My Job as an Estate Executor is almost over!!!

[SecondCor521]

Thanks. Given how unlikely I think that will be given that all accounts related to DF have been closed for a while now, and I really want to distribute all remaining funds after expenses, so accounts would be at 0 anyway. If it happens - oh well.

It might be worth checking with the unclaimed property divisions in all the states relevant to your Dad before closing things out. You may have already done so. But stuff can pop up there later also.

 

[steelyman]

It might be worth checking with the unclaimed property divisions in all the states relevant to your Dad before closing things out. You may have already done so. But stuff can pop up there later also.

That’s a very good idea. When I went through this as executor I worked through it with a gentleman who is an experienced CPA/attorney. He pointed out that it can take some time for assets to be turned over (escheated) to unclaimed property divisions at various states.

I also learned that there can be multiple EINs (employer identification number, a terrible name in my opinion): trust, estate in addition to Social Security number (while living).

 

[qwerty3656]

What is all the tax stuff with settling an estate? I thought like the first 12mm was not taxable?

 

[SecondCor521]

What is all the tax stuff with settling an estate? I thought like the first 12mm was not taxable?

The US government collects several different types of taxes which are reported on different IRS forms.

The first is income taxes, which a person owes when they receive income such as wages from a job, Social Security income, or bank interest income. This is reported on IRS Form 1040 and is quite common; you're probably familiar with this.

The second is estate taxes, which are levied against a person's estate when they die if their estate is over a large amount, currently $12.92M. This is reported on IRS Form 706 and is fairly rare.

Sometimes a person receives income after they die. In this case, there is a special tax form called a 1041 which must be filed because income taxes are due on that income to the estate. In this scenario the income is taxed differently. 1041s are often handled by estate attorneys or CPAs or occasionally by brave executors who DIY it. If you haven't been an executor yet you probably haven't seen one.

There are also trusts that have assets which earn income. This income is also taxed, and it's also reported on IRS Form 1041, although the rules for trusts are slightly different from those for estates. You might know of these if you're either filing tax returns for a trust or if you're receiving K-1s from a trust.

I didn't scroll back through this particular thread to determine which of the above have been discussed, but it's almost certainly one of the above situations.

 

[audreyh1]

What is all the tax stuff with settling an estate? I thought like the first 12mm was not taxable?

Estate income is taxable. Not the estate itself if it’s under the threshold. This estate was paid farm rent every year, so had to file estate income tax forms even though it was offset by expenses. Finally the land was sold, and due to the incredible real estate appreciation between 2020 and 2022, there ended up being a substantial capital gain. This gain was also estate income in 2022. However the proceeds were distributed to heirs, so the estate does not owe taxes, but had to file and generate K-1s because the heirs do owe taxes on the capital gains.

 

[MarieIG]

Which most of us will never have to worry about.

IIRC, in 2019 fewer than 7,000 estates here in the USA had to file Form 706.

But - IMHO, those who lose a spouse should consider whether to avail themselves of the portability exclusion.

"An executor wishing to elect portability under this extension must state at the top of the Form 706 being filed that the return is “Filed Pursuant to Rev. Proc. 2022-32 to Elect Portability under section 2010(c)(5)(A).” For more information on this extension, see Rev. Proc. 2022-32."

 

[ERD50]

It might be worth checking with the unclaimed property divisions in all the states relevant to your Dad before closing things out. You may have already done so. But stuff can pop up there later also.

That’s a very good idea. When I went through this as executor I worked through it with a gentleman who is an experienced CPA/attorney. He pointed out that it can take some time for assets to be turned over (escheated) to unclaimed property divisions at various states.

I also learned that there can be multiple EINs (employer identification number, a terrible name in my opinion): trust, estate in addition to Social Security number (while living).

+1 - I found unclaimed property (a CD) for my FIL, but not until years later , after my MIL passed, and I checked again.

At the time of FIL's passing, I don't think the CD had been 'abandoned' long enough to show up on the IL Treasurer site. I guess I should run another check on other deceased family members.

-ERD50

 

[BubbaChris]

What is all the tax stuff with settling an estate? I thought like the first 12mm was not taxable?

I think you have two good replies already, but I’ll add my specifics.

Mom died in February 2020. So a year later as executor I filed her 1040 for that year, AND I’m still waiting for that refund.

