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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4677
Experience:  35 years tax experience, including four years at a Big 4 firm.
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Do i need to file a 706 first spouse to die if his

Customer Question

do i need to file a 706 for the first spouse to die if his estate is valued at $8m and all passes to the surviving wife? (Other than for portability)
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.
Welcome to the site. I'mCustomer and will be helping you today.
The answer is a resounding yes. For a number of reasons.
Basis adjustments, titling of assets, heirs and disputes, bequests, are all good reasons to file. Filing notifies Fed tax authority of the passing and assets trading, and starts the statutory period for examination. If you don't file, IRS can audit years later.
State estate taxes are another reason to file.
It is just a good idea, and well worth the aggravation.
Thanks for asking at just answer. Positive feedback is appreciated. I'mCustomer
Customer: replied 2 years ago.
My understanding is that the assets pass tax free to the surviving spouse and as such no tax will be due.(But I understand all the reasons for filing.) Also that since all will be passing to the spouse, valuation can be set with due diligence amount as the assets will be exempted out because of passing to spouse.
Customer: replied 2 years ago.
Here is the scenario: Husband age 90 dies intestate. Some property held jointly some not. Some with beneficiary (wife) some not. Surviving wife is only heir. Value of estate held in husbands name only $3.8m (cash accounts and stocks) value of assets held jointly approx $10m, real property held jointly $4m.
Expert:  PDtax replied 2 years ago.
I forgot that there is a mandate to file if your gross estate is over $5+ million. Even though all you say is true, the 706 instructions require filing the 706 in your case even though no estate tax may be due.
Customer: replied 2 years ago.
Thanks. Do you have a simple definition for Q-Tip? No trust.(no will) Possible annuities.
Expert:  PDtax replied 2 years ago.
The best example of what is not a qtip is a gift to a spouse for her life, then a reversion to heirs. This does not qualify as qtip property. That is intended to be a gift to a spouse subject to the marital deduction at passing.
Expert:  PDtax replied 2 years ago.
I wanted to revise my last answer. QTIP trusts are used to preserve assets after the second to die uses them. Tick children from a first marriage.
The second to die spouse gets enjoyment of the asset, the estate gets a deduction for marital property, and the children inherit. Typically established in a QTIP trust.
thanks again.. Positive feedback is appreciated. I'mCustomer