As a part of the estate planning process, an Estate Tax Attorney or a Trustee of a Will is legally responsible for handling the taxes of the estate for the period it’s in their control. This includes preparing, filing and distributing any of the decedent s final tax returns from past years; a complete death record; and the preparation of any final trust assets distribution. An Estate Tax Attorney will also handle any issues that may arise during the course of probate and after the transfer of the Estate to the beneficiaries. They are also responsible for collecting any debts or other claims against the Estate and will generally retain the title to the property held by the Estate during the period of probate.
Generally, any estate planning situation must be settled at the final death court; however, there are situations where a situation may arise under which a situation can arise where a tax debt is not properly dealt with, such as a situation where an inheritance is delayed until the final estate tax return is filed. If an inheritance is delayed until the final estate tax return is filed, then the asset may not be subject to inheritance tax. In this situation, the heirs can claim the inheritance tax on their final tax return as if the asset was a refundable tax-free asset. Because of some differences in the laws of different states, it is recommended that anyone planning to make any final estates planning arrangements consult a qualified attorney. An estate-planning attorney will have the expertise and knowledge to properly deal with any situation that may arise under state law. Because of differing localities, it is recommended that any estate-planning situation involving assets should be handled only by an experienced estate-planning attorney who is familiar with both state and federal laws.
One area in which estate taxes can become problematic is when the value of an asset increases substantially during the course of someone’s life. This can happen, for example, if one spouse has an inheritance that is much larger than the other spouse. Under these circumstances, it can sometimes be difficult to determine the fair market value of one’s assets because, after all, many assets depreciate over time. However, there are situations in which a spouse may not have taken any action to obtain an appraisal of their assets even though, for example, they may have been reasonably attentive to the value of gifts they have received. If the value of an inherited asset increases significantly, such as because one spouse receives a large bonus from a company, then the difference between the fair market value of the assets and the amount of compensation paid to that spouse can trigger gift taxes.
Because of differences in state laws, there are also differences in the manner in which the executor or administrator is paid. Under most states, there is a cap on the amount of commission an executor or administrator will receive, while others do not have caps. As well, there can be a difference in how property is transferred from the decedent to the executor or administrator upon death.
To file final gift tax returns, you must file the appropriate form with your state tax agency. Some examples of this type of form are forms 706, inclusive, and forms 710, inclusive. These forms are available from various sources, including bookstores, tax preparation businesses, online businesses, and local governments. You can go further to learn about filing estate tax returns on your own, but if you are unfamiliar with the process, then your local tax agency is likely your best resource. There are some specific steps you must follow in order to file your gift tax returns, including: preparing the information you wish to include on your final gift tax returns, signing the appropriate documents, and filing the appropriate forms.
Gifts are generally not taxable. However, there are situations where one could become responsible for gifting a taxable asset to a qualifying beneficiary. This is when a giver knows that the value of such gift will exceed the value of the gift itself. For example, some lottery winnings and estate investments may qualify for gifting, while property purchased with a mortgage that exceeds the value of the loan will not. This exception typically only applies to gifts received within three years of the date of the mortgage sale.