Ideally, no distributions to the beneficiaries under the will should be make until the estate is closed and closing letters received from the Internal Revenue Service and the State Tax Commission if estate tax returns were filed. This is not always possible, particularly in light of the fact that it generally takes a minimum of nine months to get a closing letter from the IRS. Beneficiaries are usually not that patient. The earliest an executor can close an estate is after the time to probate claims has expired and no claims have been probated. This is generally possible in estates that dont require estate tax returns, particularly when surviving spouse is the sole beneficiary.
After the time for probating claims against the estate has expired and estate taxes have been paid, a partial distribution to the beneficiaries may be in order, particularly if there are no unpaid claims outstanding against the estate and the closing attorney is comfortable that the estate tax return will be accepted by the IRS as filed. In any event the executor and closing attorney should hold back enough cash from the distribution to pay for the remaining expenses of administration and to pay for any estate taxes that may be assessed by the IRS.
A Request for Estate Tax Closing Letter is an important document that individuals or their representatives can submit to the Internal Revenue Service (IRS) to obtain a certification of the estate tax closing. This letter serves as evidence that all outstanding estate taxes have been paid and that the estate tax return has been accepted by the IRS. One of the primary purposes of the Estate Tax Closing Letter is to provide assurance to the estate's executor, administrator, or beneficiaries that the estate tax liabilities have been fully satisfied. It is especially crucial when dealing with the distribution of assets, closing the estate, or transferring property titles to beneficiaries. The Request for Estate Tax Closing Letter is typically initiated after filing Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return, with the IRS. This form is used to report the value of the decedent's estate and calculate the estate tax due. Once the estate tax return is processed and all applicable taxes are paid, the executor or representative can request the closing letter. There are two main types of closing letters related to estate taxes: 1. Closing Letter: This letter indicates that the IRS has reviewed the estate tax return and accepted it as filed. It confirms that all taxes have been paid, and no further estate tax is due. This letter is generally issued within a few months after the request is submitted. 2. Closing Letter with Statement: In some cases, the IRS may issue a closing letter with a statement that explains any adjustments made to the estate tax return. Such adjustments could include a revised calculation of the estate tax due, changes in asset valuations, or modifications in allowable deductions. This letter is sent after the IRS has completed additional reviews or audits of the estate tax return. Obtaining a Request for Estate Tax Closing Letter is essential for various reasons. It provides closure to the estate administration process, allowing executors or representatives to finalize the distribution of assets and close the estate. It also offers protection for beneficiaries, confirming that the estate tax obligations have been fulfilled. To request a closing letter, the executor or representative typically needs to mail a written request to the IRS's Estate Tax Lien Department. The letter must include the decedent's name, taxpayer identification number (TIN), date of death, a copy of the previously filed estate tax return, and a statement explaining the purpose of the request. In conclusion, the Request for Estate Tax Closing Letter is a critical document that ensures the successful completion of the estate tax filing process. It brings peace of mind to the executor, administrator, or beneficiaries, certifying that all estate taxes have been settled and the estate can be closed.
