What to file after death of taxpayer?

[Jesse]

I am trying to help a friend with her father’s death and taxes. This is new to me and would like to help her as well as learn from it at the same time. I know comments from other posts suggest finding someone experienced so I’ll ask in advance to bear with me as I am both researching and asking questions to learn and gain some experience to put under my belt. You are my sounding board. I have not yet talked to the lawyer and would like to prepare myself as not to seem like a total idiot, and see if together we can resolve this matter. Any advice would be appreciated.

Taxpayer died 2/2008, had a revocable trust, other small investment funds and his home.

1.) I have ruled out the necessity of Form 706 as gross estate plus adjusted taxable gifts is less than $2,000,000. Correct?

2.) I have cross referenced the Form 56 – Notice Concerning Fiduciary Relationship. I have not come across this in the past, is this form normally filed by the lawyer?

3.) I will need to file Form 1040 for 2008 for income up to the date of death?

4.) I will need to obtain a Federal ID number and file Form 1041 for 2008 for the estate from date of death to 12/31/08?

5.) If the home does not sell by 12/31/2008 the estate will need to be kept active until it does sell?

6.) TTB pg 21-6 - The revocable trust became irrevocable at the grantor’s death and the trust needs to obtain a new Federal ID number. To my knowledge this has not been done, should it be done now, almost five months later?

7.) Would it be advisable for Form 8855 be filed to make the election to treat the revocable trust as part of the estate? If so, would it follow the estate Federal ID number and a new Federal ID number for the trust would not be necessary?

I have asked her to see the trust documents, will and any other documentation with provisions on how assets are to be distributed. After reviewing these I'm sure I'll have more questions.

[Burke]

1) Yes.
2) Executor files the Form 56.
3) Yes. But you cannot do it until 2009.
4) Yes. But executor can also elect a fiscal year if they wish. This is done at the time the return is filed. No prior notification necessary. If the taxpayer died in Feb, 2008 the estate year can be any time frame from the day after death up to (no later than) 1/31/09.
5) Yes, if you are using a calendar year, and assuming there was no surviving spouse who had JTROS.
6) Look into this further. If this was a revocable "living" trust, it was just a vehicle to avoid probate, and assets can be distributed outside of the probate process. If there was a grantor trust document, you need to review that for guidance.
7) Yes.

Get yourself a copy of the IRS Pub. 559, Suvivors, Executors, and Administrators for detailed information regarding above. I also recommend taking a course at a local community college if available, or other continuing education offered by tax organizations on Administration of Estates if you are going to make this a part of your practice. Don't do anything prior to reviewing the will and/or any trust documents.

[Jesse]

Thank you for taking the time to read through my post and helping with my questions. I really appreciate it and yes I am keeping my eye open for some good courses as well.

Thanks again.

[S T]

Do you have

Jesse,

What State? Do you now have two trusts?

Was the Revocable Living Trust an A-B trust?

So now it is two trusts, which part becomes the Irrevocable Trust of the deceased, and the Survivor Trust for the remaining Spouse?

Sandy

[KJ Judd]

I agree you do not need to file a federal estate return. However, you should check with your state to see what its threshhold is for filing an estate return. Not all states follow federal.