If you have created a living trust, after you die certain things must happen. These steps ensure compliance with state law and preserve federal estate tax exclusions. Changing titles to assets is another task in this process. Such trust administration can be complex depending on the assets involved.
The first step is to appraise assets and take an inventory to determine net worth for federal estate taxation. Estates valued at over $5 million require filing of a federal estate tax return. Income taxes must be taken care of as well. If your death results in irrevocability of the trust, heirs and beneficiaries must be notified. Your will must be filed according to state law. Death notices must be sent to the county where you owned property.
An exemption trust will reduce or eliminate federal estate taxes. Your surviving spouse will need to ensure that the steps described above are completed, and transfer assets to the exemption trust. Other state and federal requirements might necessitate additional income tax returns, so your spouse should be prepared to work with a CPA.
If your spouse does nothing in terms of trust administration after your death, then the exemption trust doesn’t exist and tax benefits to the estate are lost. This can result in higher taxes to the estate.
Unsworth LaPlante, PLLC in Vermont can help with trust administration.