Estate Planning Action Steps

By Shenkman, Martin M. | Journal of Accountancy, October 2011 | Go to article overview

Estate Planning Action Steps


Shenkman, Martin M., Journal of Accountancy


CPAs should play a more significant role than they often do in facilitating, implementing and monitoring client estate plans. National Estate Planning Awareness Week, Oct. 17-23, is an ideal time to encourage clients to address planning. Here are some practical steps practitioners should consider:

[check] If you're filing a Form 1041, U.S. Income Tax Return for Estates and Trusts, be certain that you have a copy of the fully executed trust in your file. You must ascertain whether the trust is revocable or irrevocable, a grantor trust and to whom, whether annual demand or Crummey powers are required, and whether the trust is exempt from generation-skipping transfer tax. Many of these issues are complex, but all need to be addressed properly. Recommend a meeting with the client and the attorney who drafted the trust so all operational and reporting issues are clear.

[check] If children or other heirs are being issued Schedule K-1s for the first time or for greater amounts than the prior tax year, make sure appropriate gift tax returns have been filed reporting the transfers. Do you have a current operating agreement (limited liability company) or partnership agreement (family limited partnership) in your permanent file that matches the ownership interests reflected on the K-1s? If annual gifts were made, has the entity's attorney addressed whether those interests properly qualify for the gift tax annual exclusion?

[check] When reviewing a Form 1040, U.S. Individual Income Tax Return, check to see whether each spouse has assets in his or her name. Often, estate planners counsel clients to divide assets to facilitate funding a bypass trust. If Form 109%, K-1s, property tax bills, etc. are predominantly in the name of just one spouse, it may be a tip-off that proper asset division has not been addressed.

[check] Use your knowledge of clients' finances to help them establish an estate plan. …

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