{"appState":{"pageLoadApiCallsStatus":true},"categoryState":{"relatedCategories":{"headers":{"timestamp":"2023-01-02T12:01:13+00:00"},"categoryId":34278,"data":{"title":"Estate Planning","slug":"estate-planning","image":{"src":null,"width":0,"height":0},"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"parentCategory":{"categoryId":34273,"title":"Personal Finance","slug":"personal-finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"}},"childCategories":[],"description":"We've got tons of articles on every aspect of estate planning, including your last will and testament, all the facts about trusts, paying (and minimizing) taxes, administrating and executing an estate, and much more.","relatedArticles":{"self":"https://dummies-api.dummies.com/v2/articles?category=34278&offset=0&size=5"},"hasArticle":true,"hasBook":true,"articleCount":180,"bookCount":3},"_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"relatedCategoriesLoadedStatus":"success"},"listState":{"list":{"count":10,"total":180,"items":[{"headers":{"creationTime":"2016-03-26T14:34:49+00:00","modifiedTime":"2022-10-06T17:22:44+00:00","timestamp":"2022-10-06T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"Here's What's Included in the UIMC Tax","strippedTitle":"here's what's included in the uimc tax","slug":"what-you-should-know-about-the-unearned-income-medicare-contribution-uimc-tax-to-manage-an-estate","canonicalUrl":"","seo":{"metaDescription":"Learn about the Unearned Income Medicare Contribution tax, which went into effect in January 2013, and how to handle it for an estate.","noIndex":0,"noFollow":0},"content":"As of January 1, 2013, an additional 3.8 percent tax was added to investment income in estates and trusts, thanks to provisions in the Health Care and Education Reconciliation Act of 2010. It's not an additional tax on every dollar, but only on the lesser of undistributed net investment income or any amount of adjusted gross income in excess of the highest tax bracket in any year.\r\n\r\nWhat sorts of investment income are included? Here’s a list:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Annuities</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Capital gains (including the taxable portion of the gain on the sale of a personal residence)</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Dividends</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Interest</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Passive activity income from partnerships and Subchapter S corporations</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Rents and royalties</p>\r\n</li>\r\n</ul>\r\nYou may have noticed that excluded from the list are tax-exempt interest, wages, and distributions from qualified pension, profit-sharing, and stock bonus plans — although you may still be tagged with this tax (or a portion of it) if the trust or estate’s overall income is too high.\r\n\r\nIn addition, it’s important to note that the tax is on <i>net investment income</i><i>,</i> not <i>gross investment income</i><i>.</i> As a result, you can allocate portions of all your deductible expenses against the total income, and only pay the tax on the portion that remains that’s over the limit.\r\n\r\nAll irrevocable trusts that are required to file <b>Form 1041</b> are subject to this tax. However, the following trusts are apparently excluded:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Grantor trusts (all income is reported by the grantor on his/her individual income tax return)</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Charitable foundations</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Charitable remainder trusts</p>\r\n</li>\r\n</ul>\r\n<p class=\"Tip\">The rules surrounding how investment versus non-investment income are treated in Electing Small Business Trusts (ESBTs) are quite complex. If you’re the trustee of an ESBT, you should check with a competent tax advisor for assistance in this calculation.</p>\r\n\r\n<h2 id=\"tab1\" >How to calculate the tax</h2>\r\nThe UIMC tax was only intended to apply to high-income individuals, but the basic inequity in the size of the tax brackets for trusts and estates versus individuals created an unfriendly environment for estates and trusts, one where only quite small entities are exempt from paying it. The tax is imposed as an additional tax, after all other income taxes are levied.\r\n<h2 id=\"tab2\" >How to lessen the tax’s impact</h2>\r\nThe UIMC tax is only imposed on taxable income in the trust or the estate over certain limits; if the income doesn’t reach those limits, there’s no additional tax. So, your job as executor, administrator, or trustee is to try to reduce the taxable income in the trust, while still behaving in a responsible way. You could, for example:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\"><b></b><b>Keep track of capital gains and plan to offset gains with some losses, if necessary. </b>As executor, you should be aware of the size of the estate’s capital gains before the end of the year. If your gains are large but you own something that’s a less-than-sterling performer, sell it before the end of the tax year. The loss from that sale will reduce the total gains year-to-date.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b></b><b>Invest in tax-exempt bonds and funds.</b> Remember, tax-exempt income isn’t included in the threshold calculation, so it isn’t subject to the tax.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>Increase distributions to beneficiaries, but only if the trust instrument allows, and the distribution otherwise makes sense.</b> You still have to follow the terms of the trust instrument and pay attention to the intentions of the settlor. But if you manage to pass out income to beneficiaries, that income will be included in their threshold calculation for this additional tax, not the trust or estate’s.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>Plan deductions to fall into years when income is higher and pay fewer deductible expenses in years the trust doesn’t perform as well or when more is distributed to the beneficiary.</b> That’s assuming you can predict these things, which you may not be able to precisely. But if you normally pay a trustee fee in January, and your income for the prior year is high enough to trigger this tax, you may want to take the January fee in December of the prior year.</p>\r\n</li>\r\n</ul>\r\n<p class=\"Remember\">There is no perfect solution here because the techniques that might enable the trust or estate to pay taxes at a lower rate may not be consistent with either the intent of the donor or what’s in the best interest of the beneficiary. It’s up to you to weigh all these possibilities and arrive at the most equitable solution.</p>\r\nWhatever you do, be sure to jot down your reasoning and put it in the file. That way, should anyone ever question your decision, you’ll be able to remind yourself why; and next year, when faced with the same questions and the same dilemmas, you’ll be able to see what you did in the past and judge for yourself how well it worked.","description":"As of January 1, 2013, an additional 3.8 percent tax was added to investment income in estates and trusts, thanks to provisions in the Health Care and Education Reconciliation Act of 2010. It's not an additional tax on every dollar, but only on the lesser of undistributed net investment income or any amount of adjusted gross income in excess of the highest tax bracket in any year.\r\n\r\nWhat sorts of investment income are included? Here’s a list:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Annuities</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Capital gains (including the taxable portion of the gain on the sale of a personal residence)</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Dividends</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Interest</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Passive activity income from partnerships and Subchapter S corporations</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Rents and royalties</p>\r\n</li>\r\n</ul>\r\nYou may have noticed that excluded from the list are tax-exempt interest, wages, and distributions from qualified pension, profit-sharing, and stock bonus plans — although you may still be tagged with this tax (or a portion of it) if the trust or estate’s overall income is too high.\r\n\r\nIn addition, it’s important to note that the tax is on <i>net investment income</i><i>,</i> not <i>gross investment income</i><i>.</i> As a result, you can allocate portions of all your deductible expenses against the total income, and only pay the tax on the portion that remains that’s over the limit.\r\n\r\nAll irrevocable trusts that are required to file <b>Form 1041</b> are subject to this tax. However, the following trusts are apparently excluded:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Grantor trusts (all income is reported by the grantor on his/her individual income tax return)</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Charitable foundations</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Charitable remainder trusts</p>\r\n</li>\r\n</ul>\r\n<p class=\"Tip\">The rules surrounding how investment versus non-investment income are treated in Electing Small Business Trusts (ESBTs) are quite complex. If you’re the trustee of an ESBT, you should check with a competent tax advisor for assistance in this calculation.</p>\r\n\r\n<h2 id=\"tab1\" >How to calculate the tax</h2>\r\nThe UIMC tax was only intended to apply to high-income individuals, but the basic inequity in the size of the tax brackets for trusts and estates versus individuals created an unfriendly environment for estates and trusts, one where only quite small entities are exempt from paying it. The tax is imposed as an additional tax, after all other income taxes are levied.\r\n<h2 id=\"tab2\" >How to lessen the tax’s impact</h2>\r\nThe UIMC tax is only imposed on taxable income in the trust or the estate over certain limits; if the income doesn’t reach those limits, there’s no additional tax. So, your job as executor, administrator, or trustee is to try to reduce the taxable income in the trust, while still behaving in a responsible way. You could, for example:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\"><b></b><b>Keep track of capital gains and plan to offset gains with some losses, if necessary. </b>As executor, you should be aware of the size of the estate’s capital gains before the end of the year. If your gains are large but you own something that’s a less-than-sterling performer, sell it before the end of the tax year. The loss from that sale will reduce the total gains year-to-date.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b></b><b>Invest in tax-exempt bonds and funds.</b> Remember, tax-exempt income isn’t included in the threshold calculation, so it isn’t subject to the tax.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>Increase distributions to beneficiaries, but only if the trust instrument allows, and the distribution otherwise makes sense.</b> You still have to follow the terms of the trust instrument and pay attention to the intentions of the settlor. But if you manage to pass out income to beneficiaries, that income will be included in their threshold calculation for this additional tax, not the trust or estate’s.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b>Plan deductions to fall into years when income is higher and pay fewer deductible expenses in years the trust doesn’t perform as well or when more is distributed to the beneficiary.</b> That’s assuming you can predict these things, which you may not be able to precisely. But if you normally pay a trustee fee in January, and your income for the prior year is high enough to trigger this tax, you may want to take the January fee in December of the prior year.</p>\r\n</li>\r\n</ul>\r\n<p class=\"Remember\">There is no perfect solution here because the techniques that might enable the trust or estate to pay taxes at a lower rate may not be consistent with either the intent of the donor or what’s in the best interest of the beneficiary. It’s up to you to weigh all these possibilities and arrive at the most equitable solution.</p>\r\nWhatever you do, be sure to jot down your reasoning and put it in the file. That way, should anyone ever question your decision, you’ll be able to remind yourself why; and next year, when faced with the same questions and the same dilemmas, you’ll be able to see what you did in the past and judge for yourself how well it worked.","blurb":"","authors":[{"authorId":9651,"name":"Margaret A. Munro","slug":"margaret-atkins-munro","description":"Margaret Atkins Munro, EA, has more than 30 years of experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at its volunteer tax preparer programs.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9651"}},{"authorId":9652,"name":"Kathryn A. Murphy","slug":"kathryn-a-murphy","description":" <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9652"}}],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"How to calculate the tax","target":"#tab1"},{"label":"How to lessen the tax’s impact","target":"#tab2"}],"relatedArticles":{"fromBook":[{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}},{"articleId":204410,"title":"10 Common Pitfalls for Estate and Trust Administrators to Avoid","slug":"10-common-pitfalls-for-estate-and-trust-administrators-to-avoid","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/204410"}},{"articleId":168035,"title":"Eight Transfer and Income Tax Provisions in the \"Fiscal Cliff Act\"","slug":"eight-transfer-and-income-tax-provisions-in-the-fiscal-cliff-act","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168035"}},{"articleId":168012,"title":"What to Do When Someone Dies","slug":"what-to-do-when-someone-dies","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168012"}},{"articleId":168003,"title":"Tax Forms to Know as the Fiduciary of an Estate or Trust","slug":"tax-forms-to-know-as-the-fiduciary-of-an-estate-or-trust","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168003"}}],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282179,"slug":"estate-trust-administration-for-dummies-2nd-edition","isbn":"9781119543879","categoryList":["business-careers-money","personal-finance","estate-planning"],"amazon":{"default":"https://www.amazon.com/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119543878-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/estate-and-trust-administration-for-dummies-2nd-edition-cover-9781119543879-203x255.jpg","width":203,"height":255},"title":"Estate & Trust Administration For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b><b data-author-id=\"9652\">Kathryn A. Murphy</b>, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns.</p>","authors":[{"authorId":34889,"name":"Margaret A. Munro","slug":"margaret-a-munro","description":" <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34889"}},{"authorId":9652,"name":"Kathryn A. Murphy","slug":"kathryn-a-murphy","description":" <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9652"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119543879&quot;]}]\" id=\"du-slot-633f17df62fd3\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119543879&quot;]}]\" id=\"du-slot-633f17df636da\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2022-10-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":163801},{"headers":{"creationTime":"2016-03-27T16:53:05+00:00","modifiedTime":"2022-03-09T21:14:36+00:00","timestamp":"2022-09-14T18:19:22+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"Estate Planning For Dummies Cheat Sheet","strippedTitle":"estate planning for dummies cheat sheet","slug":"estate-planning-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"An estate plan, including a last will and testament, protects your family and finances after you die. Your first step in estate planning is to write a comprehen","noIndex":0,"noFollow":0},"content":"An estate plan, including a last will and testament, protects your family and finances after you die. Your first step in estate planning is to write a comprehensive will that moves smoothly through the probate process.