When interested parties of a trust or estate enter into disputes, cost and complexity result.
Administering trusts and estates across state or national boundaries creates complexity in both filing ancillary probates and taxation issues.
When a trust or estate has liquidity problems, it may be necessary to disallow claims, negotiate work-outs, or even solve the issues with Bankruptcy.
Estate and Trust laws allow spouses and families of deceased persons to assert claims and take a portion of the estate in some instances.
For larger estates with values in the millions, tax filings are necessary and post-mortem tax planning can make a tremendous difference to the estate. Planning ahead of time with trusts and gifts is the most effective way to address taxes, though a number of options are available after death as well.
Closely held businesses might need to be sold or liquidated to cover estate taxes unless careful planning is put into place ahead of time. While some post-mortem planning and tax elections can be helpful in transitioning businesses, the rules are complex and the consequences considerable.
The taxation of trusts and estates, addressed in Subchapter J of the Internal Revenue Code, is a complicated and important set of rules. Understanding how trust and estate income and distributions can impact tax attribution and tax rates is critical to efficiently managing trusts and estates.