The IRS has released the final instructions for the 2011 United States Estate (and Generation-Skipping Transfer Tax Return (Form 706), and Guidance on Electing Portability of Deceased Spousal Exclusion Amount (Notice 2011-82).
To help increase awareness of the importance of having up to date health care legal documents (Health Care Power of Attorney, Living Will and HIPAA Authorization), TrustCounsel is offering all three documents for $50 today and tomorrow (September 29 and 30) to North Carolina residents through OurLocalDeal.
Parents - if something were to happen to you, have you done all that you can to ensure that your children are legally protected? Most parents of young children have not done anything at all, or if they have, the planning is often incomplete or outdated.
Every parent of a minor child should have:
Planning for the protection of your children in the event you are longer around is too important to ignore, and is not a "do-it-yourself" project. See an estate planning attorney, who can assist you in preparing a secure future for your children, no matter what their age.
The IRS has now issued the U.S. Estate and Generation-Skipping Transfer Tax Return (Form 706) and draft instructions for decedents dying in 2011.
The federal estate tax return and any tax is due nine months after the date of death, although a six month extension for filing (not paying) is available. This year the estate tax exemption is $5 million. Estates valued under that amount are not required to file a return, but the executor of an estate of someone married at the time of his or her death may wish to do so to ensure that the surviving spouse can take advantage of whatever part of the $5 million exemption was not used by the decedent.
The proposal from the White House includes:
IR-2011-91 (emphasis added):
WASHINGTON — The Internal Revenue Service announced today that large estates of people who died in 2010 will have until early next year to file various required returns and pay any estate taxes due. In addition, the IRS is providing penalty relief to certain beneficiaries of these estates on their 2010 federal income tax returns.
This relief is designed to give large estates, normally those over $5 million, more time to comply with key tax law changes enacted late last year. Revised versions of the estate tax forms are now available on IRS.gov, and the carryover basis form will be released this fall.
The IRS is providing the following relief:
Large estates, opting out of the estate tax, now will have until Tuesday, Jan. 17, 2012, to file Form 8939. This special carryover basis form, required of estates making this choice, was previously due on Nov. 15, 2011. Because this is a change in the specified due date rather than an extension, no statement or form needs to be filed with the IRS to have this new due date apply.
2010 estates that request an extension on Form 4768 will have until March 2012 to file their estate tax returns and pay any estate tax due. Normally, a six-month filing extension is automatically granted to estates filing this form, but extensions of time to pay are granted only for good cause. As a result, most 2010 estates that timely file Form 4768 will have until Monday, March 19, 2012 to file Form 706 or Form 706-NA. For estates of those dying late in 2010 (after Dec. 16, 2010 and before Jan. 1, 2011), the due date is 15 months after the date of death. No late-filing or late-payment penalties will be due, though interest still will be charged on any estate tax paid after the original due date.
Special penalty relief is provided to many individuals, estates and trusts that already filed a 2010 federal income tax return, or obtained an extension and plan to file by the Oct. 17, 2011 extended due date. Late-payment and negligence penalty relief applies to persons inheriting property from a decedent dying in 2010, who then sells the property in 2010 but improperly reports gain or loss because they did not know whether the estate made the carryover basis election. Details are in Notice 2011-76, posted today on IRS.gov.
The Tax Relief Act of 2010 included a spousal portability provision for the $5 million estate tax exemption. If a married person dies after December 31, 2010 and does not use all of his or her exemption, the unused portion can be transferred to the surviving spouse.
For example, if husband dies and uses $1,000,000 of his exemption on bequests to his children, with the remainder of the assets passing tax-free to his wife, she can add the remaining $4 million of the husband's exemption to her exemption (making her total exemption $9 million under current law).
To take advantage of portability, however, the unused exemption must be transferred from the estate of the first spouse to die to the surviving spouse. This can be done only by filing a federal estate tax return (Form 706), even if no tax is due. If the return is not filed, any excess exemption is forfeited and cannot be used at the death of the surviving spouse.
Form 706 is due nine months after the death of the decedent, with a six month extension available. Executors should file extensions now for decedents who died in early 2011 since the final 2011 Form 706 is not yet available.
The IRS has announced that residents of the following North Carolina counties qualify for filing and payment relief due to Hurricane Irene: Beaufort, Carteret, Craven, Dare, Hyde, Pamlico and Tyrell.
The tax relief postpones certain tax filing and payment deadlines to October 31, 2011. Included are businesses that earlier received an extension until September 15, 2011 to file their 2010 returns, as well as individuals and businesses that obtained a similar extension until October 17. It also includes the estimated tax payment for the third quarter of 2011, which would normally be due September 15.
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