[WSBAPT] Joint Trust with division at first death that was never funded

Wed Jul 13 13:37:02 PDT 2016

As part of what John suggests, remember that the (second-to-die) Decedent probably filed individual income tax returns using his/her SSN as the Tax Identification Number.  A Federal income tax return will have to be filed for that individual up to and including his/her date of death, at which point the trust, itself, will have to have an EIN assigned by the IRS, to handle any income tax issues involved in the winding up process.  There is the potential that the sole heir/beneficiary will enjoy the benefits of any loss sustained by the trust on that income tax return (via funeral expenses, possibly, attorney’s fees and costs involved in the winding up process, accounting fees, possibly appraisal fees, etc) as reflected on a K-1 form that will be going to the sole heir/beneficiary.

If there was a pour-over will (for any property that was not in the original trust), a probate might be necessary if real estate is owned outside of the trust, or if the property not in the trust is worth in excess of $100,000.00.  In that case, any probate estate that is established will also be subject to getting its own EIN, and filing a Federal Estate Income Tax Return, again with a K-1 issued.

It is always good to have a knowledgeable CPA on board to advise about the income tax aspects of cases such as this one.

Best Regards,

Doug Bratt

Douglas J. Bratt
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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of John J. Sullivan
Sent: Wednesday, July 13, 2016 11:36 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Joint Trust with division at first death that was never funded

Also consider the income tax implications.

John Sullivan

Sent from my iPhone

On Jul 13, 2016, at 11:04 AM, Teunis J. Wyers <teunisj at wyerslawpc.com<mailto:teunisj at wyerslawpc.com>> wrote:
Kristina,

What is the nature and extent of the assets?  Are they all held in the names of the trustee(s) of the trust?  Are there any WA estate tax concerns? Are there any interested persons who would be inclined to make trouble?

If none of those questions raise red flags, I would be inclined to prepare a Certification of Trust designating the sole beneficiary as Successor Trustee (if she is not already serving in that capacity) and distribute the assets to her.  If no person or taxing authority has a stake in the situation, I would just do what makes sense.  Understand, however, that my practice is, as Judge Harris once told me, "WAY up the river".

On Wed, Jul 13, 2016 at 10:00 AM, Kristina devore <kristina at devore-law.com<mailto:kristina at devore-law.com>> wrote:
Listmates,

I have a pc who came in with the revocable living trust of her parents.  The trust provided that at the first death the assets would be divided into a family trust (irrevocable) and a martial trust (revocable by surviving spouse).  This was not done at the first death.  The second parent has now passed.  The distribution provisions are the same for final distribution.  PC is the only heir/beneficiary.  Will the Trustee (same as heir/beneficiary) need to do any additional clean-up work with the trust other than distribute all to the heir/beneficiary (herself)?

Thanks in advance for any advice.

Kristina

Kristina S. DeVore | Attorney & Counselor at Law
KRISTINA DEVORE LAW FIRM, pllc | 201 NE Park Plaza Dr., Ste., 290 | Vancouver, WA  98684
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