Trust and Estate Services

Trusts

A Trust is a formal legal instrument with instructions for the Trustee, Successor Trustee as to how to manage and handle the assets left to their stewardship for the benefit of one or more beneficiaries and/or remainder men.  The Trustee can be the grantor of the Trust, or one of the beneficiaries or a third party.  In general the estate attorney drafts the trust specifically for the particular client and their wishes.  Careful consideration should be taken when choosing the Trustees.  They should be individuals which are able to understand the mechanisms of the Trust and understand the duties and responsibilities.  The Trustee can be an individual or an institution. If the Trustee is a person, they should be responsible and be able to act timely and efficiently. 

There are many different types of Trusts for many different purposes.  The Trust may exist for the education of a minor child, or caring for a spouse, or protecting a person with special needs, or many other purposes.  Trusts can be an effective tool in Estate planning.  They can be used to reduce estate taxes, but more likely in recent years, they are for the protection of the beneficiaries. 

Trust Tax Returns –

In general Trusts file their tax returns on a calendar year basis.  The filing date is generally April 15th.  Trusts file Form 1041 and, in general, are taxed on their net income.  If, however the Trust makes distributions to the beneficiary (ies) by certain dates the income may be taxed to the beneficiary (ies) instead of the Trust. The specifics of the taxes to pay and who pays them are dependent upon the terms of the Trust and the elections by the Trustee.  We assist our clients in making those elections by explaining the ramifications of the variety of allowable actions.

Estates

Estates are formed when a person passes away. We support the families and personal representatives of the decedents by helping to manage the Estate. We serve as the personal representative of the estate as requested. We work closely with the Register of Wills and the family in administering the Estates through the probate process. We work closely with the attorney and personal representative to prepare the required Estate inheritance returns and appropriate income tax returns for the Estate. Estate planning with Thompson Tax Associates is easy and gives you peace of mind about the future.

An Estate is created when someone passes away.   The Estate or Probate process is overseen by the local court which requires certain documents to be filed on a particular time schedule and follows along to be sure the assets of the decedent are smoothly and effectively passed along to the heirs.  A personal representative or Executor is appointed by the court and is empowered to marshal the assets.  Certain statutory time limits must be met depending upon the jurisdiction.  Over the time then the assets are transferred to the beneficiary (ies) either in kind, or are sold and cash is distributed.

If a person has real estate or business interests in more than one jurisdiction they will most likely be required to go through the Probate process in all jurisdictions.  Local legal assistance will most likely be required.  It may be possible through careful titling of assets and use of a Trust to reduce or eliminate the Probate process.  Careful consideration and consultation with legal and tax experts is imperative to making the best decisions.

Estate Tax Returns –

Estates may file their tax returns on a calendar year basis, or they may choose a fiscal year basis.  The longest fiscal year ends on the end of the month prior to the anniversary of death.  The filing date is generally 3 ½ months following the end of the fiscal year.  If the Estate is also very connected to a Trust for the same person, they may be able to file one combined return.  There are numerous reasons why this may be beneficial, the most popular are capturing deductions and reducing the number of tax returns needed.  Estates file Form 1041 and, in general, are taxed on their net income.  If, however the Estate makes distributions to the beneficiary (ies) by certain dates the income may be taxed to the beneficiary (ies) instead of the Estate. The specifics of the taxes to pay and who pays them are dependent upon actions and Elections by the Personal Representative. We assist our clients in making those elections by explaining the ramifications of the variety of allowable actions.