I'm an Executor. . . Now What?

• Probate:  It is the Executor’s first responsibility to probate the Will, thus beginning the journey into the nightmare of probate, which involves filing of numerous documents with the court system, and the payment of probate taxes, executor's commissions, and other costs and fees that will typically consume 5% to 8% of an estate. Often, funds cannot be disbursed without the approval of a probate judge or Commissioner.

• Managing/Disbursing Assets: The executor locates, manages and disburses the assets of the estate. He or she determines the value of all estate assets such as real estate.  In many cases, such property will need to be liquidated in order to pay the estate’s debts.
• Burial Expenses: One of the responsibilities of an executor is to use the estate’s funds to pay for funeral and burial expenses. The funeral home will also provide the executor with copies of the death certificate, which will be needed for several purposes, including closing financial accounts, canceling any federal benefit payments, and filing the final income tax return.
• Debts: The debts of the deceased person become the debts of the estate, and the executor must pay them before making distributions be to beneficiaries.
• Taxes: The executor will also pay all required taxes from a bank account set up in the name of the estate. 
• Care for estate's assets: The executor must care for the estate’s assets until they can be distributed, by ensuring that property is properly cared for and that funds are invested prudently.
• Liability: If an executor mismanages estate funds and this results in a loss for the beneficiaries, the executor can be found personally liable.

1. Preparation of Federal estate tax returns, Form 706, and applicable State inheritance/estate tax returns;
2. Preparation of judicial and non-judicial fiduciary accountings for trusts and estates;
3. Preparation of fiduciary income tax returns for trusts and estates, including income tax planning to minimize income taxes;
4. Preparation of Federal and State gift tax returns;
5. Post-mortem planning, including use of disclaimers, small business succession, and redemption of shares of closely-held businesses;
6. Working with executors, trustees, beneficiaries, and accountants to minimize estate tax and income tax;
7. Assisting executors in navigating through the estate administration process.
8. Assisting beneficiaries in resolving family disputes regarding inherited or inheritable assets.
9. Assistance with valuation of closely-held business interests to minimize estate tax.

Critter Corner: Do I need to file taxes for a deceased relative?



Dear Commander Bun Bun,

My mother passed away in 2014, and I am the executor for her estate. I typically wait until the last minute to file my taxes. Even though she is no longer with us, do I need to file taxes for her, as well?

Thanks for your help!

Filene Taxus

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Dear Filene,

I am sorry to hear about your loss.

After a family death, the last thing a grieving person wants to deal with is taxes. However, typically someone has to file a final tax return that needs to be submitted by the April 15 tax-filing deadline to avoid penalties. The following are some special considerations for your situation:

 

• Use of the word “deceased”: The Federal 1040 tax return (and the corresponding state tax return) will be filed using the same method a living person's tax return is filed, with two major exceptions. The word "deceased" should be placed in parentheses after the decedent's name and the date of the taxpayer's death should be written at the top of the tax return.
• Form for tax refund: If the deceased taxpayer is entitled to a tax refund, the executor will need to file Form 1310, which is a request for a refund due to a deceased taxpayer.
• Signing the return: The tax return should be signed by the executor, or personal representative, for the deceased taxpayer. If no personal representative has been appointed, the spouse can sign the return and note next to the signature "Filing as surviving spouse."
• Very Large Estates:  Form 706 may be required to figure the estate tax imposed by the IRS on estates exceeding $5,430,000.
• Deductions: Any medical bills that were incurred prior to death can be claimed, as long as they're paid within a year of the person's death.