Category: Estate & Trust Administration

ALERT – New Rules for Basis Consistency

February 13, 2016

If you are an executor of an estate or an advisor to such executor, then you need to be aware of two new statutes that may impact you and a change in the initial deadline. Included in the Surface Transportation and Veterans Health Care Choice Improvement Act that was effective on July 31, 2015, were two statutes that require the executor of an estate to report to the IRS and to the beneficiaries of the estate the basis (in this case, fair market value of the asset that is determined after a death) of the assets that the beneficiaries are to receive from the estate.

Section 1014(f) requires that the basis the beneficiary receives be consistent with the value as reported on the estate tax return. Section 6035 is the reporting requirement on new Form 8971. Under Section 6035, executors are required to provide certain information on Form 8971 to beneficiaries no later than the earlier of (a) 30 days after the estate tax return was due (taking into account any extensions), or (b) 30 days after the estate tax return is filed. In Notice 2015-57, effective on August 21, 2015, the initial deadline for such reporting was extended to February 29, 2016 to allow for the promulgation of regulations.

On February 11, 2016, Notice 2016-19 was released in which the initial deadline was further extended to March 31, 2016 to allow for more time to issue regulations relating to these new statutes. Among other items that are in need of clarification is whether an executor of an estate in which an estate tax return is only being filed to take advantage of portability needs to complete and file Form 8971. The recent Notice advises executors and others to not file Form 8971 until the release of the regulations, which are expected “very shortly.” Thus, executors and advisors remain in limbo in certain situations and will need to stay tuned for further updates.  Furthermore, beneficiaries need to be aware that they will be receiving this information and will be responsible for maintaining accurate records.  #estateadministration #taxplanning #basisconsistency #form8971

David Bowie’s Last Will and Testament – What Is to be Learned?

February 2, 2016

Last week David’s Bowie’s Last Will and Testament was filed in a New York Surrogate Court.  We learned how he wanted to be remembered, a subject I addressed in an earlier post.  We also learned how his considerable estate will be divided and about specific gifts he wanted to have made.  But most importantly, we learned that having a Last Will and Testament as the main instrument that details the disposition of our estate does not ensure privacy regarding our personal and financial affairs after death. In fact, having a Last Will and Testament means that anyone can see who benefits from an estate and ensures the Court has to be involved at some level. 

For some individuals, privacy may not be a priority issue after death, but for others privacy is tantamount.  This is why when you think about your own estate plan you should ask – “What level of privacy in my personal and financial affairs do I want to achieve after my death?”  If you want the utmost privacy, then consider using a Revocable Living Trust as the main instrument in which to dispose of your estate.  If, however, there are problematic parties or other reasons to have the Court supervise the administration of your estate, then perhaps having only a Last Will and Testament to dispose of your estate is the path to take.  But, you should consider who will have access to your estate plan and what will they learn as result.  Either way, a thoughtful conversation with your professional advisor should be had as you begin constructing your estate plan. #davidbowieswill #estateplanning #revocabletrust #livingtrust