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This is a hypothetical question for now, but the real event may occur soon.
I'm helping the nephew, who is successor trustee, fund the exemption trust created under his aunt's and uncle's living trust as the aunt recently passed away. The estate appears to be in the $2,500,000 to $3,000,000 range. The uncle is also in poor health.
If the uncle passes prior to the exemption trust being funded do we end up with a taxable estate or what?
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Power Member
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Last Login: 1/6/2010 6:00:00 PM
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In every trust I have seen, the obligation of the trustee to divide the community and fund the subtrusts survives the surviving Settlor. What is or is not in the survivor's estate from the first spouses interest in the trust depends on the language of the trust. Is the exemption trust expressed as a pecuniary amount? Or is it the residue?
John Jacobson
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Power Member
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Last Login: 3/12/2011 12:58:57 PM
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| I have had this situation. The husband died and while we were in the process of finalizing which assets would be transferred to each trust, the wife died. A list of assets to go into the Exemption Trust had been forwarded to the wife and each of the trustees ~one week before her death. The deaths were 18 months apart. It was further complicated by the fact that the broker had not stopped trading the managed account (~70% of the assets) until about 6 months after husband died. We followed the trust agreement, everyone agreed with the funding and both 706s were accepted.
Mary Kay Foss
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