CiNii Books - Estate & trust administration

Estate and Trust Administration For Dummies, 2nd Edition (9781119543879) was previously published as Estate and Trust Administration For Dummies, 2nd Edition (9781118412251). While this version features a new Dummies cover and design, the content is the same as the prior release and should not be considered a new or updated product. Your plain-English guide to administering an estate and/or trust As more and more of the population reach senior ages-including baby boomers, many of whom do not have wills-an increasing number of people are being thrust into the role of executor, administrator, personal representative of an estate, or trustee of a trust after the death of a loved one. This updated edition of Estate & Trust Administration For Dummies guides you through the confusing process of administering an estate and/or trust. Settling an estate and administering a trust can be complicated, messy, and time-consuming for individuals named as executor or trustee, most of whom have no previous experience with such matters. Estate & Trust Administration For Dummies shows you how to make sound decisions for your unique circumstances. Guides you through the confusing process of administering an estate and/or trust Provides expert advice on unfamiliar estate and trust tax law Gives you a practical checklist to follow for all of your estate and trust administration questions and concerns Whether you're looking for guidance on how to navigate the probate process and estate taxes, settle debts and bequests, fund a trust, comply with tax regulations, or anything in between, this hands-on, friendly guide takes away the mystery and provides detailed answers to all of your estate and trust administration questions.

Table of Contents

Introduction 1 About This Book 1 Conventions Used in This Book 2 What You're Not to Read 3 Foolish Assumptions 3 How This Book Is Organized 3 Part 1: Getting Started with Estate and Trust Administration 4 Part 2: Administering an Estate 4 Part 3: Operating a Revocable or Irrevocable Trust 4 Part 4: Paying the Taxes 4 Part 5: The Part of Tens 5 Icons Used in This Book 5 Beyond the Book 6 Where to Go from Here 6 Part 1: Getting Started with Estate and Trust Administration 7 Chapter 1: Operating in a Fiduciary World 9 Identifying the Players 10 Determining an estate's fiduciaries 10 Knowing who the trustees are 11 Lining up your team of advisors 13 Estate of Change: Delving into Estates 13 Altering the status quo 14 Probating an estate 14 Collecting the estate's assets 14 Paying expenses and making distributions 15 Tying up the estate's loose ends 15 Operating a Trust 15 Understanding your duties as trustee 16 Putting assets into trust 16 Putting the trust to work 16 Discovering the purpose of the trust 16 Compiling and organizing trust records 17 Bringing the trust to its conclusion 17 Paying Uncle Sam 17 Compiling the estate tax return 17 Figuring out the income taxes 18 Planning an income tax strategy 18 Whipping together Schedule K-1 18 Chapter 2: Exploring the Ins and Outs of Estates 19 Defining the Estate for Probate Administration Purposes 20 Will Power: Understanding How a Will (Or No Will) Affects an Estate 21 Dying testate 21 Dying intestate 22 Taking a Look at Who Can Inherit 23 Surviving spouse 23 Individuals omitted from the decedent's will (including intentional disinheritance) 25 The other players: Devisees and legatees 26 Heirs-at-law 26 Defining the Estate for Tax Purposes 27 Transfer taxes 27 Other taxes 30 Chapter 3: Identifying Different Types of Trusts 31 Differentiating for Income Taxes: Grantor versus Non-Grantor Trusts 32 Grantor trusts 32 Non-grantor trusts 33 Intentionally defective grantor trusts 33 Creating Trusts during Lifetime and after Death 34 Trusts created during lifetime 34 Trusts created under a last will 35 Grasping Revocable Trusts 35 Still breathing: Living trusts 36 Tackling Totten Trusts 37 Going incognito: Nominee trusts 38 Understanding Irrevocable Trusts 38 Making gifts to an irrevocable trust 39 Getting the maximum tax benefit out of dying: Marital trusts 40 Protecting the estate tax exemption: Credit shelter trusts 44 Grandpa (or Grandma) knows best: Grandchildren's trusts 45 Better safe than sorry: Insurance trusts 45 It's only a name, not a description: Crummey