\r\n\r\nMake sure you're aware of current estate taxes that may influence your planning and how insurance factors into your estate plan. Various types of trusts are available; do some research to find out whether setting up a trust is the way to go and consider some special circumstances that may arise and how they can affect your estate planning.","description":"An estate plan, including a last will and testament, protects your family and finances after you die. Your first step in estate planning is to write a comprehensive will that moves smoothly through the probate process.\r\n\r\nMake sure you're aware of current estate taxes that may influence your planning and how insurance factors into your estate plan. Various types of trusts are available; do some research to find out whether setting up a trust is the way to go and consider some special circumstances that may arise and how they can affect your estate planning.","blurb":"","authors":[{"authorId":9153,"name":"N. Brian Caverly","slug":"n-brian-caverly","description":" <p> <b>N. Brian Caverly, Esq.,</b> is an attorney&#45;at&#45;law emphasizing estate planning and elder law. <b>Jordan S. Simon</b> is Vice President of Asset Management at Venture West, a Tucson&#45;based investment firm. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9153"}},{"authorId":9154,"name":"Jordan S. Simon","slug":"jordan-s-simon","description":" <p> <b>N. Brian Caverly, Esq.,</b> is an attorney&#45;at&#45;law emphasizing estate planning and elder law. <b>Jordan S. Simon</b> is Vice President of Asset Management at Venture West, a Tucson&#45;based investment firm. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9154"}}],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":202976,"title":"How to Bypass Probate with Joint Tenancy","slug":"how-to-bypass-probate-with-joint-tenancy","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/202976"}},{"articleId":202969,"title":"Federal Laws Help Ease Tax Burden in Estate Planning","slug":"federal-laws-help-ease-tax-burden-in-estate-planning","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/202969"}},{"articleId":202960,"title":"Calculating the Value of Everything You Own for Estate Planning","slug":"calculating-the-value-of-everything-you-own-for-estate-planning","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/202960"}},{"articleId":202956,"title":"Avoiding Estate Taxes with an Irrevocable Life Insurance Trust","slug":"avoiding-estate-taxes-with-an-irrevocable-life-insurance-trust","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/202956"}}],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}},{"articleId":204410,"title":"10 Common Pitfalls for Estate and Trust Administrators to Avoid","slug":"10-common-pitfalls-for-estate-and-trust-administrators-to-avoid","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/204410"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282180,"slug":"estate-planning-for-dummies","isbn":"9780764555015","categoryList":["business-careers-money","personal-finance","estate-planning"],"amazon":{"default":"https://www.amazon.com/gp/product/0764555014/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/0764555014/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/0764555014-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/0764555014/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/0764555014/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/estate-planning-for-dummies-cover-9780764555015-203x255.jpg","width":203,"height":255},"title":"Estate Planning For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p> <b data-author-id=\"9153\">N. Brian Caverly, Esq.,</b> is an attorney-at-law emphasizing estate planning and elder law. <b data-author-id=\"9154\">Jordan S. Simon</b> is Vice President of Asset Management at Venture West, a Tucson-based investment firm. </p>","authors":[{"authorId":9153,"name":"N. Brian Caverly","slug":"n-brian-caverly","description":" <p> <b>N. Brian Caverly, Esq.,</b> is an attorney&#45;at&#45;law emphasizing estate planning and elder law. <b>Jordan S. Simon</b> is Vice President of Asset Management at Venture West, a Tucson&#45;based investment firm. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9153"}},{"authorId":9154,"name":"Jordan S. Simon","slug":"jordan-s-simon","description":" <p> <b>N. Brian Caverly, Esq.,</b> is an attorney&#45;at&#45;law emphasizing estate planning and elder law. <b>Jordan S. Simon</b> is Vice President of Asset Management at Venture West, a Tucson&#45;based investment firm. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9154"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9780764555015&quot;]}]\" id=\"du-slot-63221b2aa457f\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9780764555015&quot;]}]\" id=\"du-slot-63221b2aa5029\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":185098,"title":"Estate-Related Taxes You Need to Know About","slug":"estate-related-taxes-you-need-to-know-about","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/185098"}},{"articleId":185007,"title":"Factoring Insurance into Your Estate Plan","slug":"factoring-insurance-into-your-estate-plan","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/185007"}},{"articleId":185006,"title":"Setting Up a Trust in Your Estate Plan","slug":"setting-up-a-trust-in-your-estate-plan","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/185006"}},{"articleId":185008,"title":"Estate Planning for Special Situations","slug":"estate-planning-for-special-situations","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/185008"}}],"content":[{"title":"Last will and testament probate process","thumb":null,"image":null,"content":"<p>Probate is the method by which your estate is legally transferred after you die. When estate planning and writing your last will and testament, keep the following tips in mind to help the probate process run smoothly.</p>\n<p><img loading=\"lazy\" class=\"alignnone size-full wp-image-256934\" src=\"https://www.dummies.com/wp-content/uploads/THINGS-TO-REMEMBER-WHEN-YOU’RE-WRITING-YOUR-WILL-e1646859911597.jpg\" alt=\"Things to Remember About Probate When Writing a Last Will and Testament\" width=\"534\" height=\"1503\" /></p>\n<p>If you&#8217;re just beginning to plan an estate or write a last will and testament, you should start by figuring out everything that <a href=\"https://www.dummies.com/personal-finance/estate-planning/estate-planning-first-steps-how-much-is-your-estate-worth/\" target=\"_blank\" rel=\"noopener\">encompasses your estate</a>. It&#8217;s important to know before sitting down to write whether you have one piece of fine art or an entire gallery of work by the masters, to know whether you want to leave all your Beanie Babies to one person, or whether you want a say in where each one ends up, to decide to let your beneficiaries decide who gets what or to not.</p>\n<p>You might need to do further research in state laws or hire an estate attorney. All of these things might be overwhelming, but you need to start somewhere. To get you started, though, read the rest of this Cheat Sheet and maybe check out <a href=\"https://www.dummies.com/personal-finance/estate-planning/wills-trusts-kit-for-dummies-cheat-sheet/\" target=\"_blank\" rel=\"noopener\">Wills and Trusts Kit For Dummies Cheat Sheet</a> .</p>\n"},{"title":"Be aware of estate-related taxes","thumb":null,"image":null,"content":"<p>Depending on the value of your estate, you may not have to deal with at least some of the federal taxes, but you or your surviving beneficiaries may have a substantial amount of tax-related paperwork to file. When estate planning, use these tips to understand what you&#8217;re dealing with from a tax standpoint:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">Most people don&#8217;t have to pay the federal estate tax — the so-called &#8220;death tax&#8221; —because their estates fall below the federal threshold. But your estate may still be subject to state inheritance or estate taxes.</p>\n</li>\n<li>\n<p class=\"first-para\">The federal gift tax and the federal estate tax are part of a unified tax system, so you need to pay attention to both of these taxes as you plan your overall estate tax strategy.</p>\n</li>\n<li>\n<p class=\"first-para\">The little-known Estate Recovery Act can devastate your estate if you need to tap into certain types of government-paid health care. But you can protect your estate if you understand the rules.</p>\n</li>\n</ul>\n"},{"title":"Factoring insurance into your estate plan","thumb":null,"image":null,"content":"<p>Trusts can be a great help in your estate planning — they can protect your property, save on estate taxes, and help you avoid probate. Sounds great, right? Well, before seriously considering a trust, you need to understand the basics of trusts and make a well-informed decision about setting up trusts right for you.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">Some trusts are general-purpose; others focus on specific objectives, such as supporting your favorite charity or helping to pay for your children&#8217;s or grandchildren&#8217;s education.</p>\n</li>\n<li>\n<p class=\"first-para\">A revocable living trust may be an ideal tool to protect your estate. But beware — everyone, it seems, is trying to sell you a revocable living trust. Watch out for the hype!</p>\n</li>\n<li>\n<p class=\"first-para\">A bypass trust or a QTIP trust can help you and your spouse avoid unnecessary federal estate taxes. But you need to decide which type of trust works best in your situation.</p>\n</li>\n<li>\n<p class=\"first-para\">Some trusts are revocable, meaning that you can change your mind. Other trusts are irrevocable — they can&#8217;t be changed once you set them up. Make sure you understand the tradeoffs for your estate planning.</p>\n</li>\n</ul>\n"},{"title":"Setting up a trust in your estate plan","thumb":null,"image":null,"content":"<p>Even the most orderly estate plans can fall victim to some unforeseen event. To put together a thorough estate plan, take a look at situations that may occur and find out the necessary information for dealing with them.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">If you&#8217;re in the process of getting a divorce, you have a lot on your mind. But you also need to look at how your divorce will affect your estate planning. Chances are the answer is &#8220;a lot!&#8221;</p>\n</li>\n<li>\n<p class=\"first-para\">Part of your estate planning must deal with the possibility of becoming incompetent — unable to take care of yourself. Prepare now, just in case.</p>\n</li>\n<li>\n<p class=\"first-para\">If you have pets, you need to specify how you want your pets taken care of after you die.</p>\n</li>\n<li>\n<p class=\"first-para\">Unmarried couples, either opposite-sex or same-sex, need to pay special attention to each person&#8217;s estate planning. Otherwise, problems almost always occur when one partner dies before the other.</p>\n</li>\n</ul>\n"},{"title":"Estate planning for special situations","thumb":null,"image":null,"content":"<p>Even the most orderly estate plans can fall victim to some unforeseen event. To put together a thorough estate plan, take a look at situations that may occur and find out the necessary information for dealing with them.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">If you&#8217;re in the process of getting a divorce, you have a lot on your mind. But you also need to look at how your divorce will affect your estate planning. Chances are the answer is &#8220;a lot!&#8221;</p>\n</li>\n<li>\n<p class=\"first-para\">Part of your estate planning must deal with the possibility of becoming incompetent — unable to take care of yourself. Prepare now, just in case.</p>\n</li>\n<li>\n<p class=\"first-para\">If you have pets, you need to specify how you want your pets taken care of after you die.</p>\n</li>\n<li>\n<p class=\"first-para\">Unmarried couples, either opposite-sex or same-sex, need to pay special attention to each person&#8217;s estate planning. Otherwise, problems almost always occur when one partner dies before the other.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2022-03-09T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":208475},{"headers":{"creationTime":"2016-03-27T16:49:36+00:00","modifiedTime":"2022-02-25T15:51:22+00:00","timestamp":"2022-09-14T18:19:15+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"Estate & Trust Administration For Dummies Cheat Sheet","strippedTitle":"estate & trust administration for dummies cheat sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Are you a fiduciary? There's a lot that falls on your shoulders after the decendent passes on. Learn all about your duties here.","noIndex":0,"noFollow":0},"content":"As the fiduciary of an estate or trust, you have many duties, beginning immediately upon the <i>decedent’s </i>(deceased person’s) passing. You’re also guaranteed to become intimately familiar with a host of tax forms you may not have known existed.","description":"As the fiduciary of an estate or trust, you have many duties, beginning immediately upon the <i>decedent’s </i>(deceased person’s) passing. You’re also guaranteed to become intimately familiar with a host of tax forms you may not have known existed.","blurb":"","authors":[{"authorId":9651,"name":"Margaret A. Munro","slug":"margaret-atkins-munro","description":"Margaret Atkins Munro, EA, has more than 30 years of experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at its volunteer tax preparer programs.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9651"}},{"authorId":9652,"name":"Kathryn A. Murphy","slug":"kathryn-a-murphy","description":" <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9652"}}],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":204410,"title":"10 Common Pitfalls for Estate and Trust Administrators to Avoid","slug":"10-common-pitfalls-for-estate-and-trust-administrators-to-avoid","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/204410"}},{"articleId":168035,"title":"Eight Transfer and Income Tax Provisions in the \"Fiscal Cliff Act\"","slug":"eight-transfer-and-income-tax-provisions-in-the-fiscal-cliff-act","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168035"}},{"articleId":168012,"title":"What to Do When Someone Dies","slug":"what-to-do-when-someone-dies","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168012"}},{"articleId":168003,"title":"Tax Forms to Know as the Fiduciary of an Estate or Trust","slug":"tax-forms-to-know-as-the-fiduciary-of-an-estate-or-trust","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168003"}},{"articleId":163821,"title":"Executor's Duty: Informing Surviving Spouse of Decision Rights","slug":"executors-duty-informing-surviving-spouse-of-decision-rights","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/163821"}}],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":204410,"title":"10 Common Pitfalls for Estate and Trust Administrators to Avoid","slug":"10-common-pitfalls-for-estate-and-trust-administrators-to-avoid","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/204410"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282179,"slug":"estate-trust-administration-for-dummies-2nd-edition","isbn":"9781119543879","categoryList":["business-careers-money","personal-finance","estate-planning"],"amazon":{"default":"https://www.amazon.com/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119543878-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119543878/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/estate-and-trust-administration-for-dummies-2nd-edition-cover-9781119543879-203x255.jpg","width":203,"height":255},"title":"Estate & Trust Administration For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b><b data-author-id=\"9652\">Kathryn A. Murphy</b>, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns.