If you are serving as executor or trustee for a loved one’s estate/trust, you have duties, including filing and paying taxes. This is serious stuff, because if you goof up, you can be held personally liable for the taxes, interest, and penalties.
We are providing an overview of executor and trustee tax duties, but you definitely need to meet with a qualified probate – trust settlement attorney to get good advice, regarding your individual situation.
As executor or trustee, you will be responsible for filing the decedent’s final 1040. If your loved one died anytime in 2011, the final tax return will be for the tax year ending December 31, 2011. If you loved one dies anytime in 2012, the final tax return will be for the tax year ending December 31, 2012.
As you might expect, the returns are due April 15th of the year following death and you use the decedent’s social security number.
If the trust or estate has any income from that date of death until the trust or estate is closed, a 1041 must be filed.
The 1041 is due April 15th of the year following death and you use the EIN number assigned to the estate.
If the estate is large and exceeds any remaining applicable unified credit amount (which was $5 million in 2011, is $5.12 million in 2012, and will be $1 million in 2013) or you want to maintain eligibility for portability, a federal estate tax return (706) must be filed.
The 706 is due 9 months after the date of death (and can be extended for an additional 6 months.) Use the estate EIN number to file.
As of this writing, California does not have a state inheritance tax or state estate tax, but you would be wise to consult with a qualified probate – trust settlement attorney (estate planning attorney) to determine the current state of the law and how it applies to the trust or estate you’re handling.
Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.