Trust or Estate filing requirement

[MichaelDi09]

I have a situation that I'm getting mixed opinions on and wanted to get anyone's views on how to handle this.
My Client passed away Dec 2013, I filed for EIN for the estate for 1041 filing due to assets consisting of Rental properties, Investments, checking account.
Daughter is both executrix and trustee of a IIR Trust that was created in 2011 , but had no assets in it at DOD. According to will, it stipulates that all personal and real property flows thru to IIR Trust, upon her DOD.

My question, Do I still report any income from rentals, investments on 1041 of (yet to be applied for EIN of Trust) or do I file income under EIN of Estate on 1041?
Does it matter that no property has been transferred from the deceased soc sec to IRR Trust ID#(no EIN as of yet)?

If I file all income under the IIR Trust 1041, does that eliminate any need to file an Estate 1041 ,since no assets will technically belong to the estate, according to will and trust documents?
Appreciate any insight.

[JON]

Attorneys

I do not know exactly, but I just had one where the rentals were put into the family trust, but not right away. So I reported, per the attorneys, the activity in the 1041 Estate(for the first year), because the lawyers had not changed the titles from the estate to the family trust. Then to top things off a land ownership ended up being probated so the estate is open for another year. I started doing the 1041s a few years ago - I really do not like it. The above was a small estate, a 706 was filed nothing due but for the State. The 706 prep was $4,800 and the attorneys charged $7.800 and are not done. Around here a lot of attorneys do not do 706s anymore, but love doing the estaste "work".

If the title was automatically (or recorded) in the trust name - it becomes irrevocable on death - and the real estate is reported on that 1041. I also have a friend who prepares 1041s abd 706s for a law firm. She says they will use the 1041 ID# for the estate also if everything is in the trust. I assume if means the estate filing is one and done...

[Lion]

I haven't had to use this technique yet, but there is an election to treat the estate and trust as one. Probably if you're closing the estate within a year, but that's just my guess. You might want to research what's available in your situation.

[MichaelDi09]

titles of property

were not transferred to IIR Trust , since Trust did not yet have a EIN for any property to be recorded . Or does that not matter , if the Will states, upon death all personal and real property transfer to IRR Trust ?
I want to include all under EIN of Estate for 2014 , since nothing has of yet been transferred, or has it?
Getting mixed views from different attorneys isn't helping , but what else is new.

[Roberts]

were not transferred to IIR Trust , since Trust did not yet have a EIN for any property to be recorded . Or does that not matter , if the Will states, upon death all personal and real property transfer to IRR Trust ?
I want to include all under EIN of Estate for 2014 , since nothing has of yet been transferred, or has it?
Getting mixed views from different attorneys isn't helping , but what else is new.

Unless the assets are moved into the title of the trust, they aren't in the trust.
I've had many clients declare they have a trust so they don't need to go through probate and then when you look at the accounts, none of the assets were moved into the trust. I don't believe a will can fund the decedents trust AFTER DEATH but a will can fund a beneficiaries trust.

I've dealt with trusts that go on for more than 40 years after death and a 1041 prepared every year. Co-mingling the estate and the trusts may not be what the client wants.

IMO, figure out which attorney is going to be handling the estate going forward and do what they want. You are following THEIR requests for tax work. Other attorney's may not know all the facts as they exist and the facts are what matters.

[MichaelDi09]

Property of Estate

until properly transferred and titled in IIR Trust.
I consulted with another estate attorney and he is in agreement . Not part of trust until titled so. Thanks Roberts.

Which brings up another question regarding the Rental property and stepped up basis on DOD.

Since no appraisal has been made, as of yet, would I be correct in holding off on any preparation of 1041 for the estate?

[Roberts]

Since no appraisal has been made, as of yet, would I be correct in holding off on any preparation of 1041 for the estate?

When is the 1041 due?
If the assets of the estate aren't anywhere close to the limits before taxes are due, there isn't likely going to be an appraisal. A lot of times after the fact they'll use a real estate agent to come up with a Comps valuation based on sales in the area. The agent will often do it for free to get the sales representation on the property. They can do a comps valuation estimate LONG after the estate is closed out.

[MichaelDi09]

1041 is on extension

and I was thinking that the rental property would get a stepped up basis for depreciation for the estate 1041 and future IIR Trust 1041 filings, am I correct ?

[Roberts]

and I was thinking that the rental property would get a stepped up basis for depreciation for the estate 1041 and future IIR Trust 1041 filings, am I correct ?

Yes the estate gets the stepped up basis but the reality is that if you don't have a FMV at death, that can't be done. I've only done a few and they didn't get the FMV report done before selling.