TP made a gift of real estate to an unrelated friend. Both signed a separate document which contained certain restrictions regarding the subsequent distribution of that asset, and it is filed at the courthouse (supposedly.) I would consider this a gift of less than a complete interest. From my reading of the document, it appears to be a life estate, in that, in the event of donee's death (or inability to live in the house for whatever reason), it is to be sold and the proceeds split with part of the proceeds to go into a trust set up by the TP (who has since died.) IMO, it should have gone on a gift tax return Form 709 at the time. To my knowledge, none was filed. However, even if it were added back to the rest of the TP's estate assets, the total is still well under the exclusion amount. According to IRS instructions, executor is responsible for filing the gift tax return only if the gift was made during the year of client's death and had not been filed. I do not believe a 706 is necessary just to document all this if the totals do not exceed the exclusion amounts. Any opinions? I did advise the trustee of the trust to check to see if the document was on file with the real estate records, but I think it is still legal even if it isn't. It is drawn up by an attorney and properly notarized, etc.
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Last edited by Burke; 10-22-2015, 05:33 PM. -
What difference does it make?Originally posted by BurkeRoland Slugg
"I do what I can." -
Pass the Entity Test?
Big difference Roland, if my hunch is right.
I believe this is the establishment of a trust and not a gift.Comment
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Why do you feel it is the establishment of a trust? Most life estate situations do not automatically establish a trust entity. The separate trust which WAS established in the TP's will would be considered a remainderman of the property with the life estate interest. The only reason this has come up is that the trustee (bank) wants documentation that an Estate tax return was not required.Comment
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