V. Miscellaneous Tax Responsibilities
1. File IRS Form SS-4 for Tax I.D. Number (EIN) for Estate and Trust, CPA
if not already done.
2. File Form 56 - "Notice of Fiduciary Relationship" with the IRS
for Estate, if there is a Personal Representative, and, if not,
consider filing for Trustee or other persons in possession of
property. CPA
3. Determine who has responsibility for the income tax plan for the Estate
and Trust. CPA
4. Choose the tax year for the Estate and/or Trust. CPA
5. Determine who has responsibility to file decedent’s final 1040 which
is due by April 15th of year following decedent’s date of death and any
other return not filed by decedent as of the date of death. CPA
6. Consider a request for audit of decedent's income tax return for open years and
discharge of liability (IRC Section 6905). CPA
7. Determine if gift tax returns are due and who is responsible for filing. CPA
8. Set up tickler for filing gift tax and estate tax as well as fiduciary income
tax returns for the Estate and/or Trust for the first year and subsequent
years. Personal Representative, Trustee and accountant should all have
ticklers no matter who is responsible. __________
9. Determine if Estate Tax Return is due and who is responsible. __________
10. (a) Federal Estate Tax Return (706) is required, if the gross estate
(including adjusted taxable gifts) exceeds $11,400,000 in 2019,
plus certain inflation adjustments in future years. __________
(b) Consider portability. __________
11. The following may be necessary to be filed with Form 706:
--Certified copy of will. __________
--Copies of trust instruments and any documents granting a power __________
of appointment.
--Disclaimers, Waivers, Releases, Renunciations, etc. __________
--Copies of all valuation and appraisal information relating to
each item on the Form 706. __________
--Form 712 for all life insurance policies on decedent’s life. __________
--Form 938 (Now 712) for life insurance owned by decedent
on life of another. __________
--Copies of all appraisals. __________
--Copies of extension applications, if any. __________
--Statement waiving rights to deduct on the Estate Tax Returns
those administration expenses and casualty losses deductible on
the Estate Income Tax Returns if the personal representative
decides to deduct those expenses on the income tax return. Place
memo in file showing items used on income tax return. Note:
can and probably should only file waiver, if audited; otherwise,
the statute of limitations will eventually solve the problem but never
double deduct items without correcting one or the other return.
Note some limited items can be double deducted. __________
12. If there is a closely held family business, determine if all or a portion
can be excluded from the estate. __________
13. Consider if there may be fractional interest, minority, lack of
marketability or other discounts on asset values. __________
14. Determine if an election to claim a marital deduction for qualified
terminable interest property (QTIP) under IRC Section 2056(b)(7)
is to be made. __________
15. Determine if Qualified disclaimer under IRC 2518 is necessary. __________
16. Determine whether decedent received property from a transferor who
died within ten years before or two years after the decedent. May be a PTP
credit. Place memo in file showing items used. __________
17. If payment would be a hardship, apply to the District Director of the IRS for
permission to pay the estate taxes over a period of years and file this request with
Estate Tax Return (6166, 6166A, 6161, etc.). __________
18.
