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Estate Planning Alert: Attention executors and beneficiaries: more time….

Estate tax return deadlines deferred

After months of uncertainty as to Estate Tax filings for decedent’s who died before December 17, 2010, the day the President signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUIRJCA-covered in prior alerts and referred to “the Act”), the IRS announced on September 13, 2011 that the normal six month extension of time to file Form 706-US Estate Tax Return will be available with an extension of time to pay the estate tax that would be due. The due date for the Form 706 for those decedents had been set by the Act as September 19, 2011, nine months after enactment and later than the normal due date for all decedent’s who died before December 17, 2010. Normally, the estimated estate tax must be paid with the request for the extension of time to file.

Carryover basis

Part of the Act included an opt-out of filing a Form 706 to obtain a zero-estate tax result and instead file an information form allocating available basis exemptions to appreciated assets owned by the decedent. The initial due date for this filing on a Form 8939 was November 15, 2011 but the IRS had failed to publish that form. The new due date for those estates filing Form 8939 is January 17, 2012. Representatives of estates are still waiting for Form 8939 and Instructions that will answer several uncertainties.

Penalties on estate beneficiaries waived

Persons who inherited property from decedents who died before December 17, 2010 will be granted relief from late payment and negligence penalties if they had to file their 2010 income tax returns reporting gain or loss on the inherited property, since they had insufficient information on cost basis that could not be provided due to the delay in the publication of Form 8939.

Estates of decedents who died after December 16, 2010 and before January 1, 2011 will also be eligible to extend the filing of Form 706 and the payment of the estate tax until 15 months following the date of death but will be charged interest from nine months following the date of death, the normal due date for estate tax returns. Those estates have a $5 million exemption, adjusted for lifetime taxable gifts and a 35% rate of tax. These estates do not have the option of zero-estate tax and the basis adjustment referred to above.

If you believe you may be affected by any of these tax considerations, please contact:

Roger L. Shumaker

or any of our estate planning attorneys by clicking on the link below:

Estate Planning

Our estate planning and probate services for individuals and families are focused on helping clients meet their estate planning objectives through income, estate and gift tax minimization. Our services include preparation of wills, living trusts, financial powers of attorney, charitable trusts, and related documents. We take a comprehensive approach to the planning process to ensure that the goals of the family are carried out and that the estate is appropriately managed.

Carl J. Grassi, President
600 Superior Avenue, East, Suite 2100, Cleveland, Ohio 44114

Fax: 312.280.8232
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IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments), was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding any penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction matter addressed herein.

© 2011 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.