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      Phone: (305) 757-9255 | KayLewisEsq@LewisLawOfficePA.com       

Tuesday, April 26, 2016

Basis/Value reporting on IRS Form 8971

With the new asset basis/value reporting requirement for Estates, Form 8971 (Schedule A) is now being used to report to recipients the basis(value) of inherited assets in compliance with the "consistency rule" of IRC 1014(f). With the consistency rule, heirs are provided with the tax basis of assets they receive. For some this is a wonderful informational tool so that years will not pass and they suddenly need to determine their own tax reporting basis upon disposition. For others who serve as the executor or personal representative of a taxable estate it is a burden to them as they now must send Schedule A within 30 days after filing of the Estate's Form 706 or the due date of the 706 with extensions, whichever is earlier. Supplemental statements are also required for changes in value that make the prior statement incomplete or incorrect.

If no estate tax is due, then the consistency rule does not apply to any assets in the estate. However, if an estate tax is due, then the consistency rule applies to ALL assets in the estate not excepted. Exceptions include assets for which there is a marital or charitable deduction and tangible personal property for which an appraisal is not required (under $3K in value). 

This applies to returns filed after 7/31/15.  A recent notice (IRS Notice 2016-27) provides that Forms 8971 due prior to 6/30/16 are not due until 6/30/16. This provides a long extension for 706's filed between mid 2015 and mid 2016.

Other items not listed on a Schedule A include: Cash (other than coin collections), IRD, property sold or disposed of by the estate where gain/loss is recognized. 

The responsibility to report values does not end until all values are "final". Caution is also to be used for a reporting requirement when there is a subsequent transfer to a related transferee by a beneficiary.  

4:02 pm edt 

Wednesday, August 12, 2015

The Florida Enhanced Life Estate

Florida is one of only a few states that recognize an "Enhanced Life Estate Deed" which is commonly known in other states as a "Lady Bird Deed." With the ability to have a life estate deed to pass property automatically upon death to a named recipient, Florida residents can bypass the need for probate of the family home to pass it to their heirs. Thus, if a person has a relatively small estate not otherwise needing probate (except for the required filing of the Last and Testament), then the use of an Enhanced Life Estate Deed can simplify their estate planning needs and allow them to focus more on the naming of agents for their other documents such as a Durable Power of Attorney, Healthcare Surrogate or HIPAA information recipient.

One of the primary reasons for using the Enhanced Life Estate Deed is to avoid probate; however, the benefit for the current owner is that they retain the full right to sell, use or otherwise deal with their property without the need of obtaining the consent of the future recipient, known as the "remainderman." Since the remainderman will receive the property only if the current owner still owns it at death, their possible interest in it is considered contingent, and they will have no control over what the current owner does with the property. This ability of the current owner to do as they please with the property without involvement of the remainderman is what makes this deed preferable to many individuals over the customary life estate deed which gives the remainderman a current right in the property.

Another feature of the Enhanced Life Estate Deed is that it is not determinative of the warranty of title to the property. Therefore, it can be used regardless of whether the property is being transferred by quitclaim deed, special warranty deed or warranty deed.  This tool is becoming more popular with un-remarried widows and widowers in Florida to allow for the passage of their home without probate should they still own it at death. 

If you would like to know more about this type of deed for use in estate planning, please contact us and we will be happy to meet with you to discuss your options. 


12:05 pm edt 

2016.04.01 | 2015.08.01

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Lewis Law Office, P.A. was founded in 1998 to provide dedicated counsel and highly personal legal services to individuals and businesses. Having practiced law over 25 years, Kay Lewis strives to provide the highest quality of legal service with consideration of the client’s desires to take care of their current and future needs and their planning objectives. Kay Lewis has frequently lectured on topics including, Estate Planning, Federal and State Taxation, Corporations, and Estates, Wills and Trusts. Before beginning her law practice Kay Lewis practice tax preparation and accounting, and in 1990 she became a Certified Public Accountant (CPA) in Mississippi and in Florida in 1997. Following an internship as a prosecutor with the Leflore County District Attorney’s Office in Greenwood, Mississippi, Mrs. Lewis began the private practice of law in 1989 with a Firm in Jackson, Mississippi, later relocating to Southeast Florida where she has maintained her law practice since 1996.

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