EIN for estate admin?

[frances]

My mom recently passed.
I'm her executor, and the only heir (that will get anything anyway).

Everything she has is JTWROS with me except one piece of rental property. Was hoping to avoid probate but due to that may not be able to as I understand here it can be a lengthy process no matter what. Her tenant wants to buy the place, she promised him he could, I've told him OK, and I'd really like to have that off my plate yesterday. I know the income from the rental would still technically belong to her estate until is "settled", but if probate drags along that could be a while.

Trying to avoid as many issues as possible, but was reading last night that I'm supposed to apply for an EIN for her estate.

Seems a little weird to me, but anyone else know much about this?

I'm in Georgia.

 

[gauss]

Sorry to hear about your loss, frances.

Yes - You no longer file income tax returns in her name after her date of death (except for her final 1040 that reflects income up to the date of death). At that point, her estate is the legal owner of any income. You will request an EIN for the estate so that when you can fill out the 1041 estate income tax return (not to be confused with an estate tax return - totally different) the IRS will have your information from your EIN application.

Probate varies on state by state basis, so you will want to get some info on how it works in your state. Do you have her original will?

I will be going through this for a third time next year (this time for my DM), so I have seen this play out a few different ways so far.

I find it helpful to fill out the IRS form SS-4 by hand when requesting an EIN. The form is very general (ie it is used for businesses, organizations, trusts etc. in addition to decedent estates). Once you understand all the answers on the paper SS-4 you can then actually apply for the EIN online if you like.

Beware that the form that the IRS issues containing the EIN (immediately when done online) will need to be saved. Many organizations will want to see the full form and not just the EIN number itself.

-gauss

 

[audreyh1]

My mom recently passed.
I'm her executor, and the only heir (that will get anything anyway).

Everything she has is JTWROS with me except one piece of rental property. Was hoping to avoid probate but due to that may not be able to as I understand here it can be a lengthy process no matter what. Her tenant wants to buy the place, she promised him he could, I've told him OK, and I'd really like to have that off my plate yesterday. I know the income from the rental would still technically belong to her estate until is "settled", but if probate drags along that could be a while.

Trying to avoid as many issues as possible, but was reading last night that I'm supposed to apply for an EIN for her estate.

Seems a little weird to me, but anyone else know much about this?

I'm in Georgia.

If the estate has income, yes you will have to file estate taxes until you settle it, and that requires an EIN. The IRS makes it very easy to request one online.

I did this after I became executor. I was in GA and my probate was very quick.

Like Gauss said, save the online letter the IRS gives you.

 

[gauss]

My mom recently passed.
I'm her executor, and the only heir (that will get anything anyway).

Everything she has is JTWROS with me except one piece of rental property. Was hoping to avoid probate but due to that may not be able to as I understand here it can be a lengthy process no matter what. Her tenant wants to buy the place, she promised him he could, I've told him OK, and I'd really like to have that off my plate yesterday. I know the income from the rental would still technically belong to her estate until is "settled", but if probate drags along that could be a while.

Trying to avoid as many issues as possible, but was reading last night that I'm supposed to apply for an EIN for her estate.

Seems a little weird to me, but anyone else know much about this?

I'm in Georgia.

Note that income received by an estate and reported on 1041 has much narrower brackets than on an individual return. You can, however, distribute funds from the estate to the beneficiary and then pay taxes on the beneficiaries return instead.

Many people hire attorneys and accountants to help with all this. I am an extreme DIY ER guy who has the time and interest to dig into this, but I recognize that most folks are not.

If you think you would benefit from professional advice on all this, you might want to let them handle the details. If you don't already have an accountant and/or attorney, your funeral director (if you used their services) may be able to provide a referral to someone local.

From what you have described (the rental property is the only asset owned by the estate), you responbilities will include filing her final 1040 return and 1041 return for 2022 and then 1041 for 2023 etc. State taxes will also likely come into play if Georgia has an individual income tax and or estate income tax (again, not to be confused with an estate tax which is totally different).

You will likely need the probate court to be involved so that you can legally "sell" the property to the renter. If title insurance is commonly used in Georgia when property is sold, the title insurance company will not issue a policy until you have proper authority from the probate court.

Again state laws vary and I don't have full knowledge of your situation so take this all with a grain of salt. Be sure to do your own research and/or hire your own advisors.


-gauss

 

[frances]

Thanks for the replies.
I'll get the EIN done in the next couple of days.

