Estate Planning with Gift, Estate and Trust Returns

Estate Planning refers to death and taxes; we help clients leave estates to their chosen heirs and charities with as little tax as possible. Fortunately, 2012 laws currently make it easier for family estates under $11 million to escape estate taxation and “portability” lessens taxpayer’s legal burdens with trust attorneys to gain such benefits. 99.5% of us will not currently owe Estate tax. Yet wealthy taxpayers get limited estate tax credits and they don’t know how Estate tax laws may change in the future with presidential candidates clamoring to tax the rich. In the past 200 years, exclusion amounts have been lower and taxes higher than at present.

Estate tax returns must be filed on the death of the first spouse to claim credits and our clients need plenty of accounting help for gift tax returns. Living Trusts keep relatives out of court proceedings—slow, costly and public–but have few tax consequences. Trust returns get filed regularly by relatives of the living and the deceased and Dunham, as always, is here to help.

Trust Returns (Forms 1041)

Dunham Associates files trust returns regularly for families of the deceased who administer properties jointly that benefit multiple relatives. In a sense, they are running a business together with Forms K-1 issued similar to those of partnerships or S-Corporations. There are also trusts to benefit living individuals who can’t manage their affairs or foreigners. Others use tax strategies with Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) to split income and assets.

Gift Tax Returns (Forms 709)

There is reason to track gifts accurately and strategy in the way one presents gifts to others. Most will know the advantages of paying for education and medicine directly and many will divide gifts in $14k chunks to others. But gifts of indivisible business interests and real estate provide the best opportunities for tax planning and the most complicated returns. Taxpayers calculate Generation Skipping Transfer taxes on this form as well.

Estate Tax Returns (Forms 706)

Taxpayers frequently file these returns to claim the Estate Tax Credit from their deceased spouse when they fear they will have an estate over five million on their own death. The wealthiest may genuinely owe tax and the tax rates are a startling 40% of wealth acquired. We discuss strategies to avoid this tax elsewhere. Dunham Associates CPAs certainly assists with valuation of estate issues and choice of alternative valuation dates.

Real Estate Taxation and Planning: Purchase analysis, Financing, 1031 Exchanges, and Foreclosures.