What is the name of your state? nm
my father in law passed away in aug of 2003.
my sister in law is the trustee to his estate.
before he passed he set up a revocable trust, which became irrevocable upon his passing.
he left a gross estate of 1,014,000 dollars and a taxable estate of 990,000dollars.
according to the first and final report from the trust, dated from aug 2003 to aug 2005, the status of the trust was good. it says that the trustee had collected all assets belonging to the trust, filed and paid all taxes and had paid all debts, and trust expenses, allowing the trust to be terminated and the remaining assets distributed to the heirs.
there were also trust income receipts of 70,000 dollars included in the gross estate.
the final report claims that the trustee filed estate taxes form 706 and ca form et-1 she received an irs tax closing statement in aug of 2005. also, she filed fiduciary returns as well as the fathers final personal income tax return.
the only return she hadnt filed by this time, was one more fiduciary return for the winding up of the administration of the estate.
there is a reserve of 15,000 dollars held aside in the trust for any unexpected expenses .
in the final report it says that the trustee is responsible for paying all federal ,state and foreign death taxes, debts , last illnesses and funeral expenses then distribute the principle to the five beneficiaries, including herself, evenly.
the money in his gross estate came from bank accounts, savings, cd's , life insurance, the sale of his house, and a couple ira accounts, but was included in the gross estate, also.
after almost three years, the irs is questioning the money my husband received as an inheirtance, saying it was from trust income.
we are confused, there was a will, , and a trust that went through probate, and we were under the understanding that since the trustee paid all the taxes, any distributions to my husband would be tax free .
the question is, since the trustee paid estate tax, state tax, fiduciary taxes, and the personal income tax (state and federal) for the father, isnt it wrong for the irs to ask for us to pay an additional tax on the inheritance?
everyhting i read, including irs publications say that there might be tax owed, and that the estate , or the beneficiary must pay, but it is never taxed to both.
and since the trustee did this under the scrutiny of an attorney, a cpa, and the california probate court, can the irs come after us? isnt that something like double taxation?
in my opinion, it seems more like its been taxed five times. six, if we have to pay, too.
please respomd, or direct me to someone who should be able to give me the answer i need.
thank you for your time.
my father in law passed away in aug of 2003.
my sister in law is the trustee to his estate.before he passed he set up a revocable trust, which became irrevocable upon his passing.
he left a gross estate of 1,014,000 dollars and a taxable estate of 990,000dollars.
according to the first and final report from the trust, dated from aug 2003 to aug 2005, the status of the trust was good. it says that the trustee had collected all assets belonging to the trust, filed and paid all taxes and had paid all debts, and trust expenses, allowing the trust to be terminated and the remaining assets distributed to the heirs.
there were also trust income receipts of 70,000 dollars included in the gross estate.
the final report claims that the trustee filed estate taxes form 706 and ca form et-1 she received an irs tax closing statement in aug of 2005. also, she filed fiduciary returns as well as the fathers final personal income tax return.
the only return she hadnt filed by this time, was one more fiduciary return for the winding up of the administration of the estate.
there is a reserve of 15,000 dollars held aside in the trust for any unexpected expenses .
in the final report it says that the trustee is responsible for paying all federal ,state and foreign death taxes, debts , last illnesses and funeral expenses then distribute the principle to the five beneficiaries, including herself, evenly.
the money in his gross estate came from bank accounts, savings, cd's , life insurance, the sale of his house, and a couple ira accounts, but was included in the gross estate, also.
after almost three years, the irs is questioning the money my husband received as an inheirtance, saying it was from trust income.
we are confused, there was a will, , and a trust that went through probate, and we were under the understanding that since the trustee paid all the taxes, any distributions to my husband would be tax free .
the question is, since the trustee paid estate tax, state tax, fiduciary taxes, and the personal income tax (state and federal) for the father, isnt it wrong for the irs to ask for us to pay an additional tax on the inheritance?
everyhting i read, including irs publications say that there might be tax owed, and that the estate , or the beneficiary must pay, but it is never taxed to both.
and since the trustee did this under the scrutiny of an attorney, a cpa, and the california probate court, can the irs come after us? isnt that something like double taxation?
in my opinion, it seems more like its been taxed five times. six, if we have to pay, too.
please respomd, or direct me to someone who should be able to give me the answer i need.
thank you for your time.