If a trust has been established as part of an estate plan, assets in the trust must be administered following the death of the decedent. This process is not something that happens automatically according to the terms of the trust. Instead, a trustee is responsible for overseeing the transfer of money and other assets to beneficiaries. This individual must also make payments to creditors as necessary and maintain proper accounting for the estate.
At KJMLAW Partners, our attorneys manage all aspects of trust administration, including the filing of necessary tax returns. The IRS Form 706, known as an “estate tax return,” lists all property in an estate, including such assets as bank and retirement account balances, life insurance holdings, and real estate properties. We prepare estate tax returns for clients whose trusts we administer, as well as for others whose trustees do not have the specialized knowledge to do so. We also work with individuals and estates to correct errors made in past filings and ensure the documents are completed properly.
Upon the death of a spouse, our firm helps clients to file estate tax returns within the time required to protect and carry over the decedent’s unused estate tax exemption. This tool, known as portability, is of particular importance now, as the current estate tax exemption of $11.7 million is expected to be lowered within the year, and eventually to as low as $6 million by 2026. Claiming a spouse’s unused exemption protects the eventual beneficiaries of the surviving spouse from paying 40% on whatever portion of the estate surpasses the lower exemption amount at the time of their passing. For larger estates, this translates into millions of dollars.
Typical estates see preliminary distributions in the first several months after a decedent’s passing, and final distributions within eighteen months. This process can extend up to three years for larger estates, as trustees must wait for estate tax returns to be reviewed by the IRS. The timeline is dependent on the number and types of assets involved, and our lawyers have extensive experience with valuation matters, which include coordinating with appraisers and valuing assets from life insurance policies to family limited partnerships and closely held entities.
- After an enrolled agent had completed their estate tax returns incorrectly, a client came to us to fix the issues. The estate included three businesses within trusts, and we assisted the client in properly splitting ownership as fractional interests, thereby reducing the value of the taxable estate. As estate planning lawyers, we have specialized knowledge of how to properly allocate expenses and assets related to trusts and gifts that many enrolled agents do not.
- Since 2017, we have handled trust administration for a client who inherited ten properties following the death of her husband. We manage the estate, which includes a recognizable film location featured in the 1978 thriller Halloween (currently rented as commercial office space). As part of our work with this client, we have also made gifts in response to tax law changes, including the recent passage of Proposition 19 in California, which altered exemptions from property tax assessments for real estate transfers between parent and child.
- Our firm worked with siblings living in separate countries (U.S. and Canada) who were the sole trustees of their parents’ estate in California. We ensured compliance with proper tax withholding requirements for non-U.S. persons and avoided the assets being treated as a foreign trust for U.S. tax purposes.
- Our attorneys shielded a client’s $6 million estate from roughly $400k in taxes by timely filing an estate tax return upon the death of her spouse. This carried over an estate tax exemption of $11.4 million, protecting the estate from future tax law changes which would lower the estate tax exemption.
Our firm has over two decades of experience administering trusts for high-net-worth individuals and other clients with estates comprised of businesses, real estate properties, and investment assets. We work on behalf of these estates to properly distribute assets to beneficiaries according to the terms of the relevant trusts and to accurately report each transfer of assets to the IRS. We also handle the full range of issues that can arise in trust administration, up to and including litigation. To find out how we can help you with the administration of an estate, please call our office at 626-568-9300 or email Kevin Moore at firstname.lastname@example.org and Kevin Bayley at email@example.com.