</p>","authors":[{"authorId":34889,"name":"Margaret A. Munro","slug":"margaret-a-munro","description":" <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34889"}},{"authorId":9652,"name":"Kathryn A. Murphy","slug":"kathryn-a-murphy","description":" <p><b>Margaret Atkins Munro, EA,</b> has more than 30 years&#39; experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. <b>Kathryn A. Murphy, Esq.,</b> is an attorney with more than 20 years&#39; experience administering estates and trusts and preparing estate and gift tax returns. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9652"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119543879&quot;]}]\" id=\"du-slot-63221b23c64f5\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119543879&quot;]}]\" id=\"du-slot-63221b23c7019\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":168003,"title":"Tax Forms to Know as the Fiduciary of an Estate or Trust","slug":"tax-forms-to-know-as-the-fiduciary-of-an-estate-or-trust","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168003"}},{"articleId":168012,"title":"What to Do When Someone Dies","slug":"what-to-do-when-someone-dies","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/168012"}}],"content":[{"title":"Tax forms to know as the fiduciary of an estate or trust","thumb":null,"image":null,"content":"<p>When you’re administering an estate or trust, you may have to prepare a seemingly endless array of tax returns. The following table lists some of the most popular ones. Check with your accountant or attorney if you have any questions.</p>\n<table>\n<tbody>\n<tr>\n<th>Federal Tax Form Number and Name</th>\n<th>When It’s Required</th>\n<th>When It’s Due</th>\n</tr>\n<tr>\n<td>Form 1040<br />\nU.S. Individual Income Tax Return</td>\n<td>When the decedent had income prior to death that hasn’t<br />\nbeen reported.</td>\n<td>April 15 following the year of death; automatic 6-month<br />\nextension of time to file provided Form 4868 is filed on or before<br />\nApril 15. Form 4868 doesn’t need to be filed if no tax is<br />\ndue; the extension is automatic.</td>\n</tr>\n<tr>\n<td>Form 1041<br />\nU.S. Income Tax Return for Estates and Trusts</td>\n<td>When the estate or trust receives income earned.</td>\n<td>3-1/2 months after the year-end of the estate or trust; most<br />\ntrusts are required to use a December 31 year end, but estates may<br />\nelect a fiscal year, provided the first fiscal year ends no later<br />\nthan 11 full months after the date of death.</td>\n</tr>\n<tr>\n<td>Form 706<br />\nUnited States Estate (and Generation-Skipping Transfer) Tax<br />\nReturn</td>\n<td>For estates with assets more than a certain amount. Even though<br />\nnot every estate with assets over that amount will have an estate<br />\ntax, those estates are still required to file.</td>\n<td>9 months after date of death; due date may be extended by 6<br />\nadditional months for cause.</td>\n</tr>\n<tr>\n<td>Form 709<br />\nUnited States Gift (and Generation-Skipping Transfer) Tax<br />\nReturn</td>\n<td>Generally, if the decedent gave gifts to someone (other than<br />\nhis or her spouse) totaling more than $14,000 in calendar year<br />\n2013, or if the decedent was splitting gifts with a surviving<br />\nspouse who made the gifts, and the gifts haven’t yet been<br />\nreported.</td>\n<td>April 15 of the year following the year the gift was made.<br />\nAutomatic 6-month extension of time to file provided Form 4868 is<br />\nfiled on or before April 15 for taxpayer’s Form 1040.</td>\n</tr>\n<tr>\n<td>Form 1310<br />\nStatement of Person Claiming Refund Due a Deceased Person</td>\n<td>If a tax refund is due a decedent on his or her Form 1040<br />\n(whether final or any prior year), but he or she has no surviving<br />\nspouse or court-appointed representative, the person requesting the<br />\nrefund must complete and file Form 1310.</td>\n<td>File together with the related tax return. If claiming a refund<br />\nfor a prior year for which a tax return has already been filed,<br />\nsend as soon as possible to the IRS Service Center where the<br />\noriginal return was filed.</td>\n</tr>\n<tr>\n<td>Form SS-4<br />\nApplication for Employer Identification Number</td>\n<td>For any trust or estate that will maintain bank or brokerage<br />\naccounts, or to whom anyone who makes a payment may be required to<br />\nissue either a Form 1099 or a Form W-2.</td>\n<td>Immediate prior to opening any accounts for estate or trust.<br />\nYou can apply online at <a href=\"https://www.irs.gov\" target=\"_blank\" rel=\"noopener noreferrer\">www.irs.gov</a>.</td>\n</tr>\n<tr>\n<td>Form 1099-MISC</td>\n<td>To report payments in any amount to attorneys, or of $600 or<br />\nmore to accountants, trustees, or any non-corporate entity to whom<br />\nthe estate or trust paid compensation.</td>\n<td>Send copy to recipient no later than January 31 of the year<br />\nfollowing the tax year involved. Copy should be filed with the IRS<br />\nby February 28 (if filing on paper, and accompanied by Form 1096),<br />\nor by March 31 if filing electronically.</td>\n</tr>\n</tbody>\n</table>\n"},{"title":"What to do when someone dies","thumb":null,"image":null,"content":"<p>If you’re an executor, personal representative, or administrator of an estate, your job begins at the death of the person whose estate you’re administering. The following list contains tasks you need to take care of in the first days and weeks after the decedent’s death.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">Determine the decedent’s wishes regarding arrangements such as funeral and burial.</p>\n</li>\n<li>\n<p class=\"first-para\">Obtain copies of the death certificate.</p>\n</li>\n<li>\n<p class=\"first-para\">Ascertain whether the decedent had a last will and other estate-planning documents and then try to find them.</p>\n</li>\n<li>\n<p class=\"first-para\">Apply for a federal Taxpayer Identification Number for the estate, using Form SS-4. (This is like a Social Security number for the estate.)</p>\n</li>\n<li>\n<p class=\"first-para\">Figure out the decedent’s <i>domicile</i> (where he or she “lived” for probate and tax purposes) and where real property (real estate) is located, because the executor may have to probate the estate in multiple jurisdictions.</p>\n</li>\n<li>\n<p class=\"first-para\">Determine whether you need professional advisors such as an attorney, CPA, or enrolled agent.</p>\n</li>\n<li>\n<p class=\"first-para\">If the decedent has no surviving spouse:</p>\n<ul class=\"level-two\">\n<li>\n<p class=\"first-para\">Change the locks on the decedent’s residence immediately.</p>\n</li>\n<li>\n<p class=\"first-para\">Locate and take possession of decedent’s checkbook and credit cards and notify banks and credit card companies of the decedent’s passing.</p>\n</li>\n<li>\n<p class=\"first-para\">Notify the decedent’s homeowner’s insurance company and automobile insurance company. Add executor, when appointed, as insured and determine whether coverage, particularly on items of unusual value, is adequate.</p>\n</li>\n</ul>\n</li>\n<li>\n<p class=\"first-para\">Cancel pending contracts (such as purchase and sale agreements on real estate) and rewrite as executor.</p>\n</li>\n<li>\n<p class=\"first-para\">Marshall and safeguard the decedent’s assets by</p>\n<ul class=\"level-two\">\n<li>\n<p class=\"first-para\">Locating the safe-deposit box and inventorying its contents</p>\n</li>\n<li>\n<p class=\"first-para\">Collecting information regarding the type, value, and manner of holding for all the decedent’s assets</p>\n</li>\n</ul>\n</li>\n<li>\n<p class=\"first-para\">Determine <i>heirs at law</i> (those who would inherit if the decedent was will-less) and <i>beneficiaries</i> (those who inherit in the presence of a will) of the decedent’s estate.</p>\n</li>\n<li>\n<p class=\"first-para\">Decide whether probate of the decedent’s will (or administration of the decedent’s estate) is necessary and file the decedent’s last will with the probate court.</p>\n</li>\n<li>\n<p class=\"first-para\">If probate is necessary:</p>\n<ul class=\"level-two\">\n<li>\n<p class=\"first-para\">Figure out whether <i>ancillary</i><i>,</i> or supplemental, probate is also necessary (for real property in another state).</p>\n</li>\n<li>\n<p class=\"first-para\">Decide whether temporary administration of the estate is necessary for assets that must be dealt with immediately.</p>\n</li>\n</ul>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"One year","lifeExpectancySetFrom":"2022-02-25T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":207998},{"headers":{"creationTime":"2016-03-26T21:03:23+00:00","modifiedTime":"2021-12-22T14:34:26+00:00","timestamp":"2022-09-14T18:18:56+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"How to Calculate Estate or Trust Income Distribution Deductions (Schedule B)","strippedTitle":"how to calculate estate or trust income distribution deductions (schedule b)","slug":"how-to-calculate-estate-or-trust-income-distribution-deductions-schedule-b","canonicalUrl":"","seo":{"metaDescription":"The Income Distribution Deduction can be taken for certain income distributed to beneficiaries. Here's how it works.","noIndex":0,"noFollow":0},"content":"If you're preparing taxes for an estate or trust, be aware that the Income Distribution Deduction (Schedule B) is unique to these assets.\r\n\r\nWhen trusts and estates give income payments to beneficiaries, those payments carry income tax consequences for the trust or estate <i>and</i> for the beneficiaries. The trust or estate receives a deduction, and the beneficiaries must include the amount deducted from the Form 1041 on their individual Form 1040.\r\n\r\nForm 1041, Schedule B synthesizes all the important information into the all-important <i>income distribution </i><i>deduction</i>.\r\n\r\nTo complete Schedule B, follow these steps (unless the trust or estate is in its final year):\r\n<ol class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Take the total from line 17 on the front of Form 1041 (line 1).</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Add that total to the adjusted tax-exempt interest, which is nothing more than total tax-exempt interest less fiduciary and other fees allocated to it (also known as the contents of line 2).</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Enter the net capital gain (flip your tax return to its front, and place the number you see on line 4 onto Schedule B, line 6 on the back).</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b></b>Subtract that number from your total of Schedule B, lines 1 and 2, to arrive at the distributable net income (DNI), or the total amount that could possibly be taxed to the beneficiary.</p>\r\n</li>\r\n</ol>\r\nIf you’re preparing the return for an estate or simple trust, you can ignore Schedule B, line 8. If yours is a complex trust and you’re either not required to distribute all income or you distributed more than just income, you need to calculate <i>trust accounting income</i> (TAI).\r\n\r\nTo calculate TAI, add lines 1 through 8 from the front of Form 1041 and the tax-exempt income from line 1 of “Other Information” on the back of Form 1041. Subtract capital gains or losses (line 4, Form 1041) and all fees and expenses that you charged against the income earned in the trust.\r\n\r\nExclude fees and expenses charged against principal (including whatever fees you paid from the capital gains) when calculating TAI. Also, don’t allocate any of the income fees you’ve paid between taxable and tax-exempt income.\r\n\r\nOn Schedule B, line 11, you put the total amount of distributions made from the estate or trust to beneficiaries during the tax year. These amounts may be mandatory. For example, in the case of a simple trust, all income must be distributed in the tax year that you’re preparing the return for.\r\n\r\nIn this case, one of three scenarios may apply:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">If you’re required to distribute all, or any part, of the trust’s income, place the amount you’re required to pay to the beneficiary (even if you didn’t actually pay it) on line 9.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Any amounts of income you paid to the beneficiary at your discretion, but that weren’t mandated by the trust instrument, belong on line 10.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">The total of lines 9 and 10 belongs on line 11.</p>\r\n</li>\r\n</ul>\r\nOn line 12, calculate what portion of that total distribution came from tax-exempt income. If you distributed 100 percent of the income, place the number you have on Schedule B, line 2. If you distributed less than 100 percent, calculate the percentage of income you did distribute, and then multiply that percentage by the amount on Schedule B, line 2. Subtract line 12 from line 11 to arrive at line 13, Schedule B.\r\n\r\nNow that you’ve calculated line 13, you need to also arrive at line 14. Just subtract line 2 of Schedule B from line 7 and place your answer on line 14. Compare lines 13 and 14. The smaller of the two is the income distribution deduction. Place your answer on line 15, Schedule B, and then carry the result to line 18 on page 1 of Form 1041.","description":"If you're preparing taxes for an estate or trust, be aware that the Income Distribution Deduction (Schedule B) is unique to these assets.\r\n\r\nWhen trusts and estates give income payments to beneficiaries, those payments carry income tax consequences for the trust or estate <i>and</i> for the beneficiaries. The trust or estate receives a deduction, and the beneficiaries must include the amount deducted from the Form 1041 on their individual Form 1040.\r\n\r\nForm 1041, Schedule B synthesizes all the important information into the all-important <i>income distribution </i><i>deduction</i>.\r\n\r\nTo complete Schedule B, follow these steps (unless the trust or estate is in its final year):\r\n<ol class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">Take the total from line 17 on the front of Form 1041 (line 1).</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Add that total to the adjusted tax-exempt interest, which is nothing more than total tax-exempt interest less fiduciary and other fees allocated to it (also known as the contents of line 2).</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Enter the net capital gain (flip your tax return to its front, and place the number you see on line 4 onto Schedule B, line 6 on the back).</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\"><b></b>Subtract that number from your total of Schedule B, lines 1 and 2, to arrive at the distributable net income (DNI), or the total amount that could possibly be taxed to the beneficiary.</p>\r\n</li>\r\n</ol>\r\nIf you’re preparing the return for an estate or simple trust, you can ignore Schedule B, line 8. If yours is a complex trust and you’re either not required to distribute all income or you distributed more than just income, you need to calculate <i>trust accounting income</i> (TAI).\r\n\r\nTo calculate TAI, add lines 1 through 8 from the front of Form 1041 and the tax-exempt income from line 1 of “Other Information” on the back of Form 1041. Subtract capital gains or losses (line 4, Form 1041) and all fees and expenses that you charged against the income earned in the trust.\r\n\r\nExclude fees and expenses charged against principal (including whatever fees you paid from the capital gains) when calculating TAI. Also, don’t allocate any of the income fees you’ve paid between taxable and tax-exempt income.\r\n\r\nOn Schedule B, line 11, you put the total amount of distributions made from the estate or trust to beneficiaries during the tax year. These amounts may be mandatory. For example, in the case of a simple trust, all income must be distributed in the tax year that you’re preparing the return for.\r\n\r\nIn this case, one of three scenarios may apply:\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">If you’re required to distribute all, or any part, of the trust’s income, place the amount you’re required to pay to the beneficiary (even if you didn’t actually pay it) on line 9.