Hopefully Simple Questions On Estate Tax

I reside in California.

My wifes father passed away 2 months ago and we have finally found all the paperwork.
He had a personal trust that was created in 2001. In the trust it specifies that a commercial property he owned actually will go to my wife. We also have a copy of the marital property agreement that he drew up in 2005 when he married his 3rd wife (Now his Widow) that also secifies that the same commercial property goes to my wife.We have an appraisal that estimates the commercial property value at about $2.75 million with a current mortgage balance of $950,000.
We have no idea what was left to his wife other that a few obvious things like the home and their car, we have no Idea the amounts of any accounts that he may have had. For Estate tax purposes, would his widow be responsible for filing the tax return and do we then total up the entire estate, the items left per the marital agreement with his Widow and the appraised value minus liabilities of the Commercial Building left to my wife and file one tax return and if so how do we determine what percent of the Estate Tax is paid by my wife and by her Fathers Widow. Of course I am assuming total assets for all will be over 2 Million total. We are also wondering who is responsible for paying the CPA to do the tax return.
Any Advice Would Be Gratefully Appreciated

This could be easy, or it could be a bit complicated, depending on whether your wife gets along with her stepmother, and whether her father had more than one trust. You might start with the premarital agreement: can you tell whether there is any community property in their marriage? If not, did he hold all of his separate property in the personal trust, including the property passing to his wife? If so, look for amendments to it after they got married. A key question is who is the successor trustee.

Technically, anyone who receives property from a decedent is reponsible for filing an estate tax return. Practically, it probably depends on who is the successor trustee under the trust. (If there is more than one trust, the two trustees can get together to decide.)

Fortunately for your wife, it appears from the facts you gave that a return will need to be filed, but that it will not show a taxable estate. The value of the property passing to the wife is deducted (the marital deduction) so the net of what's left is under 2 mil.

With this much at stake, does your wife plan on seeking legal and tax help just to make sure that everything turns out OK?

We will be working with an estate attorney as soon as we have a fairly good understanding of the information at hand and are able to understand the advice he will give us., Her brother is the trustee on my wifes dads trust and successor on the trust that holds the marital property agreement between his father and his widow. Should we request the trust and full marital agreement and amendments from his widow seeing as my wifes brother is the successor trustee for the trust that holds the marital agreement? Does he have the right to request that?
Thanks Again

Your brother needs to get with the program. He is in charge of this estate that is in trust. You should get a copy of everything also.

You said, you "have found all of the paperwork". Does that include the Trust?

I am sorry, maybe I didnt make myself clear, yes we have my Wifes Fathers Trust From 2001 that specifies that said commercial property goes to my wife. My Brother-in-law is the trustee. We have a few pages sent to us by the deceased widow stating that the comercial building was to be my wifes and was excluded from the written marital agreement in a seperate trust that was between the deceased and his widow, we have the papers that address that issue. My Brother-in-law is also the successor trustee on the trust between the deceased and his widow.
My question is who files the final tax return and should it include all assets that the wife inherited from their seperate trust (from Husband To Wife) and the commercial property that my wife recieved from an earlier dated trust that was in her Fathers name. Or should we file 2 seperate returns. Each one a full accounting of what each individual recieved. I know there is a 2 Million dollar limit for estate taxes, what happens if she has 2 million dollars from the death of her spouse per their marital agreement and we have a 1.75 million dollar from the inheritance of the commercial property from his personal tust dated in 2001.
Thanks again in advance

my educated guess on a few points :

1) 1 person died. the feds are gonna want to see only one estate tax return filed, if it is necessary.

2) there is no limit on the amount that one can pass on to a spouse.

3) if that amount passed on outside of the marital deduction is greater than the limit, then an estate tax return needs to be filed, and taxes paid.

Does the trust allow or instruct that the property be sold? Unless your wife can afford to continue making the mortgage payments on her own, a sale is the only way she is going to realize a financial benefit here.

You truly need the services of a trust attorney and a CPA.

Does the trust name any other beneficiaries besides your wife?

Does the 3rd wife know about this personal trust? Your attorney will need to advise you on whether the 3rd wife would or would not have grounds to contest the personal trust or whether it should or should not have been updated with the 2005 agreement.

Also need to be finding out if he had other assets (will or other trusts) that would have the financial resources to be able to afford to pay off the $950,000 mortgage or not.

DANDY DON IN OKLAHOMA ([email protected])