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Member
 
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Last Login: 5/2/2011 5:21:23 PM
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| Gift was made to child, a single family dwelling, owned by the Bypass Trust as to an undivided 1/2 interest, and owned by the decedent's Revocable Trust as to an undivided 1/2 interest. Gift made in 2004. DOD 2005. Total value of the gift was $240,000. Decedent amended revocable trust to provide a specific bequest to the other two siblings of $240,000 each, with no estate tax allocated to this asset. Of the $240,000 gift, should only 1/2 of the value be declared on the 709, and then the 1/2 of the value be reported on the 706?
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Member
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Last Login: 8/30/2010 8:41:47 AM
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| Linda, if I am reading your question right, the surviving spouse transferred the 1/2 interest held in his or her trust to a child aa well as the 1/2 interest held in the deceased spouse's credit or by-pass trust. Did he or she acting as trustee have the power to make the distribution out the credit trust? Clearly the gift of the 1/2 interest out of the survivor's would be reported on the 709 as a gift, but the transfer out of the credit trust is a problem, at least on the surface. I wouldn't think that it would go on the 706 since the surviving spouse only had an income interest in the credit trust and the transfer was made prior to the survivor's death. I am assuming that this is a normal credit trust and the surviving spouse has no special powers over the assets in the credit trust. The trustee may have violated his or her fiduciary duties to the beneficiaries of the trust by making the distribution of a trust asset, but I don't think the transfer is a gift and it should be reported on the survivor's 706.
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Member
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Last Login: 12/1/2009 12:47:02 PM
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another issue that i see is that the value of the interests would likely be subject to discounts due to the fractionalized shares...
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. |
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