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">Any amounts of income you paid to the beneficiary at your discretion, but that weren’t mandated by the trust instrument, belong on line 10.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">The total of lines 9 and 10 belongs on line 11.</p>\r\n</li>\r\n</ul>\r\nOn line 12, calculate what portion of that total distribution came from tax-exempt income. If you distributed 100 percent of the income, place the number you have on Schedule B, line 2. If you distributed less than 100 percent, calculate the percentage of income you did distribute, and then multiply that percentage by the amount on Schedule B, line 2. Subtract line 12 from line 11 to arrive at line 13, Schedule B.\r\n\r\nNow that you’ve calculated line 13, you need to also arrive at line 14. Just subtract line 2 of Schedule B from line 7 and place your answer on line 14. Compare lines 13 and 14. The smaller of the two is the income distribution deduction. Place your answer on line 15, Schedule B, and then carry the result to line 18 on page 1 of Form 1041.","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b10e1278\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b10e1cfd\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-07-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":190719},{"headers":{"creationTime":"2016-03-26T07:41:30+00:00","modifiedTime":"2021-12-22T14:29:33+00:00","timestamp":"2022-09-14T18:18:56+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"Bypassing Probate with Beneficiary Designations","strippedTitle":"bypassing probate with beneficiary designations","slug":"bypassing-probate-with-beneficiary-designations","canonicalUrl":"","seo":{"metaDescription":"When estate planning, you could consider making beneficiary designations that will allow your heirs to bypass probate.","noIndex":0,"noFollow":0},"content":"Simply put, <em>probate</em> is the legal process related to a deceased person's will, property and finances that takes place after they die. It can be long and costly, so to spare their families the hassle, many people opt to meet their estate planning goals through the proper use of beneficiary designations.\r\n\r\nYou're likely familiar with beneficiary designations on life insurance policies, 401(k) plan assets, and IRA accounts, but you may not be aware that you can designate beneficiaries on other types of assets as well.\r\n<div class=\"imageBlock\" style=\"width: 500px;\">[caption id=\"\" align=\"alignnone\" width=\"500\"]<img src=\"https://www.dummies.com/wp-content/uploads/479653.image0.jpg\" alt=\"[Credit: ©iStockphoto.com/stocknshares]\" width=\"500\" height=\"333\" /> © stocknshares / iStockphoto.com[/caption]</div>\r\nYou may establish a transfer on death (TOD) or payable on death (POD) beneficiary designation on your bank accounts. This same type of beneficiary designation is also available with many brokerage accounts. Contact your brokerage company to establish a beneficiary designation on your personal account.\r\n<p class=\"Tip\">In a few states, you can have a beneficiary designation on your personal property and real estate. Contact your county's registrar of deeds office to find out whether this option is allowable and to figure out the process to register your beneficiary designation on personal property and real estate.</p>\r\nIf you own assets titled <i>joint tenants with right of survivorship</i>, that account already has the equivalent of a beneficiary designation. Your joint owner will automatically inherit 100 percent of the asset balance upon your death.\r\n\r\nAssets that transfer to your heirs automatically upon your death aren't subject to the terms of your will. The ownership of the account (joint tenants with right of survivorship) or the beneficiary designation takes precedence over your will. Those assets will be transferred directly to recipients without going through a long, tedious, and expensive probate process.\r\n\r\nYour will actually doesn't become effective until it has been entered into probate. The probate process typically takes 9 to 24 months to complete. By structuring your assets to minimize the number of items and total dollar value of assets that have to go through probate, you will save your executor (the one who you assign in your will to do this time-consuming, thankless job) a lot of time and your estate a lot of money.","description":"Simply put, <em>probate</em> is the legal process related to a deceased person's will, property and finances that takes place after they die. It can be long and costly, so to spare their families the hassle, many people opt to meet their estate planning goals through the proper use of beneficiary designations.\r\n\r\nYou're likely familiar with beneficiary designations on life insurance policies, 401(k) plan assets, and IRA accounts, but you may not be aware that you can designate beneficiaries on other types of assets as well.\r\n<div class=\"imageBlock\" style=\"width: 500px;\">[caption id=\"\" align=\"alignnone\" width=\"500\"]<img src=\"https://www.dummies.com/wp-content/uploads/479653.image0.jpg\" alt=\"[Credit: ©iStockphoto.com/stocknshares]\" width=\"500\" height=\"333\" /> © stocknshares / iStockphoto.com[/caption]</div>\r\nYou may establish a transfer on death (TOD) or payable on death (POD) beneficiary designation on your bank accounts. This same type of beneficiary designation is also available with many brokerage accounts. Contact your brokerage company to establish a beneficiary designation on your personal account.\r\n<p class=\"Tip\">In a few states, you can have a beneficiary designation on your personal property and real estate. Contact your county's registrar of deeds office to find out whether this option is allowable and to figure out the process to register your beneficiary designation on personal property and real estate.</p>\r\nIf you own assets titled <i>joint tenants with right of survivorship</i>, that account already has the equivalent of a beneficiary designation. Your joint owner will automatically inherit 100 percent of the asset balance upon your death.\r\n\r\nAssets that transfer to your heirs automatically upon your death aren't subject to the terms of your will. The ownership of the account (joint tenants with right of survivorship) or the beneficiary designation takes precedence over your will. Those assets will be transferred directly to recipients without going through a long, tedious, and expensive probate process.\r\n\r\nYour will actually doesn't become effective until it has been entered into probate. The probate process typically takes 9 to 24 months to complete. By structuring your assets to minimize the number of items and total dollar value of assets that have to go through probate, you will save your executor (the one who you assign in your will to do this time-consuming, thankless job) a lot of time and your estate a lot of money.","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b10d1908\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b10d2330\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-07-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":142896},{"headers":{"creationTime":"2016-03-26T21:02:13+00:00","modifiedTime":"2021-12-21T21:43:24+00:00","timestamp":"2022-09-14T18:18:56+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"How to Pay a Trust's Expenses","strippedTitle":"how to pay a trust's expenses","slug":"how-to-pay-a-trusts-expenses","canonicalUrl":"","seo":{"metaDescription":"In addition to making payments to the beneficiaries, as trustee, you’re also responsible for paying the expenses you incur in administering the trust. The prima","noIndex":0,"noFollow":0},"content":"In addition to making payments to the beneficiaries, as trustee, you’re also responsible for paying the expenses you incur in administering the trust. The primary expenses include trustee’s fees, investment advice, accounting fees, and taxes.\r\n<h2 id=\"tab1\" >Trustees’ fees</h2>\r\nA trustee’s fee is the amount the trust pays to compensate the trustee for his or her time. There is no set trustee’s fee. You can choose to base it on a small percentage of the market value of the assets plus a percentage of the income earned by the trust. You may opt to calculate the number of hours you spend and bill by the hour. You may even charge a flat fee, which is more like an honorarium. What you may not do is overcharge.\r\n\r\nTrustee fees are an income tax deduction for the trust but taxable income to you. You must declare these fees on your Form 1040,<b> </b>where you place them on line 21, Other Income. If you’re a professional trustee, this income is also subject to Self-Employment Tax. Otherwise, it’s income taxable only.\r\n<p class=\"Remember\">Trustee fees are typically paid both from principal and income so as not to burden either side unduly.</p>\r\n\r\n<h2 id=\"tab2\" >Investment advice in a trust</h2>\r\nInvestment advice is deductible to the trust minus the 2 percent haircut to which miscellaneous itemized deductions are subject.\r\n<h2 id=\"tab3\" >Trust's accounting fees</h2>\r\nUnless you’re preparing Form 1041<b> </b>by yourself, you also have to pay accounting or tax preparation fees. You may choose to pay these from income or principal, or a combination of the two. Accounting fees in a trust are usually charged on an hourly basis or on the complexity of the returns being prepared, and are fully deductible.\r\n<h2 id=\"tab4\" >Taxes in a trust</h2>\r\nState and local income taxes, real estate taxes, and personal property taxes are all deductible if paid by the trust on trust obligations. So, if the trust owns real estate, it gets to deduct those taxes. If, on the other hand, the trust pays the real estate taxes on property owned by the income beneficiary, the trust has actually made a distribution to the beneficiary.\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">If the trust is only paying a capital gains tax, you pay that from principal.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">If the trust is accumulating income, you pay the entire tax from principal because the accumulated income is transferred to principal at the end of each year and becomes part of the principal.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">On occasion, when you don’t transfer accumulated income to principal, you pay taxes on the ordinary income of the trust from the income side, and the capital gains taxes from the principal side.</p>\r\n</li>\r\n</ul>\r\nTo the extent that income is available in the trust to pass out to a beneficiary, that tax payment becomes an income distribution, and the beneficiary will receive a Schedule K-1 from the trust.\r\n<p class=\"Remember\">Unlike individuals, who may deduct state sales taxes rather than state income taxes, state sales tax deductions aren’t available for trusts. After all, trusts don’t buy anything except for services, and those services typically aren’t subject to sales tax.</p>","description":"In addition to making payments to the beneficiaries, as trustee, you’re also responsible for paying the expenses you incur in administering the trust. The primary expenses include trustee’s fees, investment advice, accounting fees, and taxes.\r\n<h2 id=\"tab1\" >Trustees’ fees</h2>\r\nA trustee’s fee is the amount the trust pays to compensate the trustee for his or her time. There is no set trustee’s fee. You can choose to base it on a small percentage of the market value of the assets plus a percentage of the income earned by the trust. You may opt to calculate the number of hours you spend and bill by the hour. You may even charge a flat fee, which is more like an honorarium. What you may not do is overcharge.\r\n\r\nTrustee fees are an income tax deduction for the trust but taxable income to you. You must declare these fees on your Form 1040,<b> </b>where you place them on line 21, Other Income. If you’re a professional trustee, this income is also subject to Self-Employment Tax. Otherwise, it’s income taxable only.\r\n<p class=\"Remember\">Trustee fees are typically paid both from principal and income so as not to burden either side unduly.</p>\r\n\r\n<h2 id=\"tab2\" >Investment advice in a trust</h2>\r\nInvestment advice is deductible to the trust minus the 2 percent haircut to which miscellaneous itemized deductions are subject.\r\n<h2 id=\"tab3\" >Trust's accounting fees</h2>\r\nUnless you’re preparing Form 1041<b> </b>by yourself, you also have to pay accounting or tax preparation fees. You may choose to pay these from income or principal, or a combination of the two. Accounting fees in a trust are usually charged on an hourly basis or on the complexity of the returns being prepared, and are fully deductible.\r\n<h2 id=\"tab4\" >Taxes in a trust</h2>\r\nState and local income taxes, real estate taxes, and personal property taxes are all deductible if paid by the trust on trust obligations. So, if the trust owns real estate, it gets to deduct those taxes. If, on the other hand, the trust pays the real estate taxes on property owned by the income beneficiary, the trust has actually made a distribution to the beneficiary.\r\n<ul class=\"level-one\">\r\n \t<li>\r\n<p class=\"first-para\">If the trust is only paying a capital gains tax, you pay that from principal.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">If the trust is accumulating income, you pay the entire tax from principal because the accumulated income is transferred to principal at the end of each year and becomes part of the principal.</p>\r\n</li>\r\n \t<li>\r\n<p class=\"first-para\">On occasion, when you don’t transfer accumulated income to principal, you pay taxes on the ordinary income of the trust from the income side, and the capital gains taxes from the principal side.</p>\r\n</li>\r\n</ul>\r\nTo the extent that income is available in the trust to pass out to a beneficiary, that tax payment becomes an income distribution, and the beneficiary will receive a Schedule K-1 from the trust.\r\n<p class=\"Remember\">Unlike individuals, who may deduct state sales taxes rather than state income taxes, state sales tax deductions aren’t available for trusts. After all, trusts don’t buy anything except for services, and those services typically aren’t subject to sales tax.</p>","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Trustees’ fees","target":"#tab1"},{"label":"Investment advice in a trust","target":"#tab2"},{"label":"Trust's accounting fees","target":"#tab3"},{"label":"Taxes in a trust","target":"#tab4"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b109a00e\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b109aa84\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-06-29T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":190548},{"headers":{"creationTime":"2016-03-26T21:03:16+00:00","modifiedTime":"2021-12-21T21:42:24+00:00","timestamp":"2022-09-14T18:18:56+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"Schedule K-1 for Estates and Trusts: General Information","strippedTitle":"schedule k-1 for estates and trusts: general information","slug":"schedule-k-1-for-estates-and-trusts-general-information","canonicalUrl":"","seo":{"metaDescription":"An estate or trust’s income retains its character , and so beneficiaries must be informed of this character. The Schedule K-1 (Form 1041) gives the beneficiary ","noIndex":0,"noFollow":0},"content":"An estate or trust’s income <i>retains its character</i>, and so beneficiaries must be informed of this character. The Schedule K-1 (Form 1041)<b> </b>gives the beneficiary the specific allocation between all items of income, allowing easy transfer from the K-1 to the beneficiary’s Form 1040.\r\n\r\nWhen there is one income beneficiary, the total amount of the <i>income distribution deduction</i> (IDD) is shown on a single Schedule K-1, with allocations made between the different types of income. When there are multiple beneficiaries, you’re required to prepare a separate K-1 for each, with the total IDD divided among the beneficiaries on their K-1s in the same proportion as the distributions were made.