Source: http://www.lawfirms.com/resources/estate-planning/beneficiary-fiduciary-liability-part-three.htm
Timestamp: 2016-08-24 01:32:21
Document Index: 94013870

Matched Legal Cases: ['§6901', '§6324', '§6901', '§3713', '§2501', '§6324', '§\n6324', '§733', '§733', '§3713', '§733', '§733', '§6334', '§6334', '§6334', '§193']

Beneficiary and Fiduciary Liability: Part Three | Lawfirms.com
When and How to Contest a NY Last Will and Testament So You Think You Want to Revoke an Irrevocable Trust? What exactly is elder law? The Basics of the Probate Process Five Reasons to Have a Will in Florida This space intentionally set to be hidden. Beneficiary and Fiduciary Liability: Part Three
Roth IRA Conversion: Opportunities for 2010 and Beyond
Trust Taxes:
Every estate and trust beneficiary (heir, legatee, and
devisee) must be appraised of their
potential for personal liability for unpaid estate taxes under IRC §6901(a)(1)
(probate estate) and §6324(a)(2) (non-probate assets included in the decedent's
gross taxable estate). Pursuant
to IRC §6901, the liability of a transferee is similar to that of the
transferor under §3713. A beneficiary’s transferee liability
will be limited to the value of assets transferred to them (Commissioner v. Henderson's Estate, 147
F.2d 619 (5th Cir. 1945)). Gift
IRC §2501, a donor (party making a gift) will bear primary responsibility for
paying any tax liability associated with a gift. This will not preclude a donee, under IRC §6324, from being held liable for the applicable gift tax. Transferee liability will hold the donee personally
liable for the applicable gift tax (the donor's tax deficiency), up to the value of the gift, even if the gift received did
not contribute to the unpaid gift tax liability (U.S. v. Botefuhr, 309 F.3d 1263 (10th Cir.
2002). IRC §
6324 further provides that the tax lien shall remain in place for ten-years
from the date the gifts are made. The liability will immediately arise once the
donor fails to pay the applicable gift tax (Poinier v. Commissioner, 858 F.2d 917 (3d Cir. 1988)). FLORIDA
Florida law, a claim for federal taxes (income, estate or gift) will not be subject
to F.S. §733.702, §733.710 or the requirement that a
creditor claim be filed in probate proceedings (U.S. v. Stevenson, 2001-2 USTC
¶50,371 (M.D. Fla. 2001)). The IRS can provide
notice of the tax liability to the fiduciary by sending Form 10492. The federal
tax obligation will then receive preference over all other claims against and
obligations (state inheritance taxes, and other expenses) of an estate (Rev. Rul. 79-310,
1979-2 C.B. 404).
As a result, even if the IRS fails to file a
claim against an estate, the Fiduciary should actively assert the U.S.
Government’s priority under IRC §3713. Florida Statutes:
Florida Statutes §733.801 and §733.802 may be utilized to protect a Fiduciary
by limiting the circumstances under which they will be required
to either pay or deliver a devise or distributive share to a beneficiary. The limitations include: (i) not earlier than
five (5) months after the granting of letters of administration; and (ii) compelled,
prior to final distribution, to pay a devise in money, deliver specific
personal property, unless the personal property is exempt personal property.
Even then, unless the beneficiary establishes that the assets will not be
required for the payment of estate and inheritance tax, a claim (debts,
elective share, expenses of administration, etc.), provide funds for
contribution, or to enforce equalization in case of advancements. If the administration of the estate is not
completed before the entry of an order of partial distribution (devise, family
allowance, or elective share) a court may require the beneficiary to post a
bond with sureties and require them to make contribution, plus interest, if it
is later determined that there are insufficient assets. Homestead Property:
Federal tax law,
accept as provided under IRC §6334,
Property Exempt from Levy, will preempt Florida’s exempt property statutes and
constitutional homestead protection laws. The preemption will allow the IRS to impose
a federal tax lien or levy on personal assets of an estate or trust for collection
(In Re Garcia, (S.D. Fla. 2002) or homestead property (Busby
v. IRS, 79 A.F.T.R. 2d 97-1493 (S.D. Fla. 1997)). IRC Section 6331 permits the United
States to collect taxes of a delinquent taxpayer by levy on all property and
rights to property unless exempt under section IRC §6334. IRC §6334
specifically provides that a “principal residence
shall not be exempt from levy if a judge or magistrate of a district court of
the United States approves in writing) the levy of such residence.”
Under Florida law, a
Fiduciary is obligated to notify the county property appraiser of a decedent’s
death and their property’s ineligibility for the homestead tax exemption. F.S. §193.155(9) provides that a Fiduciary’s
failure could result in the assessment of penalties and interest. In addition,
if the property was not entitled to a homestead property tax exemption, the statute provides for the imposition
of: (i) a lien against the real property; and (ii) imposition of taxes,
interest, and a penalty equal to fifty (50%) percent of the unpaid taxes
resulting from the incorrect classification. This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter. If you need help with Estate Planning please click here to consult with Marc J. Soss, or an Estate Planning Lawyer in your area.
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