|
|
|
Member
 
Group: Forum Members
Last Login: 12/1/2009 12:47:02 PM
Posts: 44,
Visits: 58
|
|
2nd spouse died recently... upon first death an "exemption trust" was to be created. title to a piece of real estate was changed to the exemption trust by quitclaim deed, which was signed and notorized- but never recorded.
the surviving spouse had the right to live in the property, and she did up until her death.
the only income/deduction related to the property was the property taxes paid. property taxes were deducted on the spouse's form 1040. no form 1041 was ever filed (are we surprised? ! )
my first thought is that the spouse exhibited her intent by signing the quitclaim deed. but since she did not record it, was she considering changing her mind? it could be argued that she had the benefits and burdens of ownership as though she did not make the transfer (her deduction on her form 1040, for example)- and it could also be argued that she had the benefits and burdens of ownership as though she did make the transfer (she was allowed to live in the property by the trust, and indicated that intent by the signed deed).
if the property was in the exemption trust, there would be no estate tax return required on the second death. without the exemption trust, a return would be required but sufficient deductions exist such that it is unlikely that any tax would be due. if the property was not in the trust, it would get a much better step-up.
the question is whether the signed but unrecorded deed is determinative for estate tax purposes?
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein. |
|
|
|
|
Power Member
Group: Forum Members
Last Login: 3/12/2011 12:58:57 PM
Posts: 147,
Visits: 823
|
|
| A quit claim deed is legal even if it isn't recorded. Here in No Calif the Assessor's office is really great about answering questions and they never ask who th property owner is or where it's located. If you were nervous about it, perhaps you could File Form 706 anyway without the property. When you answer the question about being the beneficiary or trustee of a trust that's not included, you could name the trust. I did some research at one time that concluded that the income beneficiary could deduct property taxes for a trust property if the trust didn't have sufficient funds. I've entered property taxes on K-1s (often as the only item) when there is no DNI. Don't worry, be happy. 
Mary Kay Foss
|
|
|
|
|
Member
Group: Forum Members
Last Login: 12/1/2009 12:47:02 PM
Posts: 44,
Visits: 58
|
|
darn- i would rather file the return with it to get the full step-up!
but if title has transferred, then i dont have a choice...
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein. |
|
|
|