If cash is needed and if the estate holds a substantial interest in a
closely-held corporation that qualifies, consider 303 redemption and
Section 333 liquidation. Consider treatment for state income taxes. __________
19. Request an early audit (2204) of 706 for federal and state Estate Tax Returns. __________
20. If no clause as to payment of death taxes in Will or Trust, see IRC 2206,
2207 and SC12-15-1540 for apportionment. __________
21 Complete accrued Income in Respect of a Decedent (IRD) and report on
Estate Tax Returns and fiduciary income tax returns. CPA
22. Complete Deductions in Respect of Decedent (DIRD) amounts for
1041 and make sure beneficiaries are aware of any affect on their personal
tax returns. CPA
23. Determine if any gift tax returns have been filed. CPA
24. Determine any household or other employees and whether all reporting
requirements are taken care of by the decedent’s accountant. CPA
VI. Marshalling and Inventorying Assets (Generally)
1. Inventory safe deposit box. __________
Box #: ___________ Location:____________________________
2. Suit considered if death caused by an accident, negligence or malpractice. __________
3. Write all bankers, brokers and others with whom deceased might have had
Business relations for additional assets. Also check with the unclaimed property
division of each state in which the decedent lived. __________
4. Examine personal records such as tax returns for three years preceding date
of death and all gift tax returns. Other records such as check books and
canceled checks may also be necessary. __________
5. Obtain car appraisals and transfer title and insurance if applicable. __________
6. Determine if insurance on automobiles, personal effects, real estate, etc. are
adequate. __________
7. Discontinue or change gas, electricity, telephone, water, charge accounts, etc.,
if applicable. __________
8. Remove valuables from dwelling and place of business, if applicable.
Prepare Receipts and Releases and Distribution Agreements (if it is for the
final distribution if part of a series of distributions but final distribution
not yet made) (Form 401PC). __________
9. Cancel and settle open orders and accounts with brokers, if applicable. __________
10. Arrange for Postmaster to forward mail, to Personal Representative
or Trustee, if necessary. __________
11. Contact employer or former employer with respect to any death benefits,
salary fees, commissions, other compensation owed, or ownership interest. __________
12. Cancel subscriptions and charge accounts and receive refunds,
if applicable. __________
13. Determine if interest, dividends and other amounts due prior to death
are received. __________
14. Open estate checking account. __________
15. Place all liquid assets (stocks, bonds, mutual funds and cash, etc.) in
brokerage account with check writing privileges, if not already
in Trust with similar arrangement. Note: The Law Offices of Michael
J. Howell does not handle any funds. __________
16. Determine if E Bonds should be exchanged for H Bonds and, if so,
complete exchange Form 3235. Toll free number 1-800-USBONDS. __________
17. File Inventory and Appraisement (Form 350PC), if a Personal Representative
is appointed. Due ninety days (90) after appointment of Personal Representative
by Probate Court. __________
18. Prudent Fiduciary Standards require assets to be managed.
The Law Office of Michael J. Howell, P.A. does not manage or handle assets.
Who will invest and manage the assets? __________
19. Is there a large IRA? If so, client must make sure CPA makes
all final analysis and required elections. Rollover options should be considered,
if there is a surviving spouse. CPA
20. CPA should make sure any IRA distributions required by the decedent
are/were made for the year of death and are not inadvertently rolled over. CPA
21. Roth IRAs should be separately analyzed by CPA as to distribution requirements. CPA
VII. Probate Accountings
1. Determine who will prepare accounting, if needed. __________
2. Beginning balance of accounting is normally the same as probate assets on
the 706. __________
3. Make sure Personal Representative places all stocks, bonds, mutual funds,
checking accounts and other liquid assets in brokerage account. If not done right
after death, then will cause substantial additional accounting costs. __________
4. Personal Representative must use estate’s EIN for the broker or other
accounts not the decedent’s social security number or that of the
Personal Representative; otherwise will create problems of whose taxable
income is reported to and can be time consuming to correct. __________
5. Personal Representative must provide copies of all bank, brokerage and
related statements at least monthly to person preparing accounting, until the
probate estate is closed. __________
6. Accounting should be kept up to date on a monthly basis. __________
7. Personal Representative, CPA and attorney should periodically be provided
with accountings. __________
8. Accounting should be filed with Probate Court, as required. __________
9. Date Account Due: 62-3-1003, if Personal Representative is appointed,
one year after date of first publication of notice to creditors. __________
VIII. Social Security, V.A. and Medicare
1. Surviving spouse and/or minor disabled children should file for survivorship
SS benefits, if applicable. __________
2. File for Social Security lump sum death payment, if applicable. __________
3. Personal Representative and/or Trustee should file for Medicare
benefits, if applicable. __________
4. Last social security payment may be taken back by Social
Security Administration. __________
Items IX-XXV Deal in Large Part with Filing Estate and Generation Skipping Transfer Tax Returns, Which May Not Be Required Due to the Large Federal Exemption. However, Anytime there is a Surviving Spouse, Even if no Such Return is Required, Portability Should be Discussed and Considered.
IX. Real Estate
1. Determine if decedent owned real estate and how property is titled.
Obtain copy of deed. __________
2. Check for fractional interest, minority, lack of marketability
or other available discounts. __________
3. Contact appraiser to appraise property and make sure appraiser signs
Inventory as to property appraised (Form 351 PC) (62-3-707). __________
4. File Deed of Distribution (Form 400PC) when appropriate (62-3-907 and 908). __________
5. File death certificate or JTROS Affidavit when appropriate. Note: JTROS
Affidavit is a Beaufort County custom. __________
6. Check any leases for obligations of lessor and lessee in which decedent was
a party. Obtain evidence that both parties have complied with any obligations. __________
7. Pro rate rent to date of death, if any. __________
8. Complete Form ET491-A IRS Form 4422 "Release of Estate Tax Lien" if
real estate is to be sold during administration. __________
9. If a Personal Representative has been appointed, consider sale of real estate
to pay debts, if applicable/needed (62-3-1301). __________
10. Place all information on Estate Tax Return and/or Probate Court
Inventory, if any. Make sure all backup information is with Estate
Tax Return. Also make sure that if Estate Tax Return Schedules have
references to attachments, they are taken off for Probate Court
Inventory purposes. __________
X. Stocks, Bonds and Other Securities
1. Obtain copy of all brokerage statements received just prior to and just after
date of death. __________
2. Obtain copies of any securities not in a brokerage account and have them
placed in a brokerage account. __________
3. Obtain professional EVP valuation of all stocks and bonds. Note:
The expense of an EVP appraisal is normally more than offset by the
additional time and cost it takes to obtain the correct information
from a broker or from newspapers. __________
4. Personal Representative and Trustee must be comfortable that insurance
coverage on brokerage account is adequate. __________
5. Place all information on Estate Tax Return and/or Probate Court
Inventory, if any. __________
6. Make sure all backup information is with Estate Tax Return . __________
7. Make sure all monthly statements are forwarded to person responsible
for the accountings. __________
