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Austin and Edna’s joint Federal income tax return for 1998
was filed by Dennis as personal representative for each estate.
The 1998 return was the first return on which it was reported
that Austin and Edna were liable for self-employment tax on the
payments from KPLP. The living trust remained KPLP’s general
partner after Austin and Edna died. The living trust held the
same property from the spring of 1995 until Austin’s death, and
the living trust’s property was worth $143,932 on the date of
Austin’s death. Pursuant to the terms of the living trust
agreement, Austin and Edna’s funeral expenses and Austin’s estate
taxes were paid by the living trust. On September 1, 1999, KPLP
issued a check to the living trust for $19,500. On the same day,
the living trust paid estate taxes of $20,068 owed by Austin’s
estate.
The living trust agreement provided that upon the death of
the first of Austin or Edna to die, the living trust would split
into a marital deduction trust and a family trust. All of the
living trust property, less the amount necessary to use the
unified credit amount in effect for the year of death, was to be
transferred to the marital deduction trust. The remaining assets
were to be transferred to the family trust.
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Last modified: May 25, 2011