As a part of an estate planning process, an Estate Attorney or an Administeror of a Living Will is required to manage the estates assets for the period it is in their care. This includes preparing, filing and serving all of the decedent s individual tax returns for past financial years; preparation and filing any of the decedent s final estate tax return; as well as assisting with any final probate actions. If any estate requires protection under a power of attorney, the estate planning attorney will also work in support to protect that power of attorney.
A final estate tax return is the final installment of U.S. federal income tax. It can be a complicated process. Estate tax returns are prepared and filed by anyone of many different levels of experience and understanding. The process begins with preparation and filing of any required returns. The forms that must be filed to include the federal income tax and any state and local income tax.
When filing the final estate tax return, the first thing to do is determine which beneficiaries will receive the distribution. Federal tax law states that the beneficiaries are those persons “who would have been entitled to receive an inheritance at the time of the death of the testator.” A beneficiary can be a relative, a friend or any other person. The funds from these distributions are usually exempt from federal and state taxes.
Some of these assets are also subject to a trust tax. Assets that are transferred into a trust will generally be exempt from estate and trust taxes. Another way to avoid estate and trust taxes on certain assets is to assign these assets to a specific legal entity. This allows you to pass title of these assets to an institution that does not owe taxes on them. There are many different ways to designate the legal entity in cases such as these.
Estate tax lawyers specialize in planning and representing the interests of their clients. These professionals know all of the details that must be addressed when it comes to filing final returns. It is often a complex and time consuming process. They are there to protect the interests of their clients and make sure they pay nothing more than is absolutely necessary. These professionals understand the importance of paying payroll taxes, investment and retirement accounts, taxes on stock options and foreign properties owned on behalf of their clients. They are also familiar with the tax laws of every state and the requirements of each state’s income tax.
If there are any unsecured debts owed to the decedent, the executor must report and document these debtors on the final estate-tax return. Unpaid medical expenses, unpaid student loan or other educational expenses must also be reported on the final return for the year of death. Taxes owed to any beneficiaries will also need to be paid if the decedent was not covered by a living trust.