There is new legislation that was recently passed and introduces the concept of a Graduated Rate Estate (GRE).  Prior to the legislation, many estates and testamentary trusts were benefiting from lower tax brackets, but beginning January 1, 2016 these trusts will be subject to the top marginal tax rate.  Going forward the GRE will last for a maximum of 36 months and have special characteristics such as the availability of lower tax brackets (i.e. graduated tax rates).  After 36 months have elapsed, the trusts will then have another year end triggered on the next December 31st.  Existing estates and testamentary trusts where the individual passed away earlier than 36 months prior to December 31, 2015 will have a December 31st year-end starting in 2015. Please note that the graduated rates no longer apply effective January 1, 2016, therefore, if you have an estate or testamentary trust that is older than 36 months, the stub period in 2015 is the last return with graduated rates.

 

How this affects estate file(s):

Do you have an Estate file that is older than 36 months old?

If you do, you will encounter a “stub” period return this year, so this means going forward the year end will now be December 31st. We kindly ask that you bring in the bank statements, transaction details, etc., from the date of the last return completed up to December 31st 2015 in order for us to complete the second (“stub” period) return this year.

For example, if your last estate return was June 10, 2015. Then you will have a “stub” period from June 11, 2015 until December 31, 2015.

 

We are here to help!

Please feel free to contact your RLB advisor or our estates department at 519-822-9933.