The executor or legal representative is legally responsible for filing the final estate tax return and the estate final estate tax return for a decedent’s estate for the year ending on death. This includes preparing, recording and updating any of the decedent s final tax statements for previous years; a full statement of final estate tax return; distributing any unused assets; and dispersing any remaining funds. In addition, the executor is responsible to report any capital gains and any inheritance tax payable to the appropriate federal tax authority.
If you have already prepared your final estate tax return and your deceased loved one had no US tax liabilities, the executor should prepare a simple statement to send to the IRS on behalf of the decedent. He or she should keep a record of any additional gifts received and any inherit gifts that resulted from legitimate retirement and insurance benefits that the decedent might have accumulated. Any property transferred to beneficiaries should be described so that the final estate can bequeath an appropriate amount of tax deadweight. Gifts to charity and government agencies are generally not required. If you are planning to distribute gifts after death, you will need to determine if you need a certificate of exemption or a living trust to avoid probate and Estate Tax.
The final estate tax returns must be submitted on a timely basis to the IRS by the executor. Filing electronically usually expedites the process. It is important for anyone planning to leave someone behind to ensure the correct and complete preparation and submission of final tax returns. If you are planning to hire a professional attorney to help you with the preparation of your final tax returns, be sure he or she is familiar with the proper process as well as the IRS regulations regarding the preparation of final tax returns.
The final estate tax return can contain errors if your records are incomplete. You may want to retain signed records from estate planning meetings, such as those held with a real estate agent or lawyer. Real estate transactions are only reported if the decedent specifically directed that they be included on the final return. There may be situations where you are unable to remember a specific transaction or there is simply a lack of available information. In this case, you may wish to consider retaining some documentation from earlier years in order to avoid probate questions on your final return.
When you file your final federal and state income tax returns, one of the major areas of concern for an estate administrator is the net gain or loss incurred during the year. Net gain is the amount earned by the decedent during the year, less any amount paid out or taken out as a gift during that time. The amount of gain does not include any amounts that the decedent may have realized during the year from the sale of property, whether paid out cash or in kind. A good rule of thumb is that the more money that the decedent earns, the larger the amount of gain that should be reported on the final estate tax return. However, this amount will always be less than the gross estate property value that was calculated using the marital property model.
Because there are so many aspects to the final estate tax return, it can take a skilled professional to help an estate administrator navigate the complex waters of estate taxes. It is not enough to simply fill out the form; the person filling it out must understand the implications it presents to each of the recipients listed on the WV. Even the most seasoned professional must be consulted with every few years in order to ensure that the estate taxes being administered are still accurate and up to date. It is always best to follow the instructions listed on the WV, which are designed to help people with their complex financial affairs.