form 706 martial deduction\community property

"myoceansoul" <myoceansoul[at]yahoo.com> wrote in message
news:4908b1af$0$22260$6c36adad[at]news.usenetserver.com...
- quote -

> I am looking for some help I am working on a Form 706 for a California
> couple in a community property state. The estate is worth $4 million gross
> so were trying to use as much of the $2 million credit as possible income
> to fund the bypass (decedent trust) Half the assets are titled Joint
> tenancy which are mandatory martial deduction which will pass to the
> survivor's trust.
> The other half of the assets are in the name of revocable family trust
> which are considered community propety according to the trust. My question
> is do the family trust titled assets which are community property have to
> be included in the mandatory martial deduction as were trying to use as
> much of the $2million exemption as possible.
> -------------------------------------
Do you mean that 50% of the community property is $4 million or do you mean

that both halves equal $4 million?

When assets are held in joint tenancy but originated with community property
and a step up in income basis for both halves is important, we frequently
file a declaration by the surviving spouse with the probate court to the
effect that he/she always believed the assets were community and was unaware
that community property and joint tenancy were incompatible concepts. The
survivor consents to having the asset treated as a community property
probate asset. If you have a pour over Will, the result would be for the
"joint tenancy" interest to go through probate and be added to the revocable
trust, in which case you can allocate $2 million to the Bypass Trust and the
balance to the Survivor's Trust.

Since you appear to be in Califronia, I suggest that you locate an attorney
who is certified as a specialist in Estate Planning to advise you.

Jon Gallo
- quote -

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myoceansoul[at]yahoo.com (myoceansoul) wrote:

- quote -

> I am looking for some help I am working on a Form 706 for a
> California couple in a community property state. The estate is
> worth $4 million gross

This question doesn't make complete sense in a couple of ways. Do
you mean the decedent's portion is worth $4 million, or that's the
value of what both the spouses have?

- quote -

> so were trying to use as much of the $2 million credit as possible
> income to fund the bypass (decedent trust) Half the assets are
> titled Joint tenancy which are mandatory martial deduction which
> will pass to the survivor's trust.

How in the world can joint tenancy property pass to the survivor's
trust? Was the trust a joint tenant? This makes no sense to me.

- quote -

> The other half of the assets are in the name of revocable
> family trust which are considered community propety according to
> the trust. My question is do the family trust titled assets which
> are community property have to be included in the mandatory
> martial deduction as were trying to use as much of the $2million
> exemption as possible.

Assuming the decedent's portion is worth $4 million by itself, the
marital deduction is already used up based on what you said. The
joint tenancy property should automatically go to the surviving
spouse, so its value will be included in the marital deduction. If
that's half, you've used up the $2 million you wanted to use. The
balance does not need to be included in the marital deduction if the
trust is drafted properly.

If each spouse owns half of the $4 million, your problem is much
smaller but the issues are the same.

Stu

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I am looking for some help I am working on a Form 706 for a California
couple in a community property state. The estate is worth $4 million gross
so were trying to use as much of the $2 million credit as possible income
to fund the bypass (decedent trust) Half the assets are titled Joint
tenancy which are mandatory martial deduction which will pass to the
survivor's trust.
The other half of the assets are in the name of revocable family trust
which are considered community propety according to the trust. My question
is do the family trust titled assets which are community property have to
be included in the mandatory martial deduction as were trying to use as
much of the $2million exemption as possible.

-----



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Tax and Accounting Software Forums
Web and RSS access to your favorite newsgroup -
misc.taxes.moderated - 17270 messages and counting!
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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >