Atlanta Estate Planning, Wills & Probate | Siedentopf Law

What is 706 in Estate Planning?

Maybe you’ve heard the term “706” with friends probating an estate or maybe your financial analyst has mentioned it, but you’re not sure what they mean. This article will hopefully give you a firm grasp on the 706, what it actually is, and what it means for you.

What is the 706?

The 706 is a tax form: Form 706. The formal name of this form is the “United States Estate (and Generation-Skipping Transfer) Tax Return”. This is a form that is used during the probate process– not a form used for estate planning purposes. Meaning, you do not need to complete Form 706 when preparing your Will, Trust, or other estate planning documents. This form, as it pertained to your estate, would only be completed after your death.

So now that we know that the 706 is a tax form let’s dive into the reasons for this form, when, and why we might use this form.

What is the Purpose of Form 706?

As mentioned above, Form 706 is a tax form used while executing or probating an estate. This form is used by the executor, administrator, or trustee of an estate to calculate estate taxes, including the generation-skipping transfer tax. 

This form is only used in estates of certain values or higher. So, not every executor will complete this form.

If you must complete Form 706 for taxes of a deceased loved one, you will need to gather a lot of information– much like when you complete your own taxes. Except it’s trickier because you’ll have to locate someone else’s paperwork. You’ll need to provide the value of the estate, estimated deductions, and other items. Depending on the size of the estate this may be very simple to compile or incredibly complex. We always recommend talking with a skilled professional when working on these forms. A tax professional, such as a CPA or accounting firm, can assist.

Who Has to File Form 706?

The executor of an estate is the person or entity responsible for filing this tax form with the IRS. But not every estate or executor will need to file this tax form.

Form 706 is only used in estates valued above certain thresholds. This form is not needed if the estate is valued below these thresholds.

The threshold for a decedent who dies in 2023 is $12.92 million. So, this means that you only need to complete this form when the estate is valued at $12.92 million or more. If the estate valuation falls below this number, you will not need to complete the 706.

Keep in mind, that this amount changes each year– due to inflation/recession. Your tax professional will have access to these threshold amounts each year and the IRS publishes these amounts each year.

When Does Form 706 Have to be Filed?

If the value of the estate is above the threshold dictated by the IRS in the year of the decedent’s death, Form 706 must be filed within nine (9) months of the date of death of the testator/grantor. At the time of filing, any taxes owed must also be paid. There is another form, Form 4768, that, when granted, gives you an automatic six (6) month extension on this deadline. Form 4768 is the Application for an Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes. Additionally, you may request a deadline extension in some cases.

Commonly Asked Questions About Form 706:

What is a 706 tax code?

The 706 tax code refers to IRS Form 706, also known as the United States Estate (and Generation-Skipping Transfer) Tax Return. This form is used to calculate and report federal estate tax liability upon the death of an individual.

What is form 706 used for?

IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return, is used to calculate and report federal estate tax liability upon the death of an individual. Executors of estates worth more than the estate tax exemption must file this form to report the estate’s assets, deductions, and calculate the estate tax due.

In conclusion, if you are the executor of an estate requiring the filing of a Form 706 you likely need the assistance of professionals to help you get these forms completed properly within the required timeline. Remember, as executor you are permitted to hire professionals to work on behalf of the estate. Tax professionals and lawyers fall into this category.

Even when families are in complete harmony over the probate process or execution of a Will or Trust, it can be complicated. The professionals at Siedentopf Law are skilled in handling these types of scenarios and we welcome your call. Call us at (404) 736-6066 or visit our website to schedule a consultation.

Whether you’re in the Atlanta and Brookhaven areas, or in Cobb, DeKalb , Fulton, Gwinnett, or another county in metro Atlanta, we can help you. We can also work with executors by phone or video conference if they are out of state or far away. Only after listening carefully will we present the options that are right for you and explore the benefits and costs of each one. 

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