Federal Estate Tax Return and Portability Assistance
The death of a family member can create significant tax and reporting responsibilities in addition to the probate and estate administration process. In some estates, the executor or next of kin must prepare and file a federal estate tax return, IRS Form 706. In others, filing may be advisable even though no federal estate tax is currently due. Because Form 706 involves detailed reporting of a decedent’s assets, liabilities, lifetime gifts, trusts, business interests, and other financial information, proper preparation often requires coordination among the estate attorney, accountant, financial advisors, and qualified appraisers.
At Cook Tillman Law Group, we assist executors, trustees, and families with federal estate tax returns as part of our estate administration practice.
When Is an Estate Tax Return Needed?
Whether an estate must file a federal estate tax return depends on the federal estate tax laws in effect at the decedent’s death and the size and nature of the decedent’s estate and prior taxable gifts.
Preparing the return may require determining and documenting values for:
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Real estate
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Bank and investment accounts
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Retirement benefits
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Life insurance
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Closely held businesses and partnership interests
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Trust interests
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Notes and other debts owed to the decedent
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Tangible personal property
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Lifetime taxable gifts
For estates containing real estate, business interests, or other assets without a readily available market value, appraisals may be an essential part of the process.
Our attorneys coordinate the collection and reporting of this information and work with the estate’s other professional advisors to prepare a complete and accurate return.
Preserving a Deceased Spouse's Estate Tax Exemption Through Portability
An estate tax return can also be important even when an estate is well below the amount that would otherwise require payment of federal estate tax.
Federal law permits a surviving spouse, when the appropriate election is made, to potentially use the deceased spouse’s unused federal estate tax exemption. This is commonly referred to as a portability election. Preserving that unused exemption can provide substantial future tax benefits if the surviving spouse’s assets appreciate, the surviving spouse receives additional assets, or federal estate tax laws change in the future.
Because portability generally requires the deceased spouse’s estate to file an appropriate federal estate tax return, families should consider the issue even when they initially assume that the estate is “too small” to require estate tax planning.
Estate Tax Planning Does Not End at Death
Post-death tax decisions can have long-term consequences. In addition to determining whether an estate tax return is required, we help executors and surviving family members consider available elections, valuation issues, portability, tax basis considerations, and the interaction between the estate tax return and the decedent’s existing estate plan.
Our estate administration attorneys routinely work with accountants, appraisers, financial institutions, and other professionals to handle these issues while guiding the executor through the broader probate or trust administration.
Contact Cook Tillman Law Group if you are administering an estate and need assistance determining whether a federal estate tax return or portability election should be filed.