Managing Taxes
The executor is obligated to file a final tax return for a deceased person, and if advantageous, to amend the previous filings to take advantage of carry back provisions. There may be circumstances where the filing of multiple returns can reduce the tax burden.
The executor must usually also file a return for income earned and gains (or losses) realized during the administration.
The complexities of a final return may vary, but could include the reporting of capital gains on the deemed disposition of capital property. The full value of retirement savings or income plans generally have to be reported in the final return, which should also incorporate such deductions as charitable donations or medical payments to ensure that the maximum amount is available for distribution to the beneficiaries. Often the deductions will be different in the final tax return than in a regular tax return. Care and expertise are also required in filing the first year's tax return for an estate, as various potentially tax reducing elections are available. A well drafted will with Trust provisions may also allow opportunities for future income splitting to minimize the ongoing tax bill.
Leaving a legacy
Many people find that generosity toward their favorite charity is the best way to leave a legacy, both to their family and the institutions they support. An added benefit, of course, is the tax deductions available. Trusts with a charity as the beneficiary offer an estate planning tool that accomplishes two goals - philanthropy and tax reduction.
HSBC has Trust and Estate professionals that can offer the knowledge, dedication and experience to help you establish the most appropriate charitable trust for your situation.
For more information or to discuss your particular situation, you can contact an HSBC Securities
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