New Reporting Requirements for Property Received from an Estate

What you need to know:

On March 2, 2016, the Treasury Department released proposed regulations (REG-127923-15) implementing a new law that requires consistent reporting of value of certain assets received from an estate. In particular, the new law requires an executor to deliver a statement to the IRS and to each beneficiary stating the value of each asset distributed to a beneficiary. The beneficiary must then report that value as his or her cost basis when selling the asset. The new requirements apply to many estates that filed or were required to file estate tax returns after July 31, 2015. Statements for some estates are due as soon as March 31, 2016.

The proposed regulations also impose a new requirement on some beneficiaries receiving assets from an estate. In certain circumstances, a beneficiary who wishes to make a gift of such an asset in the future must report that gift to the IRS within 30 days after making the gift, and must also deliver a statement to the recipient of the gift similar to the one that the beneficiary received from the executor.

What you need to do:

There are many exceptions to these reporting requirements, and there are opportunities, with proper planning, to minimize their impact on an estate and on beneficiaries receiving assets from an estate. Please contact a member of Choate’s Wealth Management practice for more information.