Estate Tax

Legacy Planning strategies are very important to avoid extra gift tax, Completion of a trust tax return is a standard service, along with IRS correspondence in regards to the trust. Trust Creation is possible at the firm in order to create wealth management, Wealth Management applies to tax strategies to stay out of have tax brackets of the trust.

Trust Creation is possible at the firm in order to create wealth management, Wealth Management applies to tax strategies to stay out of have tax brackets of the trust.

**Beneficiary. A beneficiary includes an heir, a legatee, or a devisee.

**Fiduciary. A fiduciary is a trustee of a trust, or an executor, executrix, administrator, administratrix, personal representative, or person in possession of property of a decedent’s estate.

**Trust. A trust is an arrangement created either by a will or by an inter vivos declaration by which trustees take title to property for the purpose of protecting or conserving it for the beneficiaries under the ordinary rules applied in chancery or probate courts.

**Revocable living trust. A revocable living trust is an arrangement created by a written agreement or declaration during the life of an individual and can be changed or ended at any time during the individual’s life. A revocable living trust is generally created to manage and distribute property. Many people use this type of trust instead of (or in addition to) a will. Because this type of trust is revocable, it is treated as a grantor type trust for tax purposes.

**Decedent’s estate. The decedent’s estate is an entity that is formed at the time of an individual’s death and generally is charged with gathering the decedent’s assets, paying the decedent’s debts and expenses, and distributing the remaining assets. Generally, the estate consists of all the property, real or personal, tangible or intangible, wherever situated, that the decedent owned an interest in at death.

**The fiduciary of a domestic decedent’s estate, trust, or bankruptcy estate uses
Form 1041 to report:

  • The income, deductions, gains, losses, etc. of the estate or trust;
  • The income that is either accumulated or held for future distribution or distributed currently to the beneficiaries;
  • Any income tax liability of the estate or trust;
  • Employment taxes on wages paid to household employees
  • Net Investment Income Tax.

**Income Taxation of Trusts and Decedents’ Estates

A trust or a decedent’s estate is a separate legal entity for federal tax purposes. A decedent’s estate comes into existence at the time of death of an individual. A trust may be created during an individual’s life or at the time of his or her death under a will (testamentary). If the trust instrument contains certain provisions, then the person creating the trust (the grantor) is treated as the owner of the trust’s assets. Such a trust is a grantor type trust. A trust or decedent’s estate figures its gross income in much the same manner as an individual. Most deductions and credits allowed to individuals are also allowed to estates and trusts. However, there is one major distinction. A trust or decedent’s estate is allowed an income distribution deduction for distributions to beneficiaries. The income distribution deduction determines the amount of any distributions taxed to the beneficiaries. For this reason, a trust or decedent’s estate sometimes is referred to as a “pass-through” entity. The beneficiary, and not the trust or decedent’s estate, pays income tax on his or her distributive share of income.