Final regulations ease partial disclaimers

Article Abstract:

Final regulations adopted under Section 2518 of the Internal Revenue Code are discussed that facilitate disclaiming less than an entire interest in an inherited estate. Other changes (interests by custodians or beneficiaries, what constitutes a qualified disclaimer of an interest, effects of qualified disclaimers, joint ownership and joint tenancy) are also discussed. The new final regulations are more flexible than those in the past with respect to heirs' refusals to take possession of inherited property in order to avoid payment of inheritance and gift taxes on the estate.

Tax administration and procedure, Tax administration, Transfer taxes

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New law severely restricts ability to use estates and trusts as income shifting devices

Article Abstract:

Under the Tax Reform Act of 1986, estates and trusts will be less attractive as a method of shifting income. The new law changes the rate of income taxation for estates, grantor trusts, unearned income of children under 14, and generation-skipping income transfers. The application of these new tax rules under the recently enacted law is discussed in terms of estate and tax planning strategies. In general, the higher tax rates applicable to estates and trusts minimize their usefulness as tax-saving planning alternatives.

Finance, taxation, & monetary policy, Analysis, Tax reform, Income shifting

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Estates and trusts file the same return, but use different rules

Article Abstract:

Trusts and estates under administration are required to file a Fiduciary Income Tax Return, Form 1041. The income tax treatment for trusts and estates, though similar, varies in the consideration of distributions. Trusts generally have fewer options in tax planning. Estates, however, may defer estimated tax payments, recognize loss in the sale of certain property to beneficiaries, and have latitude in the selection of tax year.

Tax returns, Estates (Law)

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