MarketWatch reports on four issues to consider when closing an estate. The article begins as follows:
When a loved one dies, somebody must step up to the plate to handle all the resulting tax issues. This person may be identified in the decedent’s will as executor of the estate. If there isn’t a will, however, the probate court will appoint someone to be the administrator. In either case, it’s often the surviving spouse or another family member who takes on this responsibility.
Regardless of which route you take to get there, your duties as executor are essentially the same. The executor’s job is to identify the estate’s assets, pay off its debts and then distribute whatever is left to the rightful heirs and beneficiaries. He or she is also required to file any necessary tax returns and pay any taxes. Should this not be handled properly, the IRS can come after the executor personally for tax underpayments (plus penalties and interest) — even if he or she has hired a professional to deal with the paperwork. So if you find yourself in this role, you need to take the responsibility seriously.
The article then discusses the following four steps:
- Filing final 1040.
- Filing the estate’s income-tax return.
- Filing the estate’s estate tax return.
- The miscellaneous details.