\r\n\r\nSchedule K-1 allows your beneficiary to separate his or her income distribution into all the sorts of income received by the trust or estate. Because it is an attachment to Form 1041, you must distribute a copy of it to the income beneficiaries no later than the due date for Form 1041, as extended. Remember, the beneficiaries can’t prepare their 1040s until they receive their K-1s from you.\r\n<h2 id=\"tab1\" >Part I: Information about the estate or trust</h2>\r\nIn Part I, fill out the tax identification number (the <i>TIN</i>), the name of the estate or trust, and the <i>fiduciary’s</i> name and address. You also have the opportunity to check a box to indicate whether and when you filed Form 1041-T, Allocation of Estimated Tax Payments to Beneficiaries (Under Code Section 643(g)).\r\n\r\nBy checking Part I, Box D of Schedule K-1, you tell the beneficiary that he or she now has credit for additional tax payments, even though the trustee originally paid them on behalf of the trust.\r\n\r\nCode Section 643(g) allows you to assign estimated taxes paid by the trust or estate to individual beneficiaries in the final year of the trust or estate. Because the trust won’t owe any tax in its final year, it doesn’t need the estimated tax payments.\r\n\r\nForm 1041-T may only be filed in the final year of the trust or estate, is irrevocable, and must be made on or before the 65th day of the year following the end of the trust or estate’s tax year. If you’ve made a Code Section 643(g) election and allocated the estimated taxes, you have to check Box E to indicate it’s the final year of the trust or estate.\r\n<h2 id=\"tab2\" >Part II: Information about the beneficiary</h2>\r\nSchedule K-1, Part II is about as simple as it gets. On line F, put in the beneficiary’s TIN, and on line G, fill in the beneficiary’s name and address.\r\n\r\nIn Box H, choose between a domestic or foreign beneficiary, whichever applies. If the beneficiary lives in the U.S., no further information is necessary. If the beneficiary resides in a foreign country, you may want to consult with a tax advisor who can check the foreign tax treaties involved and make sure you’re not required to withhold U.S. income taxes on distributions to this beneficiary.","description":"An estate or trust’s income <i>retains its character</i>, and so beneficiaries must be informed of this character. The Schedule K-1 (Form 1041)<b> </b>gives the beneficiary the specific allocation between all items of income, allowing easy transfer from the K-1 to the beneficiary’s Form 1040.\r\n\r\nWhen there is one income beneficiary, the total amount of the <i>income distribution deduction</i> (IDD) is shown on a single Schedule K-1, with allocations made between the different types of income. When there are multiple beneficiaries, you’re required to prepare a separate K-1 for each, with the total IDD divided among the beneficiaries on their K-1s in the same proportion as the distributions were made.\r\n\r\nSchedule K-1 allows your beneficiary to separate his or her income distribution into all the sorts of income received by the trust or estate. Because it is an attachment to Form 1041, you must distribute a copy of it to the income beneficiaries no later than the due date for Form 1041, as extended. Remember, the beneficiaries can’t prepare their 1040s until they receive their K-1s from you.\r\n<h2 id=\"tab1\" >Part I: Information about the estate or trust</h2>\r\nIn Part I, fill out the tax identification number (the <i>TIN</i>), the name of the estate or trust, and the <i>fiduciary’s</i> name and address. You also have the opportunity to check a box to indicate whether and when you filed Form 1041-T, Allocation of Estimated Tax Payments to Beneficiaries (Under Code Section 643(g)).\r\n\r\nBy checking Part I, Box D of Schedule K-1, you tell the beneficiary that he or she now has credit for additional tax payments, even though the trustee originally paid them on behalf of the trust.\r\n\r\nCode Section 643(g) allows you to assign estimated taxes paid by the trust or estate to individual beneficiaries in the final year of the trust or estate. Because the trust won’t owe any tax in its final year, it doesn’t need the estimated tax payments.\r\n\r\nForm 1041-T may only be filed in the final year of the trust or estate, is irrevocable, and must be made on or before the 65th day of the year following the end of the trust or estate’s tax year. If you’ve made a Code Section 643(g) election and allocated the estimated taxes, you have to check Box E to indicate it’s the final year of the trust or estate.\r\n<h2 id=\"tab2\" >Part II: Information about the beneficiary</h2>\r\nSchedule K-1, Part II is about as simple as it gets. On line F, put in the beneficiary’s TIN, and on line G, fill in the beneficiary’s name and address.\r\n\r\nIn Box H, choose between a domestic or foreign beneficiary, whichever applies. If the beneficiary lives in the U.S., no further information is necessary. If the beneficiary resides in a foreign country, you may want to consult with a tax advisor who can check the foreign tax treaties involved and make sure you’re not required to withhold U.S. income taxes on distributions to this beneficiary.","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Part I: Information about the estate or trust","target":"#tab1"},{"label":"Part II: Information about the beneficiary","target":"#tab2"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b109214b\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b1092a93\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"Six months","lifeExpectancySetFrom":"2021-12-21T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":190701},{"headers":{"creationTime":"2016-03-26T22:16:39+00:00","modifiedTime":"2021-12-13T16:15:59+00:00","timestamp":"2022-09-14T18:18:53+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"Estate Planning First Steps: How Much Is Your Estate Worth?","strippedTitle":"estate planning first steps: how much is your estate worth?","slug":"estate-planning-first-steps-how-much-is-your-estate-worth","canonicalUrl":"","seo":{"metaDescription":"Learn how to calculate the value of your estate and your net worth so you can begin your estate planning process.","noIndex":0,"noFollow":0},"content":"Estate planning is all about what you want to have happen to you, your dependents, and your stuff when you’re gone. Estate planning also covers what happens if you’re alive but can’t make decisions for yourself.\r\n\r\nYou may think that you don’t care what happens after you’re gone, but what about the family, friends, and stuff you leave behind? Do you care if the most important person in your life receives anything you may have of value, or are you okay with having the state decide how to divvy up your stuff? Who’s going to go through your underwear drawer? Who will care for your beloved cat or, more importantly, your dependent children?\r\n\r\nThe first thing you need to do when <a href=\"https://www.dummies.com/personal-finance/estate-planning/estate-planning-for-dummies-cheat-sheet/\" target=\"_blank\" rel=\"noopener\">planning your estate</a> is to calculate your gross estate. Then you can employ different estate planning strategies based on the size and composition of your estate. Begin by entering your Net Worth total in Step 1 of the Calculating Your Gross Estate worksheet (shown in figure below), which you can <a href=\"https://www.dummies.com/wp-content/uploads/Calculating-Your-Gross-Estate-Worksheet.pdf\" target=\"_blank\" rel=\"noopener\">download and print here</a>.\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/114662.image0.jpg\" alt=\"image0.jpg\" width=\"462\" height=\"365\" />\r\n\r\nIf you haven't yet determined your net worth, the Statement of Financial Net Worth Worksheet can help you figure it out. <a href=\"https://www.dummies.com/wp-content/uploads/Statement-of-Financial-Net-Worth-Worksheet.pdf\" target=\"_blank\" rel=\"noopener\">Download here</a>.\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/114663.image1.jpg\" alt=\"image1.jpg\" width=\"259\" height=\"400\" />\r\n\r\nThe number you came up with for your gross estate is probably bigger than you were expecting. That number represents, for most people, the stuff you need to figure out what to do with, and your estate plan tells the world what you want to happen to your stuff when you die.","description":"Estate planning is all about what you want to have happen to you, your dependents, and your stuff when you’re gone. Estate planning also covers what happens if you’re alive but can’t make decisions for yourself.\r\n\r\nYou may think that you don’t care what happens after you’re gone, but what about the family, friends, and stuff you leave behind? Do you care if the most important person in your life receives anything you may have of value, or are you okay with having the state decide how to divvy up your stuff? Who’s going to go through your underwear drawer? Who will care for your beloved cat or, more importantly, your dependent children?\r\n\r\nThe first thing you need to do when <a href=\"https://www.dummies.com/personal-finance/estate-planning/estate-planning-for-dummies-cheat-sheet/\" target=\"_blank\" rel=\"noopener\">planning your estate</a> is to calculate your gross estate. Then you can employ different estate planning strategies based on the size and composition of your estate. Begin by entering your Net Worth total in Step 1 of the Calculating Your Gross Estate worksheet (shown in figure below), which you can <a href=\"https://www.dummies.com/wp-content/uploads/Calculating-Your-Gross-Estate-Worksheet.pdf\" target=\"_blank\" rel=\"noopener\">download and print here</a>.\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/114662.image0.jpg\" alt=\"image0.jpg\" width=\"462\" height=\"365\" />\r\n\r\nIf you haven't yet determined your net worth, the Statement of Financial Net Worth Worksheet can help you figure it out. <a href=\"https://www.dummies.com/wp-content/uploads/Statement-of-Financial-Net-Worth-Worksheet.pdf\" target=\"_blank\" rel=\"noopener\">Download here</a>.\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/114663.image1.jpg\" alt=\"image1.jpg\" width=\"259\" height=\"400\" />\r\n\r\nThe number you came up with for your gross estate is probably bigger than you were expecting. That number represents, for most people, the stuff you need to figure out what to do with, and your estate plan tells the world what you want to happen to your stuff when you die.","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209411,"title":"Wills and Trusts Kit For Dummies Cheat Sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209411"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[{"title":"For the Aspiring Aficionado","slug":"for-the-bougielicious","collectionId":287570}],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b0d552e3\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-63221b0d55cf8\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Explore","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-08-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":197110},{"headers":{"creationTime":"2016-03-27T16:58:18+00:00","modifiedTime":"2021-09-24T18:54:18+00:00","timestamp":"2022-09-14T18:18:39+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"Wills and Trusts Kit For Dummies Cheat Sheet","strippedTitle":"wills and trusts kit for dummies cheat sheet","slug":"wills-trusts-kit-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Care for your loved ones by making sure your affairs are in order. Consider who can help, what items to locate, and how to prepare.","noIndex":0,"noFollow":0},"content":"Taking the time and attention to write a will and set up a trust — or a couple of trusts — are acts of generosity that your heirs and loved ones will appreciate in their time of grief. To do it right, you need to keep track of the people and papers involved, plan for incapacity, and know what you need from an estate plan, then review your plan regularly and especially after significant life changes.","description":"Taking the time and attention to write a will and set up a trust — or a couple of trusts — are acts of generosity that your heirs and loved ones will appreciate in their time of grief. To do it right, you need to keep track of the people and papers involved, plan for incapacity, and know what you need from an estate plan, then review your plan regularly and especially after significant life changes.","blurb":"","authors":[{"authorId":10556,"name":"Aaron Larson","slug":"aaron-larson","description":" <p><b>Aaron Larson</b> is an attorney practicing law in Ann Arbor, Michigan. He formerly worked for the Institute of Continuing Legal Education, where he developed professional education programs for lawyers in areas including estate planning. He operates the ExpertLaw website. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/10556"}}],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":195336,"title":"How to Prepare for a Meeting with an Estate Planning Lawyer","slug":"how-to-prepare-for-a-meeting-with-an-estate-planning-lawyer","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195336"}},{"articleId":195334,"title":"When to Review Your Estate Plan","slug":"when-to-review-your-estate-plan","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195334"}},{"articleId":195335,"title":"People Who Can Help with Your Estate Plan","slug":"people-who-can-help-with-your-estate-plan","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195335"}},{"articleId":195332,"title":"How to Plan for Incapacity in Your Will and Trust","slug":"how-to-plan-for-incapacity-in-your-will-and-trust","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195332"}},{"articleId":195333,"title":"Will and Trust Items to Keep Track Of","slug":"will-and-trust-items-to-keep-track-of","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195333"}}],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate Process","slug":"last-will-and-testament-probate-process","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/256933"}},{"articleId":209202,"title":"Wills & Estate Planning For Canadians For Dummies Cheat Sheet","slug":"wills-estate-planning-for-canadians-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/209202"}},{"articleId":208475,"title":"Estate Planning For Dummies Cheat Sheet","slug":"estate-planning-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208475"}},{"articleId":207998,"title":"Estate & Trust Administration For Dummies Cheat Sheet","slug":"estate-trust-administration-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207998"}},{"articleId":204410,"title":"10 Common Pitfalls for Estate and Trust Administrators to Avoid","slug":"10-common-pitfalls-for-estate-and-trust-administrators-to-avoid","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/204410"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282673,"slug":"wills-and-trusts-kit-for-dummies","isbn":"9781119832188","categoryList":["business-careers-money","personal-finance","estate-planning"],"amazon":{"default":"https://www.amazon.com/gp/product/1119832187/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119832187/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119832187-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119832187/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119832187/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/wills-and-trusts-kit-for-dummies-2nd-edition-cover-9781119832188-203x255.jpg","width":203,"height":255},"title":"Wills & Trusts Kit For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b><b data-author-id=\"10556\">Aaron Larson</b></b> is an attorney practicing law in Ann Arbor, Michigan. He formerly worked for the Institute of Continuing Legal Education, where he developed professional education programs for lawyers in areas including estate planning. He operates the ExpertLaw website.