September 18, 2014 Category: Will Contests, Trust Disputes & Probate Administration
Don’t forget the IRS. It sounds like a silly platitude. The IRS always gets theirs, doesn’t it? But in a decedent’s estate it is essential that someone (a personal representative) file a final tax return for the decedent. Again, this seems simple, but not always. Let’s say Grandpa Bill, who was working up until his death, died March 15, 2014. Let’s say all of his financial assets were jointly owned with daughter. Since Grandpa died before April 15 he hadn’t yet filed his 2013 return AND he had income in 2014 for which another return has to be filed.
But everything passed to daughter directly upon Grandpa’s death you say. True, but the IRS still has the ability to go after that asset, now owned by daughter, for any unpaid taxes. Does anyone really need that aggravation? The simple way to avoid the problem is to make sure the 2013 and 2014 tax returns are filed and, yes, they can be filed at the same time. Yes, it’s a little bit of a pain, but it’s much less than the pain of having the IRS poking around years later. Add on interest and penalties and that bank account that transferred to daughter by operation of law may just disappear.