Tuesday, April 9, 2013

Tax And Probate Vital Information

Jack has two reasons to total up what assets his mother owned at her death.  As executor of her estate, he must disclose to the court the value of the assets held in her name only at her death.  The IRS and Illinois Department of Revenue, as always, want to know even more, namely; everything she owned at death whether in her name only, held jointly with others, or was an insurance policy or other investment.

As we wrote about in earlier columns, it is important for estate tax purposes to determine whether or not his mother’s assets add up to less than $4 million.  If the total is less, there will be no estate taxes due to the IRS or Illinois.  

For probate purposes, Jack must account to the court for all that is held only in her name at her death.  If it is less than $100,000 and doesn’t include real estate, he might even be able to avoid probate altogether.

For both the IRS and probate purposes, it is the value of the asset at Jack’s mother’s date of death that is determinative.  The IRS does manage to complicate things a bit by allowing Jack to choose to use an alternate date to calculate the value for estate tax purposes instead, but Jack does not need it.

Illinois complicates the process by requiring a ‘theoretical’ modified federal tax return to be prepared and filed with the state when the taxable estate is more than $4 million but less than $5 million, even though that federal return would not be filed with the IRS. 

For advice about estate planning options to reduce after-death expenses, call our office at (815) 436-1996 for an appointment.  © 2013 Gruber Law Office, Ltd.


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