</p>","authors":[{"authorId":10556,"name":"Aaron Larson","slug":"aaron-larson","description":" <p><b>Aaron Larson</b> is an attorney practicing law in Ann Arbor, Michigan. He formerly worked for the Institute of Continuing Legal Education, where he developed professional education programs for lawyers in areas including estate planning. He operates the ExpertLaw website. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/10556"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119832188&quot;]}]\" id=\"du-slot-63221aff41705\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;estate-planning&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119832188&quot;]}]\" id=\"du-slot-63221aff42169\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":195333,"title":"Will and Trust Items to Keep Track Of","slug":"will-and-trust-items-to-keep-track-of","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195333"}},{"articleId":195335,"title":"People Who Can Help with Your Estate Plan","slug":"people-who-can-help-with-your-estate-plan","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195335"}},{"articleId":195334,"title":"When to Review Your Estate Plan","slug":"when-to-review-your-estate-plan","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195334"}},{"articleId":195336,"title":"How to Prepare for a Meeting with an Estate Planning Lawyer","slug":"how-to-prepare-for-a-meeting-with-an-estate-planning-lawyer","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195336"}},{"articleId":195332,"title":"How to Plan for Incapacity in Your Will and Trust","slug":"how-to-plan-for-incapacity-in-your-will-and-trust","categoryList":["business-careers-money","personal-finance","estate-planning"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195332"}}],"content":[{"title":"Will and trust items to keep track of","thumb":null,"image":null,"content":"<p>You’ve gone to the necessary trouble of drawing up your will and perhaps creating a trust. Now you need to make a list of the locations of important papers and make sure that you and at least one other trusted person knows where the list is so that they can find your documents when the need arises. Include the locations of the following items:</p>\n<ul>\n<li>Your will</li>\n<li>Your trust(s)</li>\n<li>Your healthcare proxy</li>\n<li>Your living will</li>\n<li>Your durable power of attorney</li>\n<li>Your tax records</li>\n<li>Your safe deposit box</li>\n</ul>\n"},{"title":"People who can help with your estate plan","thumb":null,"image":null,"content":"<p>When it comes to your estate plan, maintaining current contact information for the people who have agreed to serve in roles such as trustee, personal representative, or custodian for your minor children is important. Also, any professionals who helped you set up your will and trusts can be useful not only during the creation of these documents, but also later on if you want to make changes. They can be invaluable resources for your executor and loved ones when the time comes. Keep a list of the names, addresses, and phone numbers of the following professionals and helpers:</p>\n<ul>\n<li>Your personal representative</li>\n<li>Your trustee</li>\n<li>The guardian for your children</li>\n<li>Your attorney-in-fact</li>\n<li>Your healthcare advocate</li>\n<li>Your estate planning lawyer (if you used one)</li>\n<li>Your accountant (if you have one)</li>\n</ul>\n"},{"title":"When to review your estate plan","thumb":null,"image":null,"content":"<p>You should review your estate plan, including your will and any trusts, on a periodic basis to be sure that your inheritance and disability planning remains consistent with your needs and goals. In addition, you should review your estate plan upon significant life changes, including:</p>\n<ul>\n<li>Marriage, separation or divorce</li>\n<li>Birth or adoption of a child</li>\n<li>Death of an heir</li>\n<li>Move to another state</li>\n<li>Significant changes in your health</li>\n<li>Significant changes in your financial condition</li>\n</ul>\n"},{"title":"How to prepare for a meeting with an estate planning lawyer","thumb":null,"image":null,"content":"<p>If you don’t want to plan your own estate, or are concerned about the complexity of your estate plan and want your will and trust to be legal, it makes sense to meet with a lawyer to form your estate plan. Lawyers who specialize in estate planning can help you cover all contingencies and help make sure that your plan is complete. Use the tips in the following list to prepare for your meeting:</p>\n<ul>\n<li>Ask about your lawyer’s experience. You’ll benefit if your lawyer is experienced working with estates similar to yours.</li>\n<li>Before you meet an estate planning lawyer, most law offices will provide you with a questionnaire to complete and a list of documents to take with you to your meeting. You will save time and possibly money by completing the questionnaire and compiling the documents before your consultation.</li>\n<li>Be clear on what estate planning documents are included in your estate plan and what your lawyer will charge to complete those documents. Get an estimate of how much your complete estate plan will cost.</li>\n<li>Discuss estate taxes with your lawyer. Estate tax exemptions are presently very generous, but those exemptions will change over time. Your lawyer can help you figure out whether your estate is likely to have to pay estate taxes and, if so, how to minimize or avoid them.</li>\n<li>Discuss any special circumstances with your lawyer. Do you have a family business? An heir with a disability? Children from a prior marriage or relationship? To properly plan your estate, your lawyer needs to know your needs.</li>\n</ul>\n"},{"title":"How to prepare for an incapacity in your estate plan","thumb":null,"image":null,"content":"<p>It’s not easy to think about, but your estate plan and living trust need to include provisions that go into effect if you become incapacitated for any reason. Your family will be grateful for your forethought. Keep in mind the following points about planning for incapacity:</p>\n<ul>\n<li>If you don’t create a plan for your incapacity, a court may appoint somebody to oversee your personal and financial needs. By planning for incapacity, you can choose the people who will help you, provide them with guidance as to your wishes, impose limits on their powers, or grant them powers beyond what a court may allow.</li>\n<li>Your durable power of attorney designates the person who can assist you with your financial affairs or manage them on your behalf.</li>\n<li>Your healthcare proxy grants authority to the person who you have chosen to assist you with decisions concerning your medical care or make those decisions for you consistent with your instructions.</li>\n<li>You can provide within your living trust for your trustee to gain immediate authority over your trust assets if you become incapacitated.</li>\n<li>Your living will provides guidance to your family and doctors as to the type of treatment you want (and don’t want) during the final days of your life.</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Solve","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2021-09-24T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":209411},{"headers":{"creationTime":"2016-03-26T21:03:13+00:00","modifiedTime":"2021-07-06T21:49:51+00:00","timestamp":"2022-09-14T18:18:22+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Estate Planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"},"slug":"estate-planning","categoryId":34278}],"title":"How to Produce Annual Trust Accounts","strippedTitle":"how to produce annual trust accounts","slug":"how-to-produce-annual-trust-accounts","canonicalUrl":"","seo":{"metaDescription":"Administering a trust is similar to organizing your own finances, however, a trustee must document all the activity in the trust every year.","noIndex":0,"noFollow":0},"content":"Administering a trust is similar to organizing your own finances. However, a trustee must create a trust account for every year of the trust’s existence. This account traces all the activity in the trust from the ending balances of last year’s account to the closing balances at this year’s end. This information will be communicated to the trust’s beneficiaries and the probate court.\r\n<h2 id=\"tab1\" >Assembling trust administration info yearly</h2>\r\nTrusts divide transactions between principal and income. Although you can format them in a variety of ways, this figure shows a sample account in a form commonly used by most trust accountants. Schedule A minus Schedule B must equal Schedule C, and Schedule D minus Schedule E must equal Schedule F.\r\n<p class=\"Tip\">If all your trust’s assets are held by one bank, brokerage, or law firm <i>fiduciary</i> department, they should send you annual trust accounts. If you’ve scattered the trust’s assets among a variety of financial institutions, the responsibility of compiling all the information into one account becomes yours.</p>\r\n<p class=\"Remember\">Although annual account preparation may seem like a lot of work for little benefit, it’s important for a trustee to do every year. Not only do you pick up any inconsistencies in your recordkeeping this way, but you also create a permanent record of set points in the trust’s timeline.</p>\r\n\r\n<div class=\"imageBlock\" style=\"width: 289px;\">\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/224427.image0.jpg\" alt=\"Sample annual account for the XYZ Trust.\" width=\"289\" height=\"400\" />\r\n<div class=\"imageCaption\">Sample annual account for the XYZ Trust</div>\r\n</div>\r\n<a href=\"https://www.dummies.com/wp-content/uploads/224403.286173-fg1401.pdf\" target=\"_blank\" rel=\"noopener\">Click here to view this form.</a>\r\n<h2 id=\"tab2\" >Obtaining assents of beneficiaries</h2>\r\nOnce you’ve created an annual account, sign it and provide copies to all the beneficiaries for their <i>assent,</i> or approval. Prepare a summary cover sheet for the account, sign it as trustee, attach it to the six schedules, and provide a copy of the complete packet to the beneficiary. Include a photocopy of that cover sheet, which the beneficiaries then sign and return to you. Signed, these photocopies become the beneficiary’s assent to the account.\r\n\r\nAfter obtaining assents from all the beneficiaries, attach these signed documents to the front of your account, and keep the whole everything together in a permanent file. This figure shows a sample cover page, with the assent line included, for the annual account shown in the previous figure.\r\n<div class=\"imageBlock\" style=\"width: 448px;\">\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/224428.image1.jpg\" alt=\"Sample cover page for XYZ Trust annual account.\" width=\"448\" height=\"400\" />\r\n<div class=\"imageCaption\">Sample cover page for XYZ Trust annual account</div>\r\n</div>\r\n<a href=\"https://www.dummies.com/wp-content/uploads/224404.286173-fg1402.pdf\" target=\"_blank\" rel=\"noopener\">Click here to view this sample.</a>\r\n<h2 id=\"tab3\" >Filing with the probate court</h2>\r\nIf your trust is governed by an instrument contained within the Last Will of the trust’s grantor, you may file annual accounts with the probate court. In most cases, the annual account format shown in the first figure should be adequate, but obtain the court’s specific guidelines. Instead of using the cover sheet in the second figure, use the court’s cover.\r\n<p class=\"Warning\">Even if you don't get pressure from the probate court to file the annual account, you are still required to file. Prepare and file accounts in a timely fashion; finding all the financial records you need years after the fact can be difficult.</p>","description":"Administering a trust is similar to organizing your own finances. However, a trustee must create a trust account for every year of the trust’s existence. This account traces all the activity in the trust from the ending balances of last year’s account to the closing balances at this year’s end. This information will be communicated to the trust’s beneficiaries and the probate court.\r\n<h2 id=\"tab1\" >Assembling trust administration info yearly</h2>\r\nTrusts divide transactions between principal and income. Although you can format them in a variety of ways, this figure shows a sample account in a form commonly used by most trust accountants. Schedule A minus Schedule B must equal Schedule C, and Schedule D minus Schedule E must equal Schedule F.\r\n<p class=\"Tip\">If all your trust’s assets are held by one bank, brokerage, or law firm <i>fiduciary</i> department, they should send you annual trust accounts. If you’ve scattered the trust’s assets among a variety of financial institutions, the responsibility of compiling all the information into one account becomes yours.</p>\r\n<p class=\"Remember\">Although annual account preparation may seem like a lot of work for little benefit, it’s important for a trustee to do every year. Not only do you pick up any inconsistencies in your recordkeeping this way, but you also create a permanent record of set points in the trust’s timeline.</p>\r\n\r\n<div class=\"imageBlock\" style=\"width: 289px;\">\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/224427.image0.jpg\" alt=\"Sample annual account for the XYZ Trust.\" width=\"289\" height=\"400\" />\r\n<div class=\"imageCaption\">Sample annual account for the XYZ Trust</div>\r\n</div>\r\n<a href=\"https://www.dummies.com/wp-content/uploads/224403.286173-fg1401.pdf\" target=\"_blank\" rel=\"noopener\">Click here to view this form.</a>\r\n<h2 id=\"tab2\" >Obtaining assents of beneficiaries</h2>\r\nOnce you’ve created an annual account, sign it and provide copies to all the beneficiaries for their <i>assent,</i> or approval. Prepare a summary cover sheet for the account, sign it as trustee, attach it to the six schedules, and provide a copy of the complete packet to the beneficiary. Include a photocopy of that cover sheet, which the beneficiaries then sign and return to you. Signed, these photocopies become the beneficiary’s assent to the account.\r\n\r\nAfter obtaining assents from all the beneficiaries, attach these signed documents to the front of your account, and keep the whole everything together in a permanent file. This figure shows a sample cover page, with the assent line included, for the annual account shown in the previous figure.\r\n<div class=\"imageBlock\" style=\"width: 448px;\">\r\n\r\n<img src=\"https://www.dummies.com/wp-content/uploads/224428.image1.jpg\" alt=\"Sample cover page for XYZ Trust annual account.\" width=\"448\" height=\"400\" />\r\n<div class=\"imageCaption\">Sample cover page for XYZ Trust annual account</div>\r\n</div>\r\n<a href=\"https://www.dummies.com/wp-content/uploads/224404.286173-fg1402.pdf\" target=\"_blank\" rel=\"noopener\">Click here to view this sample.</a>\r\n<h2 id=\"tab3\" >Filing with the probate court</h2>\r\nIf your trust is governed by an instrument contained within the Last Will of the trust’s grantor, you may file annual accounts with the probate court. In most cases, the annual account format shown in the first figure should be adequate, but obtain the court’s specific guidelines. Instead of using the cover sheet in the second figure, use the court’s cover.\r\n<p class=\"Warning\">Even if you don't get pressure from the probate court to file the annual account, you are still required to file. Prepare and file accounts in a timely fashion; finding all the financial records you need years after the fact can be difficult.</p>","blurb":"","authors":[],"primaryCategoryTaxonomy":{"categoryId":34278,"title":"Estate Planning","slug":"estate-planning","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34278"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Assembling trust administration info yearly","target":"#tab1"},{"label":"Obtaining assents of beneficiaries","target":"#tab2"},{"label":"Filing with the probate court","target":"#tab3"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":256933,"title":"Last Will and Testament Probate 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Estate Planning Here's What's Included in the UIMC Tax

