What is a 645 Election:
The Internal Revenue Code §645 allows an irrevocable election to treat a qualified revocable trust (QRT) as part of the decedent’s estate for federal income tax purposes. The election allows tax advantages available to an estate to be available to the trust.
A qualified revocable trust (QRT) is a grantor trust under Sec. 676 (with revocation power retained by the grantor) as of the decedent’s date of death. Typical Revocable or Living Trusts are QRTs because the grantor retained the right to revoke the trust.
When the decedent has both a QRT and probate estate, the Sec. 645 election allows the trustee and the executor to combine a QRT and an estate into one tax return, filed as an estate. Even if there is not a separate probate estate, this election can be used to file the trust return (or several separate QRTS) as though the trust were an estate. Continue Reading →