be gone by the time I'm doing the bulk of this work (by the way, are folks flocking to any new forum in particular?), I wanted to find out now if there's any educational material out there that I should review, that will help with any estate planning considerations I should be taking as I prepare the 706. Or is that something that comes into play after the 706 is closed, when the trusts need to be funded?

For example, this estate is for the first-to-die spouse, so my initial thought was to elect the highest possible values to maximize basis, since no estate tax will be due.

I'm sure that's just scratching the surface, so again, any articles/books/IRS docs/etc. that would be helpful? The attorneys involved are helpful and cooperative, but I don't want to consume too much of their time for the sake of my client's invoice.

Thank you.

JAD (talk|edits) said:

1 May 2014

When I do an estate return, I make sure that I have backup - a formal arrangement with someone who specializes in the area. Your question regarding electing the highest possible values is a little scary. There is no election that allows you to elect a higher value than FMV. Also, fractional interest discounts have to be applied upon the death of the first spouse - the IRS doesn't allow us to claim them on the 2nd estate but not the first. Estates are complicated. The funding decisions last for a generation, at least. There may be income tax ramifications based upon some distributions but not others. The traps go on and on. You can orient to issues by doing some reading as you go, but without the expertise, you may be faced with an issue that you don't even recognize.

Mld123 (talk|edits) said:

2 May 2014
When I said highest possible value, I meant choosing between DOD values and the Alt. Valuation Date.

The attorneys involved specialize in this area, so I will be consulting with them. I would just like to educate myself so that I'm not going to them for every little thing and running up my client's bill. My concern in particular is how the preparation of the 706 could affect the trust funding that will later occur (which will be handled primarily by the attorneys) -- beyond the obvious connection of establishing values for the assets that will be going into the different trusts.

Also, can you clarify your statement about fractional interest discounts: the IRS doesn't allow us to claim them on the 2nd estate but not the first...do you mean, they're allowed for the first-to-die?


Mld123 (talk|edits) said:

2 May 2014
OK I need to amend that last statement...forgot the Alt. Valuation Date must reduce the gross estate...

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