Article / Updated 10-06-2022

As of January 1, 2013, an additional 3.8 percent tax was added to investment income in estates and trusts, thanks to provisions in the Health Care and Education Reconciliation Act of 2010. It's not an additional tax on every dollar, but only on the lesser of undistributed net investment income or any amount of adjusted gross income in excess of the highest tax bracket in any year. What sorts of investment income are included? Here’s a list: Annuities Capital gains (including the taxable portion of the gain on the sale of a personal residence) Dividends Interest Passive activity income from partnerships and Subchapter S corporations Rents and royalties You may have noticed that excluded from the list are tax-exempt interest, wages, and distributions from qualified pension, profit-sharing, and stock bonus plans — although you may still be tagged with this tax (or a portion of it) if the trust or estate’s overall income is too high. In addition, it’s important to note that the tax is on net investment income, not gross investment income. As a result, you can allocate portions of all your deductible expenses against the total income, and only pay the tax on the portion that remains that’s over the limit. All irrevocable trusts that are required to file Form 1041 are subject to this tax. However, the following trusts are apparently excluded: Grantor trusts (all income is reported by the grantor on his/her individual income tax return) Charitable foundations Charitable remainder trusts The rules surrounding how investment versus non-investment income are treated in Electing Small Business Trusts (ESBTs) are quite complex. If you’re the trustee of an ESBT, you should check with a competent tax advisor for assistance in this calculation. How to calculate the tax The UIMC tax was only intended to apply to high-income individuals, but the basic inequity in the size of the tax brackets for trusts and estates versus individuals created an unfriendly environment for estates and trusts, one where only quite small entities are exempt from paying it. The tax is imposed as an additional tax, after all other income taxes are levied. How to lessen the tax’s impact The UIMC tax is only imposed on taxable income in the trust or the estate over certain limits; if the income doesn’t reach those limits, there’s no additional tax. So, your job as executor, administrator, or trustee is to try to reduce the taxable income in the trust, while still behaving in a responsible way. You could, for example: Keep track of capital gains and plan to offset gains with some losses, if necessary. As executor, you should be aware of the size of the estate’s capital gains before the end of the year. If your gains are large but you own something that’s a less-than-sterling performer, sell it before the end of the tax year. The loss from that sale will reduce the total gains year-to-date. Invest in tax-exempt bonds and funds. Remember, tax-exempt income isn’t included in the threshold calculation, so it isn’t subject to the tax. Increase distributions to beneficiaries, but only if the trust instrument allows, and the distribution otherwise makes sense. You still have to follow the terms of the trust instrument and pay attention to the intentions of the settlor. But if you manage to pass out income to beneficiaries, that income will be included in their threshold calculation for this additional tax, not the trust or estate’s. Plan deductions to fall into years when income is higher and pay fewer deductible expenses in years the trust doesn’t perform as well or when more is distributed to the beneficiary. That’s assuming you can predict these things, which you may not be able to precisely. But if you normally pay a trustee fee in January, and your income for the prior year is high enough to trigger this tax, you may want to take the January fee in December of the prior year. There is no perfect solution here because the techniques that might enable the trust or estate to pay taxes at a lower rate may not be consistent with either the intent of the donor or what’s in the best interest of the beneficiary. It’s up to you to weigh all these possibilities and arrive at the most equitable solution. Whatever you do, be sure to jot down your reasoning and put it in the file. That way, should anyone ever question your decision, you’ll be able to remind yourself why; and next year, when faced with the same questions and the same dilemmas, you’ll be able to see what you did in the past and judge for yourself how well it worked.

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Estate Planning Estate Planning For Dummies Cheat Sheet

Cheat Sheet / Updated 03-09-2022

An estate plan, including a last will and testament, protects your family and finances after you die. Your first step in estate planning is to write a comprehensive will that moves smoothly through the probate process. Make sure you're aware of current estate taxes that may influence your planning and how insurance factors into your estate plan. Various types of trusts are available; do some research to find out whether setting up a trust is the way to go and consider some special circumstances that may arise and how they can affect your estate planning.

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Estate Planning Estate & Trust Administration For Dummies Cheat Sheet

Cheat Sheet / Updated 02-25-2022

As the fiduciary of an estate or trust, you have many duties, beginning immediately upon the decedent’s (deceased person’s) passing. You’re also guaranteed to become intimately familiar with a host of tax forms you may not have known existed.