I was looking at mom's will again this afternoon and found this little gem she put in there:
"DISPOSITION OF ASSETS. I authorize my Fiduciary without order of any Court to sell or convey any of my real estate or personal property not specifically devised or bequeathed by me at public or private sale. On every sale of real estate or personal property, the proceeds are to be deemed and treated as forming part of my personal estate."

Her next paragraph goes on to say I don't have to provide inventory reports or appraisals to anyone, including the court.

So I'm looking at that and thinking "Hmmm. Probate? Really?"

Mom was a licensed Associate Real Estate Broker and Associate Real Estate Appraisier in Georgia for many years (still had her license even when she died last month); she and dad had their own company with contracts with the state.
She knew her stuff.

I'd like to think I can go by this but....
Probably need to ask a lawyer anyway.

Thoughts?
TY in advance.

 

[Walt34]

I'd like to think I can go by this but....
Probably need to ask a lawyer anyway.

Thoughts?
TY in advance.

Probably, but...

Yes, I'd run it by a local attorney. I handled my mother's estate and yes you do have to get an EIN for the estate, which as others have pointed out is a separate legal entity which will file it's own tax return.

I hired that out, as for me it promised to be a long exercise in frustration and since it was going to be a "one-off" I didn't see much point in beating myself up to save what turned out to be (I think) $150 in 1999.

Interesting side note: When I did go to see the attorney, he had about three questions for me about what I had done with the estate, then spent the next 40 minutes or so quizzing me about my job (computer crime investigator/forensic examiner) which at the time was bleeding edge stuff in the legal field. And he didn't charge me anything.

The point being, if you've got your ducks in a row the attorney won't have to do much if anything and the bill will be sized accordingly.

 

[SecondCor521]

My condolences.

Her will, unfortunately, cannot override her state's estate laws.

You might check into small estate procedures in her state. If the value of her probate assets are small enough, you may be able to skip probate. If the value of her probate assets exceed the limit, I think you'd (unfortunately) need to do probate despite what her will might state. (The language of her will might make some parts of probate easier, though.)

Some states also have simplified probate, which may be easier than "full" probate.

You might also see if she happened to do any sort of estate avoiding TOD or Lady Bird deed on the real property - that allows real property in some states to also bypass probate. If she put the real estate into a living trust that also might bypass probate.

 

[frances]

My condolences.

Her will, unfortunately, cannot override her state's estate laws.

You might check into small estate procedures in her state. If the value of her probate assets are small enough, you may be able to skip probate. If the value of her probate assets exceed the limit, I think you'd (unfortunately) need to do probate despite what her will might state. (The language of her will might make some parts of probate easier, though.)

Some states also have simplified probate, which may be easier than "full" probate.

You might also see if she happened to do any sort of estate avoiding TOD or Lady Bird deed on the real property - that allows real property in some states to also bypass probate. If she put the real estate into a living trust that also might bypass probate.

Thank you.

Everything except this one piece of property is directly mine as it is all either JTWROS or I'm the sole beneficiary.

As far as the total value of the estate it is rather small, so I think I will be able to do a simplified probate.

UNFORTUNATELY though from what I'm reading TOD and/or Lady Bird deeds are specifically prohibited in Georgia.

I greatly appreciate all of the thoughtful information everyone is giving me here - this process is frustrating and painful at the same time. Mom tried to make it easy for me and she did to some extent but it still has it's moment and will continue to do so.

Merry Christmas week everyone.

 

[ERD50]

...

I find it helpful to fill out the IRS form SS-4 by hand when requesting an EIN. The form is very general (ie it is used for businesses, organizations, trusts etc. in addition to decedent estates). Once you understand all the answers on the paper SS-4 you can then actually apply for the EIN online if you like.

Beware that the form that the IRS issues containing the EIN (immediately when done online) will need to be saved. Many organizations will want to see the full form and not just the EIN number itself.

-gauss

Thanks for that. When FIL passed, the lawyers filed for the EIN (and charged for all sorts of stuff). When MIL passed, I understood this wasn't that hard, and I offered to take care of it.

It wasn't really any problem getting an EIN online, but I really didn't understand the questions, or how I was supposed to answer. It seemed it should be simple, when private individual passes, they need an EIN. But as you say, it is a general form for people w/o SSN, for businesses, etc. so their are so many twist and turns, I couldn't make heads or tails out of it.

I just did the best I could, was pretty sure it wasn't right, but I got an EIN. I decided it probably really doesn't matter if I did it right or not. The EIN was used to re-title the accounts from the SSN, and we got everything closed and distributed that year, so one final tax form. AFAIK, as long as the IRS has an EIN they can reference, it probably doesn't matter one whit how I answered any of those questions, or as long as I got reasonably close. But I don't know.

