Question re: 706

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James Neilson

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Aug 9, 2022, 7:10:10 AM8/9/22
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My question is regarding claiming portability on a 706.

In the past when filing a 706 for the first to die of a married couple that had a A B Trust, we would split the assets in half.  Half the assets would go into Trust B for the decedent, using their personal exemption.  The other half going into Trust A of the surviving spouse.

When the surviving spouse died Trust B would not be included in the estate of surviving spouse and would go to named beneficiaries.

Under current law and with the exemption being  11.7 million dollars, A B Trust are now non existent.

My question  is in filing a 706 under current law and  preserving all of the 11.7 million exemption, what is the best way to do this?

I believe the best way to do this is not how we have done this in the past, but for the first to die spouse to utilize to its fullest the unlimited Marital Deduction and give everything to surviving spouse, thus preserving 100% on the deceased 11.7 million exemption for portability election.  This would then make available at the surviving spouse's death potentially 23.4 million dollars to reduce estate taxes with.

I would appreciate some input into this to make sure this would be the proper way to file a 706 under current law.

Thanks
Jim 


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Tom Cox

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Aug 9, 2022, 1:26:21 PM8/9/22
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I think Jim is correct, plus under the old A&B trust the assets in the B trust do not receive a step in basis when distributed at the death of the 2nd to die. 

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Diana Skocypec

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Aug 9, 2022, 2:15:26 PM8/9/22
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The ATG for Estates and Trusts references the auditor looking for community property rules on the state level. I don't know if that would affect Jim's analysis.
The portability 706 I prepared (my only one so far) took into account the community property ownership rules which still left a very large sum to transfer to the surviving
spouse. The trust itself was drafted under the old AB rules, but three different attorneys advised that it was not necessary to do the split.


On Tue, Aug 9, 2022 at 4:10 AM 'James Neilson' via ClientWhysConnect <clientwh...@googlegroups.com> wrote:
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