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RLTs and incidence of estate tax liability

Say you have a revocable living trust that becomes irrevocable on the death of the grantor, and says that the post-death trustee is to distribute the trust's assets to some set of people in some set of proportions.

Further assume that all/the vast majority of the decedents assets were titled to his RLT.

I know that this will not reduce estate tax liability one iota, but I'm curious about the logistics of how the taxman makes sure he gets his cut.

Do the relevant federal and state laws block the trustee from transferring the trust assets to the beneficiaries until any tax due is paid? Or is the transfer allowed to happen as soon as the trustee wants to do it, but liability for the estate tax is placed on the trustee? Or on the beneficiaries? Or both?

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro
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Just a guess (an educated guess but nevertheless a guess):

Yes. Maybe and Yes. Yes. Yes.

I'm least confident about my answer to the 2nd, 2 part, question

Reply to
Bill Brown

On the Federal front both fiduciary liability and the estate tax lien apply, as well as vanilla transferee liability. Strictly anecdotal, but I took a quick look at my trust document, and it has basically the same "pay the bills first" verbiage common in wills.

Phil Marti Retired IRS Collection

Reply to
Phil Marti

Or is the transfer allowed to happen as soon as the trustee

The estate is liable for the tax. The fiduciary becomes liable if the estate can't pay because there was breach of fiduciary duty. The beneficiaries become liable if they received distributions and the fiduciary can't pay.

So the order is: Estate, fiduciary (trustee/executor, administrator, personal representative, etc.), beneficiary.

Reply to
Alan

And there is even a "takeback" provision when it comes to transfers and estate tax.

Reply to
D. Stussy

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