Putting a notarized trust in place and executing a will is one of the best ways you can protect your assets for your loved ones and ensure that they have an easier time upon your passing due to the fact that there is a plan in place so they won't have to make rush decisions during such a difficult time in their lives. But you have to wonder, what actually happens when you die? We will break that down for you so you can feel at peace knowing everything truly has been taken care of.

A Basic Estate

This is an example of a basic estate with a trust that has been signed and notarized and where a will has been executed. The trust document will provide where and how the assets held in the trust will be distributed to the settlor's beneficiaries. Another objective of the trust document will be to minimize estate taxes by utilizing techniques such as a by-pass trust. This will utilize the settlor's $600,000 estate tax exemption to reduce the tax liability, and in some cases, remove it completely.

Upon the death of the settlor, the successor trustee named by the trust document will follow the testamentary instructions in the trust document. In addition to handling assets inside the trust, the trustee may notify the executor of assets not inside the trust to begin the probate process for those assets.

Gathering The Assets of the Deceased Settlor

The trustee will need to create a complete listing of all of the assets owned directly or indirectly by the settlor. Deeds or titles of ownership pertaining to identified assets should be reviewed. Along with the list assets, a listing of all debts of the deceased settlor should also be created. Assets should be secured and preserved. After everything has been secured it is time for the next step.

Valuing the Assets of the Decedent as of the Date of Death

Each asset must be valued at a fair market value as if the buyer and the seller were both willing to make the transaction with neither being rushed to buy or sell.

In some cases an independent appraiser is necessary to help establish a fair market value.

Assets must be valued accurately so that income taxes, estate taxes and distribution of assets is not adversely effected by miss valued assets at a later time.

Preparation and Filing of a Federal Estate Tax Return (Form 706)

All assets owned by the decedent need to be listed on the IRS Form 706. This includes assets held in a trust, held in the name of the decedent or are jointly held with another person or entity. A form 706 is due within nine months of the date of death. A one time six month extension may be requested for reasonable cause. The estate taxes are also due nine months from the time of death. Interest and penalties will be assessed for late payments.

Finally, The Following of the Settlor's Testamentary Plan

Once all of the above is settled it is time for the trustee to following the instructions laid out in the trust document. If property passes under a will it will be handled by the named executor of the will. Any assets to be used to fund a by-pass trust or other trusts will be selected in accordance with the trust instructions. The trustee will establish accounting records. Gifts designated for beneficiaries will be completed by the trustee.

What About My Last Income Tax Return?

The final federal return (Form 1040) must be filed and must include all income and deductions up to the date of death. This return is due on April 15th of the following year. If a by-pass trust is established there will need to be Fiduciary Income Tax Return (Form 1041) filed each successive year. The first return will include income and deductions going from the date of death to the end of the year only. Should a probate estate be established a Fiduciary Income Tax Return will need to be filed annually during the existence of the probate estate.



This information is provided to you for informational purposes only. It is not specific advice. It does not constitute an attorney client relationship. Should you need advice on creating or maintaining your Las Vegas family trust you can contact the law offices of Anthony L. Barney, Ltd. Get their free estate planning guide.

 


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