Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

We have a will with a bypass trust set up, and I see no problem

should I die first....
We have a will with a bypass trust set up, and I see no problem should I die first. But what happens if my wife dies first as her assets appears to be worth only $850k.

I have $3400K in an IRA, $1700k in a ROTH, plus I would have about $450k after her death.

If I die two months later, will there be Estate taxes due? If so, what can I do to avoid them.
Show More
Show Less
Ask Your Own Tax Question
Answered in 12 minutes by:
10/7/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,663
Experience: Taxes, Immigration, Labor Relations
Verified

Lev :

Hi and welcome to our site!
In case of the bypass trust - there is NO difference who dies first.
I hope you both will live long enough
The main purpose of the bypass trust is to utilize unlimited spousal estate tax exclusion and ensure that property will not be subject to estate taxes when the second spouse dies.
It doesn't matter if you die two months later your spouse as your spouse's part of the bypass trust becomes irrevocable on the day she dies. The only matter which spouse dies first.

Lev :

Without using a bypass trust - all assets will be included into the estate of a second spouse, by with the bypass trust - the second spouse still may use inherited assets but will not include these assets into his/her estate.
Please be aware that in case when an IRA account is part of your estate - and you want the trust to be a beneficiary - there will be certain distribution rules.
If your spouse is a beneficiary of your IRA account - she generally may treat that account as her own. That might be especially helpful in case of Roth IRA because there is no RMD - and if you die first - she will be able to maintain deferral status in that account as long as she is alive.
So - you might want to plan carefully - and might want to leave some of your assets outside the trust.

Customer:

I understand the reason for the bypass trust and I understand the RMD of regular IRA's vs ROTH IRA's> My question concerns more about how the bypass trust is funded. In the case where she dies, I can see only $850k as available for funding the bypass trust, as that would be her net worth at her death. That would still leave me with an IRA worth $3400 and a ROTH worth $1700k and another $450k which results from the division of our joint assets. That totals to $5550k,

Customer:

Hit RETURN and it ;sent reply before I was finished. Please explain how the bypass trust is funded at her death.

Lev :

Yes - that is correct. If her assets are $850k - that is the maximum she may use to fund the trust.
You may gift her some of your assets - there is no gift tax consequences for gifting to the spouse who is an US citizen. However assets in your IRA accounts may not be gifted or transferred to your spouse without prior distribution.

Lev :

When we are talking about funding the trust - this refers to actual transferring assets that are titled in the individual or in joint names and changing the title to the name of the Trust.
In case of the IRA account that may not be re-titled - you name the trust as a beneficiary - so assets will be transferred upon your death.

Lev :

Similar - if you have a life insurance - and want it to go to the trust - you name the trust as a beneficiary of your insurance policy.

Customer:

If I understand this correctly, then I could gift her some or all my assets outside the IRA's and take distributions from either IRA and gift that as well. Is there a minimum time before her death that the IRS requires before it's considered gifted?

Lev :

Yes - that is correct. However assets distributed from regular IRA account would be taxable for you upon distribution - and you will not longer able to maintain tax deferral status on income generated from these assets.
For estate tax purposes gifts made within a year of the death are included into the taxable estate.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,663
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,663
30,663 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
My mother died in Illinois. On the federal estate tax return
My mother died in Illinois. On the federal estate tax return she has 3.9 million adjusted gross estate and 1.5 million in taxable gifts made in 2010 and 1.7 million in unused exemption from my father'… read more
Lev
Lev
Tax Advisor
30,663 satisfied customers
I plan on rolling my traditional 401k into my Roth IRA. I
I plan on rolling my traditional 401k into my Roth IRA. I have about $16000 taxable in my traditional 401K. Is there anyway to avoid the large tax hit?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Are adr fees in a roth ira or an ira deductible, as
are adr fees in a roth ira or an ira deductible, as investment expenses? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
I'm checking into using part of my Roth IRA as a down
I'm checking into using part of my Roth IRA as a down payment on a condo and want to make sure I don't incur a taxable event or penalty. I have transferred/consolidated funds from fidelity to vanguard… read more
Carter McBride
Carter McBride
LLM
247 satisfied customers
Is inheritance income from Germany subject to US taxes?
Is inheritance income from Germany subject to US taxes? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
The gift tax return was due in year 2012 and 2013 and donor
the gift tax return was due in year 2012 and 2013 and donor forgot to file it. now what are the consequences for donor and receiver?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
Roth IRA question: If the Roth is at least 5 years old, can
Roth IRA question: If the Roth is at least 5 years old, can you use basis to pay for college expenses for your NIECE or Nephew? Or does it have to be immediate family? Looking for an alternative to a … read more
Lev
Lev
Tax Advisor
30,663 satisfied customers
Inherited property in 2014 and sold it in 2016. I have
Inherited property in 2014 and sold it in 2016. I have questions about filing the estate's taxes as well as how to report the capital loss on my personal taxes … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,797 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I have a Roth IRA. if I close it, do I pay taxes on the
I have a Roth IRA. if I close it, do I pay taxes on the profit or on the whole value at closing? I am closing it early. Do I pay penalty on the profit or on the value at closing?… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,277 satisfied customers
Under the IRC, a taxpayer who inherits property gets an
Under the IRC, a taxpayer who inherits property gets an automatic, income-tax-free, step-up in basis for that asset. That is, the heir uses the property's value on the deceased's date of death (or 6 m… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
What are tax rules for an inherited Roth IRA, GA, the
what are tax rules for an inherited Roth IRA JA: Since estate law varies from place to place, can you tell me what state this is in? Customer: GA JA: What documents or supporting evidence do you have?… read more
Lev
Lev
Tax Advisor
30,663 satisfied customers
As I worked for a non-profit there was no Roth IRA for the
As I worked for a non-profit there was no Roth IRA for the 403-b. I got laid off last year and haven't been able to find another job. I moved my IRA to a well-known investing company. I am almost 62 a… read more
Lev
Lev
Tax Advisor
30,663 satisfied customers
Related to my previous question are the US beneficiaries of
Good afternoon, related to my previous question are the US beneficiaries of an offshore/ foreign trust obliged to report to the IRS that they are beneficiaries even when the trust had not distributed … read more
abci168
abci168
Principal
27 satisfied customers
I received a 1099-R for a Roth IRA conversion but some of
I received a 1099-R for a backdoor Roth IRA conversion but some of the contributions made to the traditional IRA were nondeductible, one was deductible and there were some earnings. Is the entire amou… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
I have a NJ estate tax return to prepare for a decedent in
I have a NJ estate tax return to prepare for a decedent in NJ. The brokerage statement has an account with the decedent and a trustee set up for her grandson under a U/W/O . Are these assets included … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
Rules on Rollovers (Return of a non-taxed IRA Distribution).
Rules on Rollovers (Return of a non-taxed IRA Distribution). Over 70-1/2 years old) … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
IRS said the Roth IRA reported distribution was not held for
IRS said the Roth IRA reported distribution was not held for at least 5 years. It was. I was told I needed to send in a 8606 with my 2014 tax return. How do I go about doing that so I don't own the $1… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x