A family-office tax calendar

A family office may carry the tax year of a dozen taxpayers at once: family members, trusts, an estate, partnerships, a foundation, and every state they touch. Each has its own due dates, and few of those dates stand alone. A trustee’s decision in March changes a beneficiary’s return; one fund’s late tax statement holds up three other returns. The value of a good calendar lies less in the dates themselves than in the connections between them.

One spring, several taxpayers

Consider a family with two adult children, a long-term family trust, an investment partnership and a private foundation, all on the calendar year. In early March, the trustee decides whether distributions made in the first 65 days of the year should count toward the prior year. The election is made on the trust’s Form 1041, filed on time including extensions, and it shapes both the trust’s taxable income and what each beneficiary reports.

March 15 brings the partnership’s return or its extension, and with it the timing of the K-1s, the forms reporting each partner’s share of income, that everyone else is waiting for. April 15 brings individual and trust returns, first-quarter estimates, gift tax returns for last year’s gifts, and the FBAR, the report of foreign accounts, which is automatically extended to October 15. The foundation’s return follows in May.

Gifts add dates of their own. A gift above the annual exclusion generally requires a gift tax return for that year, and its value is easiest to document when the gift is made. A private nonoperating foundation, for its part, has an annual minimum distribution requirement, so its grants and the family’s own charitable plans are best read together.

Estimates are where the connections show

Each individual, and most trusts, pays estimated tax on its own schedule, and states set their own rules. California does not allow the prior-year safe harbor for an individual whose California adjusted gross income is $1 million or more ($500,000 if married filing separately), so those payments have to follow the current year. When a K-1 or a trust distribution is still unknown, each estimate is a judgment worth making deliberately, with a date to revisit it.

Where we help

We keep the tax calendar across the people and entities in our engagement, prepare the projections and payment amounts, and raise the decisions that carry tax consequences before they are made. Trustees, foundation managers and investment advisors keep their own roles; a shared calendar simply lets each of them see what the others’ dates mean for their own.