trusts 47 Keeping a finger in the pie: Grantor-retained interest trusts 48 Exploring Charitable Trusts 50 Split-interest charitable trusts 51 Non-operating charitable foundations 52 Owning SubChapter S Shares in Trust 53 Qualified SubChapter S Trusts (QSSTs) 53 Electing Small Business Trusts (ESBTs) 54 Chapter 4: Assembling Your Team Members and Knowing When to Use Them 57 Finding What You Need to Go It Alone 57 Finding an Attorney 59 Knowing where to look 59 Asking the right questions 61 Discussing payment options 62 Finalizing your decision 63 Working with your attorney 63 Hiring a Tax Professional 65 Discovering where to look 65 Discussing payment options 66 Considering Help from Other Pros 66 Determining whether you need an investment advisor 67 Obtaining appraisers where necessary 69 Consulting with other miscellaneous pros 70 Recognizing Malpractice 71 Surveying why malpractice occurs 71 Covering your ass ets 72 Part 2: Administering an Estate 73 Chapter 5: Taking the First Steps after Death 75 Addressing the Immediate Concerns When Someone Dies 76 Honoring anatomical gifts 76 Having an autopsy performed 76 Arranging the Funeral 77 Making important decisions 77 Obtaining copies of the death certificate 82 Understanding How Death Changes Everything about the Decedent's Assets 83 Bank accounts and the need for funds 83 Powers of attorney 84 Locating the Estate-Planning Documents 84 The Last Will and testament (The Will) 84 Trust agreements and amendments 85 Letters of intent 86 Other documents that dispose of property 86 Notifying Those Who Need to Be Notified 86 Creating Calendars and Files 89 Eyeing what kind of calendar to create 89 Setting up a filing system 90 Chapter 6: Navigating the Probate Process 93 Filing the Last Will with the Probate (Or Equivalent) Court 94 Figuring Out Whether Administration Is Necessary 95 Do you need a temporary executor? 95 Do you need a special administrator? 97 Determining domicile 98 Accessing ancillary administration 99 Deciding What Shape Your Probate Procedure Should Take 100 Taking small estate shortcuts 101 Traveling the traditional probate route 103 Taking Important First Steps after Your Appointment 107 Eyeing the Surviving Spouse's Rights and Decisions Regarding Property 109 Exercising rights ahead of the provisions of the will 109 Electing against the will 109 Claiming dower 110 Chapter 7: Marshalling and Liquidating Assets 111 Understanding Why You Need to Determine What the Decedent Owned 112 Observing the Obvious: Big-Ticket Items 113 The bricks and mortar: Real estate 113 Things that move: Cars, boats, and cycles 114 Small (and closely held) businesses 114 Tracking Down All the Other Assets 115 Reading the mail 116 Perusing other personal papers 118 Finding the hiding places 118 Emptying the safe deposit box 119 Sleuthing for digital assets and info 120 Checking over prior tax returns 121 Listing Personal and Household Effects 122 Appraising the Property 123 Tangibles 124 Intangibles 125 Real estate 127 Contacting the Employer about Employee Benefits 127 Locating and Collecting Insurance Proceeds 129 Ascertaining Any Other Death Benefits 130 Preparing and Filing the Probate Inventory 132 Liquidating Assets 132 Selling stocks, bonds, and other securities 133 Disposing of real estate 134 Chapter 8: Paying the Debts, Expenses, Bequests, and Devises from the Estate 135 Determining and Paying Debts of the Decedent and Administration Expenses 136 Finding out how and when to pay claims 136 Prioritizing payment 138 Declaring the estate insolvent 140 Informing Potential Beneficiaries of Their Right to Consider Disclaimer 140 Segregating and Distributing Specific Property 142 Treading slowly before distributing 142 Making the distributions 143 Considering tangible property 144 Looking at intangible property 144 Fulfilling bequests of specific dollar amounts 145 Dividing Other Personal Property Equitably 146 Basing division on letter of intent 146 Creating a system for heirs to choose 147 Disposing of unwanted personal property 147 Slicing Up the Residue 147 Chapter 9: Closing the Estate 149 Obtaining Tax Closing Letters 149 Acquiring Releases of Lien for Real Estate 150 Paying Final Administration Expenses 151 Making Final Distributions to Residuary Beneficiaries 152 Preparing and Filing Final Estate Income Tax Returns 153 