Estate Planning – Filing a Final Estate Tax Return in 2021

If you have been appointed to be the administrator or executor of your loved one’s estate, there are some basic steps that you will need to take when completing your estate tax returns. First, understand that an estate is generally a legal entity separate from the person who is named as its administrator or executor. Therefore, while your beloved Executrix may be in charge of many aspects of the estate, she will not be the one who has to file the final estate tax return. In most cases, that responsibility falls upon the Trustee-appointed administrator. To be sure, it is your duty to ensure that all of your duties to your loved one are fulfilled by meeting each of her responsibilities.

If you have been appointed as the executor of your loved one’s will, then you have the responsibility to file your final estate tax return as directed by the state law. As part of your estate administration responsibilities, an Executeant or Administrator of a Will is required to manage the taxes of the decedent estate for the period of time it is in their care. If you are also a Executeant or Administrator, then you will simply have to file one of the forms listed below, or a combination of both. Your state may also provide for a “successor administrator” who may assume the role of the Executeant or Administeror if necessary.

The first thing you need to consider is the treatment of property passing to beneficiaries. In general, if the decedent had no children, then, in the majority of cases, there are no gift taxes. Generally, capital gains tax and gift taxes are applied to property passing to a surviving spouse, children, or parents; however, gift taxes are sometimes applied to estate assets passing to the estate or to the beneficiary. There are several situations in which you might be under a legal duty to report such gift tax, including the fact that the deceased was married, that the decedent was never married, or that the decedent had more than one dependent. If the gift is from a relative or legacy, then gift taxes should be paid by the individual or through the estate tax planning process.

Another situation that can result in gift tax liability is when the decedent owned residential real estate during his or her lifetime. If the property was owned as a rental property, then the decedent is treated as the owner of the property with a special tax called the “taxable interest in the property” or TICP in California. The term “gift property” refers to any property that is owned by the decedent and that is not qualifying property described above. This includes any real property held by a charity for the benefit of a beneficiary.

Finally, some people may be under a legal duty to file a federal estate tax return if they die before the due date for filing, or within a certain time after the due date. This can occur if the decedent was alive during the day that the IRS received notice of its intent to levy the assets. In this case, the executor of the estate of a decedent must file the timely returns. If the executor fails to file timely, the IRS can proceed with the levy, which could cause irreparable harm to the estate and its beneficiaries. For this reason, the executor must ensure that he or she files a federal timely estate tax return as required by law.

Although you might feel overwhelmed at the prospect of preparing and filing a federal estate tax return, rest assured that it really is not as difficult as it might seem. In fact, it can be quite easy if you utilize the assistance of a qualified professional, who can walk you through the process step-by-step. If you do not have this type of help, or if you would rather skip the process, you can still make things easier by utilizing the services of an experienced estate planning attorney. Once you have decided whether or not to file a federal return using a modern electronic filing system, it is important to ensure that you take the necessary steps to protect your finances and your family’s future while you are still alive.

Consultation Banner
Our Brand Logo

Contact Us

Paul E Groff Law
3649 Atlantic Ave Suite D
Long Beach, CA, 90807
Call Us: 562-426-8499
Recent Posts