Dealing with the death of a loved one is difficult. During this trying time, it can be especially difficult to focus on things like administering the estate and taking care of any tax issues surrounding the decedent. However, someone will inevitably have to deal with these issues. If the decedent has a valid Texas will that is admitted to probate, the executor assigned by the probate court is usually the person responsible for this. If there is no will or other testamentary document dealing with the decedent’s estate (meaning that the person died “intestate”), then a court will often appoint an administrator to handle the estate who serves essentially the same purpose as an executor. In addition to identifying the assets of the estate, paying any debts, and distributing the remaining assets to the beneficiaries, the executor is required to file any necessary tax returns and pay any taxes the decedent may owe. If the executor fails to file any required tax returns or pay any tax due, the IRS may come after the executor personally for any tax due, plus any penalties and interest that may have accrued. So, if you are an executor or administrator of an estate, here are some things you need to consider:
The steps involved in your specific case may vary depending on circumstances, so you should always consult with an estate planning attorney and possibly a CPA or other tax adviser for advice specific to your case.
Reference: Bill Bischoff, 4 Tax Issues to Consider When You Close an Estate, Market Watch, Feb. 17, 2015.