Readying Accounts for Allowance by the Probate Court 153 Using the appropriate form of accounting 154 Following the proper probate procedures 155 Remembering filing fees 158 Appointing a guardian ad litem, if needed 158 Filing a military affidavit, if necessary 158 Notifying the surety 158 Part 3: Operating a Revocable or Irrevocable Trust 159 Chapter 10: Understanding the Trustee's Duties 161 Getting Acquainted with the Trust Instrument 162 Creating a plan based on the trust's terms 162 Identifying the players 163 Reforming the trust 164 Empowering the Trustee 165 Buying and selling assets 165 Determining distributions to beneficiaries 165 Hiring and firing advisors 167 Coloring Inside the Lines: Understanding Fiduciary Duty and Limitations 168 Exercising discretion 168 Obtaining errors and omissions insurance 169 Protecting the Trust's Assets 169 Diversifying the assets 170 Asking for help 170 Preparing and Filing Annual Income Tax Returns and Accounts 171 Chapter 11: Funding the Trust 173 Putting Assets in Trust during Life 173 Signing It Over: Giving the Trust Asset Ownership 174 Cash and securities 175 Privately held stocks, promissory notes, and limited partnership interests 177 Real estate 178 Life insurance policies 180 Personal and household property in trust 183 Rolling Property into Trust after Death 185 Chapter 12: Investing the Trust's Assets and Paying Its Expenses 187 Appreciating the Importance of Income and Principal in Trust Administration 188 Defining principal and income 188 Distinguishing between the two 189 Using Investment Advisors Effectively 191 Holding and Diversifying Assets 192 Stocks 193 Bonds 193 Mutual funds 195 Cash needs 197 Real estate 198 Small business stocks 198 Going Green in a Trust 199 Socially conscious 200 Politically aware 200 Looking to the Beneficiaries' Needs 201 Age 202 Purpose of trust 202 Paying the Trust's Expenses 204 Trustee's fees 204 Investment advice 205 Accounting fees 205 Taxes 205 Chapter 13: Paying Trust Beneficiaries 207 Notifying Beneficiaries of the Trust 208 Obtaining addresses and Social Security numbers 208 Verifying dates of birth 209 Determining Scheduled Distributions 209 Figuring out how much to pay 210 Creating a payment schedule 213 Distributing When the Beneficiary Reaches a Specific Age 214 When Beneficiaries Request More Money: Paying Out Extra Distributions 215 Making the Decision to Distribute Discretionally: Eyeing the Trust's Terms 217 Ensuring health and well-being 217 Paying for education 217 Buying a home 218 Starting a business 219 Using trustee discretion 219 Chapter 14: Creating and Keeping Trust Records 221 Creating a Filing System 221 Getting started: Organizing the right way 222 Keeping the trust instrument handy 224 Compiling correspondence 224 Filing financial records 225 Preserving annual accounts 225 Referencing tax returns 226 Preparing an Initial Inventory and Valuing the Assets 227 Arriving directly from the donor 227 Coming from the donor's estate 228 Compiling Records of All Transactions 228 Knowing the difference between income and principal 228 Filing income tax returns annually 229 Producing Annual Trust Accounts 230 Assembling the desired information 230 Obtaining assents of beneficiaries 232 Filing with the probate court 232 Chapter 15: Terminating the Trust 235 Distributing All Assets According to the Trust Instrument 235 Calculating final income distributions 236 Holding back funds for final taxes and fees 237 Paying the remaindermen 238 Submitting the Final Income Tax Returns 240 Determining any final tax liability 241 Filing a short-year return 241 Preparing Final Accounting and Obtaining Assents of All Remaindermen 242 Finally finishing a non-probate trust 242 Polishing off a probate trust 243 Dealing with Outliers after the Trust Terminates 244 Part 4: Paying the Taxes 245 Chapter 16: Preparing the Estate Tax Return, Part 1 247 Figuring Out Which Estates Must File 248 Who must file 248 Who actually files Form 706 and when 249 Obtaining a Release from Personal Liability 250 Understanding Some of the Nitty-Gritty Rules for Filing Form 706 251 Where and how to file 251 How to pay the tax 251 Penalties for late filing, late payment, and understatement of valuation 252 Signature and verification 253 Extensions of time to file and pay tax 253 Supplemental documents 255 