IRS cached the checks, I assume that's the end of it.

-ERD50

 

[audreyh1]

Thanks for the replies.
I'll get the EIN done in the next couple of days.

I was looking at mom's will again this afternoon and found this little gem she put in there:
"DISPOSITION OF ASSETS. I authorize my Fiduciary without order of any Court to sell or convey any of my real estate or personal property not specifically devised or bequeathed by me at public or private sale. On every sale of real estate or personal property, the proceeds are to be deemed and treated as forming part of my personal estate."

Her next paragraph goes on to say I don't have to provide inventory reports or appraisals to anyone, including the court.

So I'm looking at that and thinking "Hmmm. Probate? Really?"

Mom was a licensed Associate Real Estate Broker and Associate Real Estate Appraisier in Georgia for many years (still had her license even when she died last month); she and dad had their own company with contracts with the state.
She knew her stuff.

I'd like to think I can go by this but....
Probably need to ask a lawyer anyway.

Thoughts?
TY in advance.

I used the lawyer that did DF’s will to handle the probate. Small town and county seat, it didn’t take long. I didn’t have to provide inventory reports etc. either.

 

[Souschef]

I believe if you make any income distributions from the estate, you need to file a K-1.
Someone please check that for me.

 

[Winemaker]

With DM's estate, her FIDO accounts were distributed to the 4 heirs, but they were restricted until the EIN was given and proof of PA estate taxes were paid. When we sold the house, as executor, I had to also provide proof of estate taxes were paid or they would deduct them at closing.

 

[JoeWras]

I believe if you make any income distributions from the estate, you need to file a K-1.
Someone please check that for me.

Generally, yes. This is how income distributions were paid on my dad's trust. I think the estate pays the taxes if there are no distributions, but generally you don't want the estate hanging around. The estate income tax rates are very aggressive.

For the OP: I think OP has a slightly complex problem at hand. It is too bad there is just "this one thing." That one thing is rental property. Oh boy.

OP definitely needs an EIN (and yes, DYI is sensible, our lawyer even told us to do it ourself in lieu of his $400 fee). But beyond that, there's going to be some work to do with the estate to settle that matter. It may or may not require K-1s. It will require a 1041, which is not a fun form. OP will have to check with a Georgia lawyer about that little wording in the will as to whether probate is required or not. Dad had a trust, we didn't have to go through Illinois probate.

OP: besides rental income, you could have a gain/loss on the property. You need to think about establishing a basis of the property on your mom's date of passing. Perhaps with the current market conditions, it might end up being a loss when sold - which may guide decisions on how you file the estate income tax.

 

[ncbill]

I believe if you make any income distributions from the estate, you need to file a K-1.
Someone please check that for me.

Yep, the Turbo Tax software that includes estate & trust returns will do that for you.

I used the above to prepare trust returns, distributing any income or capital gains (actually losses) to the beneficiaries of the trust.

You want to distribute all those so the trust is not paying any taxes at the higher (versus individual) tax rates.

Getting an EIN online via the IRS website is easy-peasy.

 

[MarieIG]

Thanks for the replies.
I'll get the EIN done in the next couple of days.

I was looking at mom's will again this afternoon and found this little gem she put in there:
"DISPOSITION OF ASSETS. I authorize my Fiduciary without order of any Court to sell or convey any of my real estate or personal property not specifically devised or bequeathed by me at public or private sale. On every sale of real estate or personal property, the proceeds are to be deemed and treated as forming part of my personal estate."

Her next paragraph goes on to say I don't have to provide inventory reports or appraisals to anyone, including the court.

So I'm looking at that and thinking "Hmmm. Probate? Really?"

Mom was a licensed Associate Real Estate Broker and Associate Real Estate Appraisier in Georgia for many years (still had her license even when she died last month); she and dad had their own company with contracts with the state.
She knew her stuff.

I'd like to think I can go by this but....
Probably need to ask a lawyer anyway.

Thoughts?
TY in advance.

Yeah, no personal knowledge of this, but think you need to consult a probate/ RE lawyer in your state. You have a deed which does not convey the property to you upon death. I have to "speculate" if one could simply bypass probate by putting that clause in the will, it would be there all the time. Unlike a power of attorney, which is only valid while the issuer is still alive, it is not solely the will which conveys the power to the "executor", it is the letters testamentary issued by the Court after accepting and reviewing the will.

A title company may not find you to be authorized to provide a deed - but I know nothing about Tennessee law.

When I transferred assets, I produced letters testamentary or letters of administration, not a will. Of course, YMMV.