Mom had a revocable trust that became irrevocable upon her death. I obtained an EIN (Tax ID number) for the trust and I’ve been filing 1041 returns (along with the State’s equivalent) for the trust’s brokerage account earnings. Because one heir hasn’t been ready to receive and manage her share, this process will continue for at least the 2022 and 2023 tax years.

Trusts pay a fairly high tax rate with few eligible deductions, so I doubt the IRS cares if this plays out for years.

Best regards,
Chris

 

[38Chevy454]

Estate income is taxable. Not the estate itself if it’s under the threshold. This estate was paid farm rent every year, so had to file estate income tax forms even though it was offset by expenses. Finally the land was sold, and due to the incredible real estate appreciation between 2020 and 2022, there ended up being a substantial capital gain. This gain was also estate income in 2022. However the proceeds were distributed to heirs, so the estate does not owe taxes, but had to file and generate K-1s because the heirs do owe taxes on the capital gains.

Also to make a simplified explanation adding to Audrey's post, a K-1 is a way to pass-through the income from the estate to the heir. So instead of the estate paying tax on the income, it is passed from the estate and to the heir(s). The K-1 is the way this is documented. The K-1 income, and resulting increase in taxes due on that K-1 money, is reported on the recipient's tax filing.

 

[Midpack]

Our father passed away in Nov 2018, my sister and I were co-executors. Dad had a trust which made things MUCH easier, no probate, but it still took us 8-9 months including selling his home and distributing all his assets.

Then just last month, we got a check for $24K+ in Dad's name, from AT&T Because of the time that's passed, our attorney tells us we can't just cash the check, our "powers" as co-executors lapsed after 4 years in TX. Although we have no idea why AT&T would owe him such a big chunk, our bank insists it's a legitimate check on a legit account. It's a little too much to ignore, so we're paying same attorney $3.5K to handle the whole affair, get us around probate, and send us the net proceeds. Since sister is doing all the legwork, I've insisted she keeps the whole amount - I don't want any of it since I've done nothing to resolve the matter. If nothing comes of it, we've lost nothing (I've offered to pay the attorney fees if this goes bust).

Never dreamed this would come up more than 4 years after...

 

[ncbill]

$3.5k for a $24k check?

Assuming I was an executor, and had already closed the estate account, I would have signed it as "dad, by executor me" and then wrote "pay to: me" before depositing it in my personal account and then paying the proportionate share to any other beneficiaries.

Handle the the above via ATM and who would ever notice?

 

[Morgan22]

$3.5k for a $24k check?

Assuming I was an executor, and had already closed the estate account, I would have signed it as "dad, by executor me" and then wrote "pay to: me" before depositing it in my personal account and then paying the proportionate share to any other beneficiaries.

Handle the the above via ATM and who would ever notice?

I would do the same. Avoid depositing a check in person in this type of situation.

 

[Surfs_Up]

Two of the heirs live overseas.

Any advice on potential pitfalls of having an heir that's a USA citizen living overseas ? Assets are equities, I bonds, and a home. I was told by a Eldercare lawyer that the heir living overseas should avoid being the Executor too.

 

[Surfs_Up]

Most Assets are in IRA, remaining in Revocable Trust.

Any advice on potential pitfalls of having an heir that's a USA citizen living overseas ? Assets are equities, I bonds, and a home. I was told by a Eldercare lawyer that the heir living overseas should avoid being the Executor too.

 

[audreyh1]

Any advice on potential pitfalls of having an heir that's a USA citizen living overseas ? Assets are equities, I bonds, and a home. I was told by an Eldercare lawyer that the heir living overseas should avoid being the Executor too.

Didn’t have too much trouble. Probably the most complicated is dealing with a brokerage that doesn’t handle overseas accounts. But the two siblings had US addresses for dealing with some things, annd anlready had relationships with the same brokerage, and managed to finagle it.

They both deal with the IRS just fine using their foreign addresses. One of them has since reestablished a US address.

Executor - well you would have to spend some maybe considerable time in the US to handle the executor responsibilities. I suppose it would depend on the flexibility of the individual.

 

[socca]

$3.5k for a $24k check?

Assuming I was an executor, and had already closed the estate account, I would have signed it as "dad, by executor me" and then wrote "pay to: me" before depositing it in my personal account and then paying the proportionate share to any other beneficiaries.

Handle the the above via ATM and who would ever notice?

A teller refused to deposit a check into my dad's checking account because it was made out to "The Estate Of ..." rather than his name. So, I used the bank's app on my cell phone to deposit the check. It went through just fine.

