Trust & Estate Tax Preparation

Estate Tax Preparation

An Estate Tax Return is the last tax return a person will be responsible for, and will likely be done after their passing. The Estate Tax Return is the snapshot of everything that person owned or was obligated to as of the date of death. All assets, liabilities, personal property, insurance, investments are included on this return. However, only those people with more than $5 million in asset value are required to file this type of return with the IRS. The Commonwealth of Massachusetts excludes up to $1 million in asset value. Also good to know is that the federal and Massachusetts Estate Tax rate is higher than most individual income tax rates; in Massachusetts that rate is 35 percent.

Trust Tax Preparation

As an attorney as well as a CPA, I understand how to draft trusts and the tax reporting implications for each type of trust. Many people think trusts are a tax shelter, but they’re actually used more for liability. Trusts can be a grantor, which passes through income or loss to the beneficiary. They can also contain rental properties, investment income, businesses and other elements.

People create trusts to accomplish a few specific goals:

  • To keep assets out of probate and protect them from creditors
  • To shelter assets from Estate Taxes
  • Long term care planning – to protect assets such as your home from the ‘look back’ that Medicare and nursing homes conduct. Currently, the ‘look back’ period is currently five years, but it’s recommended that you create this type of trust 10 years before you think you’ll need these services.
I would like a free consultation about my trust or estate tax situation.

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