My mother passed away almost 2 years ago. A 1041 (Type Simple Trust) was filed. Form 706 filing was not required. All assets except a modest bank acct and her home have been distributed. Because of the real estate market, we have not been able to sell the property. How long can we keep the estate open? If we keep it open longer than 2 years (see Form 1041 Sch G Other Information question 8), are we required to file Form 8855 (Election To Treat a Qualified Revocable Trust as Part of an Estate), or can we simply attach an explanation to Form 1041 and continue under the Trust/Estate's FED ID # until we dispose of all assets? The Trust was a Revocable Trust which became Irrevocable upon her death.
Estate Planning Attorney
The trustee does not have to file form 8855. The trustee should be more concerned with whether the beneficiaries will accuse the trustee of negligence than he should be with the question of whether the IRS will have a problem with how long the trust has been kept open. The trustee should document his efforts to sell the property. The trustee should consult with his attorney about what procedures are available under state law to minimize the trustee's liability for declines in values of the assets. The trustee should consult with his attorney as to whether or not it is worthwhile to have the beneficiaries agree in writing that the trust be kept going and that they do not desire the real estate to be sold if it cannot yield a certain selling price.
Elder Law Attorney
The Trust can remain open as long as necessary in order for the Trustee to reasonably carry out his fiduciary duties. It is always a good idea for a Trustee to communicate with the beneficiaries of the Trust regarding the status of the Trust so that they know what to expect and there are no unpleasant surprises.