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| SAVING $235,000 BY FILING ONE SIMPLE FORM SOURCE: RECER EXPERIENCE. A young widow whose husband had died 8.5 months previous came to see me and told me of her circumstances. Her husband had left her with an estate of $1,100,000, consisting of stock, insurance proceeds and land. When designing his estate plan, her husband had provided for a By-Pass Trust and had funded it with over $600,000 of assets. She had worked with her accountant, who brought her to see me. In addition, she had seen an attorney and a stockbroker. I asked if she had filed the requisite IRS Form 706, Federal Death Tax Return, as required within 9 months of death. She said that one of her advisors had told her she didn't need to do so. Evidently, she had received conflicting advice from the three advisers and had taken the path of least resistance; she had followed the advice of the one who told her to do nothing. I talked with the stockbroker in Kansas City and with the accountant and explained that she needed to file the Form 706 in order to "pay all the tax" that would ever be due on the husband's estate. Of course the amount of tax is zero. Failing to do that would result in all of the husband's estate being included in her taxable estate. It would result in the actual loss of the benefit of the second lifetime exemption of $600,000. The tax loss if she died in the next year, for example, would be about $185,000. When one spouse dies, the other spouse should be certain to file a Form 706, Federal Death Tax Return, if needed. Seek the advice of your accountant and attorney. |
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