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Estate Planning How to Calculate Estate or Trust Income Distribution Deductions (Schedule B)

Article / Updated 12-22-2021

If you're preparing taxes for an estate or trust, be aware that the Income Distribution Deduction (Schedule B) is unique to these assets. When trusts and estates give income payments to beneficiaries, those payments carry income tax consequences for the trust or estate and for the beneficiaries. The trust or estate receives a deduction, and the beneficiaries must include the amount deducted from the Form 1041 on their individual Form 1040. Form 1041, Schedule B synthesizes all the important information into the all-important income distribution deduction. To complete Schedule B, follow these steps (unless the trust or estate is in its final year): Take the total from line 17 on the front of Form 1041 (line 1). Add that total to the adjusted tax-exempt interest, which is nothing more than total tax-exempt interest less fiduciary and other fees allocated to it (also known as the contents of line 2). Enter the net capital gain (flip your tax return to its front, and place the number you see on line 4 onto Schedule B, line 6 on the back). Subtract that number from your total of Schedule B, lines 1 and 2, to arrive at the distributable net income (DNI), or the total amount that could possibly be taxed to the beneficiary. If you’re preparing the return for an estate or simple trust, you can ignore Schedule B, line 8. If yours is a complex trust and you’re either not required to distribute all income or you distributed more than just income, you need to calculate trust accounting income (TAI). To calculate TAI, add lines 1 through 8 from the front of Form 1041 and the tax-exempt income from line 1 of “Other Information” on the back of Form 1041. Subtract capital gains or losses (line 4, Form 1041) and all fees and expenses that you charged against the income earned in the trust. Exclude fees and expenses charged against principal (including whatever fees you paid from the capital gains) when calculating TAI. Also, don’t allocate any of the income fees you’ve paid between taxable and tax-exempt income. On Schedule B, line 11, you put the total amount of distributions made from the estate or trust to beneficiaries during the tax year. These amounts may be mandatory. For example, in the case of a simple trust, all income must be distributed in the tax year that you’re preparing the return for. In this case, one of three scenarios may apply: If you’re required to distribute all, or any part, of the trust’s income, place the amount you’re required to pay to the beneficiary (even if you didn’t actually pay it) on line 9. Any amounts of income you paid to the beneficiary at your discretion, but that weren’t mandated by the trust instrument, belong on line 10. The total of lines 9 and 10 belongs on line 11. On line 12, calculate what portion of that total distribution came from tax-exempt income. If you distributed 100 percent of the income, place the number you have on Schedule B, line 2. If you distributed less than 100 percent, calculate the percentage of income you did distribute, and then multiply that percentage by the amount on Schedule B, line 2. Subtract line 12 from line 11 to arrive at line 13, Schedule B. Now that you’ve calculated line 13, you need to also arrive at line 14. Just subtract line 2 of Schedule B from line 7 and place your answer on line 14. Compare lines 13 and 14. The smaller of the two is the income distribution deduction. Place your answer on line 15, Schedule B, and then carry the result to line 18 on page 1 of Form 1041.

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Estate Planning Bypassing Probate with Beneficiary Designations

Article / Updated 12-22-2021

Simply put, probate is the legal process related to a deceased person's will, property and finances that takes place after they die. It can be long and costly, so to spare their families the hassle, many people opt to meet their estate planning goals through the proper use of beneficiary designations. You're likely familiar with beneficiary designations on life insurance policies, 401(k) plan assets, and IRA accounts, but you may not be aware that you can designate beneficiaries on other types of assets as well. You may establish a transfer on death (TOD) or payable on death (POD) beneficiary designation on your bank accounts. This same type of beneficiary designation is also available with many brokerage accounts. Contact your brokerage company to establish a beneficiary designation on your personal account. In a few states, you can have a beneficiary designation on your personal property and real estate. Contact your county's registrar of deeds office to find out whether this option is allowable and to figure out the process to register your beneficiary designation on personal property and real estate. If you own assets titled joint tenants with right of survivorship, that account already has the equivalent of a beneficiary designation. Your joint owner will automatically inherit 100 percent of the asset balance upon your death. Assets that transfer to your heirs automatically upon your death aren't subject to the terms of your will. The ownership of the account (joint tenants with right of survivorship) or the beneficiary designation takes precedence over your will. Those assets will be transferred directly to recipients without going through a long, tedious, and expensive probate process. Your will actually doesn't become effective until it has been entered into probate. The probate process typically takes 9 to 24 months to complete. By structuring your assets to minimize the number of items and total dollar value of assets that have to go through probate, you will save your executor (the one who you assign in your will to do this time-consuming, thankless job) a lot of time and your estate a lot of money.

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Estate Planning How to Pay a Trust's Expenses

Article / Updated 12-21-2021

In addition to making payments to the beneficiaries, as trustee, you’re also responsible for paying the expenses you incur in administering the trust. The primary expenses include trustee’s fees, investment advice, accounting fees, and taxes. Trustees’ fees A trustee’s fee is the amount the trust pays to compensate the trustee for his or her time. There is no set trustee’s fee. You can choose to base it on a small percentage of the market value of the assets plus a percentage of the income earned by the trust. You may opt to calculate the number of hours you spend and bill by the hour. You may even charge a flat fee, which is more like an honorarium. What you may not do is overcharge. Trustee fees are an income tax deduction for the trust but taxable income to you. You must declare these fees on your Form 1040, where you place them on line 21, Other Income. If you’re a professional trustee, this income is also subject to Self-Employment Tax. Otherwise, it’s income taxable only. Trustee fees are typically paid both from principal and income so as not to burden either side unduly. Investment advice in a trust Investment advice is deductible to the trust minus the 2 percent haircut to which miscellaneous itemized deductions are subject. Trust's accounting fees Unless you’re preparing Form 1041 by yourself, you also have to pay accounting or tax preparation fees. You may choose to pay these from income or principal, or a combination of the two. Accounting fees in a trust are usually charged on an hourly basis or on the complexity of the returns being prepared, and are fully deductible. Taxes in a trust State and local income taxes, real estate taxes, and personal property taxes are all deductible if paid by the trust on trust obligations. So, if the trust owns real estate, it gets to deduct those taxes. If, on the other hand, the trust pays the real estate taxes on property owned by the income beneficiary, the trust has actually made a distribution to the beneficiary. If the trust is only paying a capital gains tax, you pay that from principal. If the trust is accumulating income, you pay the entire tax from principal because the accumulated income is transferred to principal at the end of each year and becomes part of the principal. On occasion, when you don’t transfer accumulated income to principal, you pay taxes on the ordinary income of the trust from the income side, and the capital gains taxes from the principal side. To the extent that income is available in the trust to pass out to a beneficiary, that tax payment becomes an income distribution, and the beneficiary will receive a Schedule K-1 from the trust. Unlike individuals, who may deduct state sales taxes rather than state income taxes, state sales tax deductions aren’t available for trusts. After all, trusts don’t buy anything except for services, and those services typically aren’t subject to sales tax.

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Estate Planning Schedule K-1 for Estates and Trusts: General Information

Article / Updated 12-21-2021

An estate or trust’s income retains its character, and so beneficiaries must be informed of this character. The Schedule K-1 (Form 1041) gives the beneficiary the specific allocation between all items of income, allowing easy transfer from the K-1 to the beneficiary’s Form 1040. When there is one income beneficiary, the total amount of the income distribution deduction (IDD) is shown on a single Schedule K-1, with allocations made between the different types of income. When there are multiple beneficiaries, you’re required to prepare a separate K-1 for each, with the total IDD divided among the beneficiaries on their K-1s in the same proportion as the distributions were made. Schedule K-1 allows your beneficiary to separate his or her income distribution into all the sorts of income received by the trust or estate. Because it is an attachment to Form 1041, you must distribute a copy of it to the income beneficiaries no later than the due date for Form 1041, as extended. Remember, the beneficiaries can’t prepare their 1040s until they receive their K-1s from you. Part I: Information about the estate or trust In Part I, fill out the tax identification number (the TIN), the name of the estate or trust, and the fiduciary’s name and address. You also have the opportunity to check a box to indicate whether and when you filed Form 1041-T, Allocation of Estimated Tax Payments to Beneficiaries (Under Code Section 643(g)). By checking Part I, Box D of Schedule K-1, you tell the beneficiary that he or she now has credit for additional tax payments, even though the trustee originally paid them on behalf of the trust. Code Section 643(g) allows you to assign estimated taxes paid by the trust or estate to individual beneficiaries in the final year of the trust or estate. Because the trust won’t owe any tax in its final year, it doesn’t need the estimated tax payments. Form 1041-T may only be filed in the final year of the trust or estate, is irrevocable, and must be made on or before the 65th day of the year following the end of the trust or estate’s tax year. If you’ve made a Code Section 643(g) election and allocated the estimated taxes, you have to check Box E to indicate it’s the final year of the trust or estate. Part II: Information about the beneficiary Schedule K-1, Part II is about as simple as it gets. On line F, put in the beneficiary’s TIN, and on line G, fill in the beneficiary’s name and address. In Box H, choose between a domestic or foreign beneficiary, whichever applies. If the beneficiary lives in the U.S., no further information is necessary. If the beneficiary resides in a foreign country, you may want to consult with a tax advisor who can check the foreign tax treaties involved and make sure you’re not required to withhold U.S. income taxes on distributions to this beneficiary.

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Estate Planning Estate Planning First Steps: How Much Is Your Estate Worth?

Article / Updated 12-13-2021

Estate planning is all about what you want to have happen to you, your dependents, and your stuff when you’re gone. Estate planning also covers what happens if you’re alive but can’t make decisions for yourself. You may think that you don’t care what happens after you’re gone, but what about the family, friends, and stuff you leave behind? Do you care if the most important person in your life receives anything you may have of value, or are you okay with having the state decide how to divvy up your stuff? Who’s going to go through your underwear drawer? Who will care for your beloved cat or, more importantly, your dependent children? The first thing you need to do when planning your estate is to calculate your gross estate. Then you can employ different estate planning strategies based on the size and composition of your estate. Begin by entering your Net Worth total in Step 1 of the Calculating Your Gross Estate worksheet (shown in figure below), which you can download and print here. If you haven't yet determined your net worth, the Statement of Financial Net Worth Worksheet can help you figure it out. Download here. The number you came up with for your gross estate is probably bigger than you were expecting. That number represents, for most people, the stuff you need to figure out what to do with, and your estate plan tells the world what you want to happen to your stuff when you die.

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Estate Planning Wills and Trusts Kit For Dummies Cheat Sheet

Cheat Sheet / Updated 09-24-2021

Taking the time and attention to write a will and set up a trust — or a couple of trusts — are acts of generosity that your heirs and loved ones will appreciate in their time of grief. To do it right, you need to keep track of the people and papers involved, plan for incapacity, and know what you need from an estate plan, then review your plan regularly and especially after significant life changes.

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Estate Planning How to Produce Annual Trust Accounts

Article / Updated 07-06-2021

Administering a trust is similar to organizing your own finances. However, a trustee must create a trust account for every year of the trust’s existence. This account traces all the activity in the trust from the ending balances of last year’s account to the closing balances at this year’s end. This information will be communicated to the trust’s beneficiaries and the probate court. Assembling trust administration info yearly Trusts divide transactions between principal and income. Although you can format them in a variety of ways, this figure shows a sample account in a form commonly used by most trust accountants. Schedule A minus Schedule B must equal Schedule C, and Schedule D minus Schedule E must equal Schedule F. If all your trust’s assets are held by one bank, brokerage, or law firm fiduciary department, they should send you annual trust accounts. If you’ve scattered the trust’s assets among a variety of financial institutions, the responsibility of compiling all the information into one account becomes yours. Although annual account preparation may seem like a lot of work for little benefit, it’s important for a trustee to do every year. Not only do you pick up any inconsistencies in your recordkeeping this way, but you also create a permanent record of set points in the trust’s timeline. Sample annual account for the XYZ Trust Click here to view this form. Obtaining assents of beneficiaries Once you’ve created an annual account, sign it and provide copies to all the beneficiaries for their assent, or approval. Prepare a summary cover sheet for the account, sign it as trustee, attach it to the six schedules, and provide a copy of the complete packet to the beneficiary. Include a photocopy of that cover sheet, which the beneficiaries then sign and return to you. Signed, these photocopies become the beneficiary’s assent to the account. After obtaining assents from all the beneficiaries, attach these signed documents to the front of your account, and keep the whole everything together in a permanent file. This figure shows a sample cover page, with the assent line included, for the annual account shown in the previous figure. Sample cover page for XYZ Trust annual account Click here to view this sample. Filing with the probate court If your trust is governed by an instrument contained within the Last Will of the trust’s grantor, you may file annual accounts with the probate court. In most cases, the annual account format shown in the first figure should be adequate, but obtain the court’s specific guidelines. Instead of using the cover sheet in the second figure, use the court’s cover. Even if you don't get pressure from the probate court to file the annual account, you are still required to file. Prepare and file accounts in a timely fashion; finding all the financial records you need years after the fact can be difficult.

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