Completing the Form 706, Pages 1-4 257 Part 1: Decedent and Executor 257 Part 2: Tax Computation 257 Signature of executor(s) 259 Signature of preparer other than the executor 259 Part 3: Elections by the executor 259 Part 4: General Information 262 Part 5: Recapitulation 265 Part 6: Portability of Deceased Spousal Unused Exclusion (DSUE) 265 Being Ready for and Handling an Audit 266 Getting an Estate Tax Closing Letter 267 Chapter 17: Preparing the Estate Tax Return, Part 2 269 Tackling the Most Common Schedules 269 Focusing on real estate: Schedule A 270 Identifying stocks and bonds: Schedule B 271 Addressing mortgages, notes, and cash: Schedule C 276 Considering life insurance: Schedule D 277 Eyeing jointly owned property: Schedule E 278 Considering other property: Schedule F 279 Touching on funeral and administration expenses: Schedule J 281 Recording debts, mortgages, and liens: Schedule K 285 Listing net losses and such: Schedule L 286 Covering bequests to a surviving spouse: Schedule M 287 Recording charitable, public, and similar gifts and bequests: Schedule O 289 Knowing When to Ask for Help 290 Listing transfers during life: Schedule G 290 Exercising powers of appointment: Schedule H 291 Considering annuities: Schedule I 291 Claiming a credit for foreign death taxes: Schedule P 292 Getting a credit for tax on prior transfers: Schedule Q 292 Generation-Skipping Transfer tax: Schedule R 292 Electing a qualified conservation easement exclusion: Schedule U 293 Filing a protective claim for refund: Schedule PC 293 Chapter 18: Filing Income Tax Returns for a Decedent, Estate, or Trust 295 Before You Begin: What You Need to Do 296 Obtain a federal tax ID number 296 Choose a tax year-end 297 Calculating the Income 298 Interest 298 Dividends 299 Business income 299 Capital gains and losses 300 Income from rents, royalties, partnerships, and other estates and trusts 302 Farm income or loss 303 Ordinary gain or loss 303 Other income 304 Deducing Deductions 304 Interest 305 Taxes 306 Fiduciary fees 306 Charitable deductions 307 Attorney, accountant, and preparer fees 308 Miscellaneous itemized deductions 308 The Income Distribution Deduction (Schedule B) 309 The estate tax deduction 311 Taxes owed 311 Credits 315 Additional taxes 316 Answering the Questions on the Back of Page 2 (Form 1041) 317 Chapter 19: Weighing Income Tax Implications 319 Timing Payments In and Out of an Estate 320 Benefitting from the estate's fiscal year 320 Balancing the estate's taxable income against the beneficiary's 321 Timing the receipt of income 323 Paying the ongoing expenses of the estate 323 Investing to Minimize Income Taxes 324 Limiting the fiduciary's income taxes 324 Protecting the beneficiary 326 Introducing the Unearned Income Medicare Contribution (UIMC) Tax 327 Calculating the tax 328 Lessening the tax's impact 328 Chapter 20: Reporting Tax Info on Schedule K-1 331 Understanding Schedule K-1 331 General information 332 Income items 335 Deductions and credits 336 Alternative minimum tax information 337 Allocating Types of Income on the K-1 338 Preparing Supplements to Schedule K-1 339 Showing foreign tax allocations 339 Providing state tax information 340 Creating Nominee Form 1099s 340 Part 5: The Part of Tens 343 Chapter 21: Ten Pitfalls for the Unwary 345 Failing to Terminate an Existing Real Estate Purchase and Sale Agreement 345 Taking a Lump Sum Distribution from a Pension Plan, IRA, or Deferred Compensation Plan 346 Creating a Feeding Frenzy When Splitting Personal Property 347 Missing Court Deadlines 348 Forgetting Tax Filing Deadlines 348 Failing to Communicate with the Heirs and Legatees 349 Exercising Poor Fiduciary Judgment 349 Underestimating the Devotion Required 350 Taking Nonsanctioned Shortcuts 350 Paying from the Wrong Pocket 351 Chapter 22: Ten Types of Taxes You May Have to Pay 353 Federal Gift Tax 354 Federal Estate Tax 354 Generation-Skipping Transfer Tax 354 State Inheritance or Estate Tax 355 Estate and Trust Income Taxes (Federal and State) 356 Decedent's Final Federal and State Income Taxes 356 Local Income Taxes 357 Local Real Estate Taxes 357 State Intangibles Taxes 357 Excise Taxes 358 Appendix A: Glossary 359 Appendix B: State-By-State Rules of Intestacy and Estate or Inheritance Tax 369 Index 401

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