There are a surprising number of entities who refuse to issue an estate-related check to anyone other than "The Estate Of ..." These folks just don't seem to be aware that many estates pass without probate and thus no checking account is ever opened in the name of the estate. Most notably, AMEX refused to issue a refund check in my dad's name. You'd think that an entity the size of American Express would know better.

 

[steelyman]

A teller refused to deposit a check into my dad's checking account because it was made out to "The Estate Of ..." rather than his name. So, I used the bank's app on my cell phone to deposit the check. It went through just fine.

I ran into a similar problem (with Schwab). Fortunately, producing a small estate affidavit convinced them. Another quirk was that the limit for small estates in Illinois is $100K (the check was less than that).

This motivated me to check the limit in North Carolina (where I live). It appears to be $20K.

 

[athena53]

A teller refused to deposit a check into my dad's checking account because it was made out to "The Estate Of ..." rather than his name. So, I used the bank's app on my cell phone to deposit the check. It went through just fine.

I had to file an amended return for the year DH died, resulting in a small refund. Both the State and Federal refund checks were made out to "Athena 53 and Mr. Athena53, Deceased". I also deposited them with my cell phone app with no problems.

DS had a hard time getting unclaimed funds from the state in my Ex's name till he produced an Affidavit of Small Estate.

This thread makes me grateful for my brother the tax CPA, who handled all of the paperwork on Dad's estate. Dad was in LTC, the house had been sold and everything was with Fidelity, so it was pretty straightforward but he did have to fight with Fidelity till they correctly reflected the step-up basis of the investments.

 

[Sunset]

$3.5k for a $24k check?

Assuming I was an executor, and had already closed the estate account, I would have signed it as "dad, by executor me" and then wrote "pay to: me" before depositing it in my personal account and then paying the proportionate share to any other beneficiaries.

Handle the the above via ATM and who would ever notice?

+1

Seems like ATM checks go through a lot easier... if it was a problem then just back at the starting point anyway. .

 

[Surfs_Up]

Didn’t have too much trouble. Probably the most complicated is dealing with a brokerage that doesn’t handle overseas accounts. But the two siblings had US addresses for dealing with some things, and already had relationships with the same brokerage, and managed to finagle it.

They both deal with the IRS just fine using their foreign addresses. One of them has since reestablished a US address.

Executor - well you would have to spend some maybe considerable time in the US to handle the executor responsibilities. I suppose it would depend on the flexibility of the individual.

Thanks Audrey !

 

[Texas Proud]

$3.5k for a $24k check?

Assuming I was an executor, and had already closed the estate account, I would have signed it as "dad, by executor me" and then wrote "pay to: me" before depositing it in my personal account and then paying the proportionate share to any other beneficiaries.

Handle the the above via ATM and who would ever notice?

+1 on this... Not as big of a check (less than $200 each year) but I have done this since 1980 on my dad's estate..

 

[RenoJay]

Congrats on getting to the end of this process. As the guy in my group who routinely talks about finance, I’ve been asked by multiple friends to be their executor. Whenever possible, I ask them to bake their spouse, adult child, etc. and I offer to “supervise and provide sound guidance.” Clearly I won’t have any legal power if there’s a money grab by relatives, but I’m usually good at talking sense into feuding parties and I don’t want the official responsibility of crossing T’s and dotting I’s if I can avoid it.

For my own estate, I’ve named friends as executors (whom I trust more than family) but that’ll switch to my kids when they come of age.

 

[RenoJay]

Wonderful autocorrect had me baking spouses and children in previous post. [emoji23]

 

[Texas Proud]

Wonderful autocorrect had me baking spouses and children in previous post. [emoji23]

Yep, bake those people!!!



If someone wanted me to be executor I would say that I charge a high fee... it can be as high as 5% of the estate... but if a small estate can be higher if you put in a lot of hours...

 

[steelyman]

I had an interesting call with a woman associated with a company that had assumed responsibility for annuities issued by another company. What I was trying to do was to get a distribution issued for someone who had passed away in 1994.

This woman’s unenviable job was to track down people/parties who were owed money before escheating the proceeds to the last known state of residence.

She was pretty interesting, told me several personal stories including how much money she was trying to deal with. At one point she said she had actually turned to Facebook to try to find these people! Oh my… at least my situation was resolved and I’m expecting to receive a couple of decent sized checks to be deposited in an estate account.