Estate Administrator Duties

When a Person Dies. What about taxes?When a person dies, a probate proceeding may be opened. Depending on state law, probate will generally open within 30 to 90-days from the date of death.  One of the probate court’s first actions will be to appoint a legal representative for the decedent and his or her estate. The legal representative may be a surviving spouse, other family member, executor named in the decedent’s will, or an attorney. We will use the term “estate administrator” to refer to the appointed legal representative. The probate court will issue Letters Testamentary authorizing the estate administrator of the decedent to act on the decedent’s behalf. You will need the Letters Testamentary to handle the decedent’s tax and other matters.

General Duties of the Estate Administrator:

Responsiblities of an Estate Administrator or a FiduciaryIn general, the responsibilities of an estate administrator are to collect all the decedent’s assets, pay creditors and distribute the remaining assets to heirs or other beneficiaries. As an estate administrator your first responsibility is to provide the probate court with an accounting of the decedent’s assets and debts. Some assets may need to be appraised to determine their value. All debts will need to be verified and creditor claims against the estate must be filed. Madison Consulting is highly experienced in the final accounting process.

Tax Responsibilities of the Estate Administrator:

A decedent and their estate are separate taxable entities. So if filing requirements are satisfied, an estate administrator may have to file different types of tax returns.

Tax Responsibilities of the Estate Administrator. IRS 706 RI-706 ri706First, an estate administrator may need to file income tax returns for the decedent. The decedent’s tax return for the year of death, and for any preceding years for which a return was not filed, are required if the decedent’s income for those years was above the filing requirement.

Second, an estate administrator may need to file income tax returns for the estate. An estate is required to file an income tax return if assets of the estate generate more than $600 in annual income. For example, if the decedent had interest, dividend or rental income when alive, then after death that income becomes income of the estate and may trigger the requirement to file an estate income tax return.  If the estate operates a business after the owner’s death, the estate administrator is required to secure a new employer identification number for the business, report wages or income under the new EIN and pay any taxes that are due.  Let Madison Consulting assist you with the burden of tax and filing compliance.

Some or all of the information you need to file income tax returns for the decedent and their estate may be in the decedent’s personal records. If access to these records is challenging, let Madison Consulting assist you by working directly with the IRS to obtain records.

Filing an Estate Tax Return or an Estate Income Tax Return. Rhode Island CPA firm.Third, an estate administrator may need to file an estate tax return. Estate tax is a tax on the transfer of assets from the decedent to their heirs and beneficiaries. In general, estate tax only applies to large estates. For help with determining whether an estate tax return is required and how to file it, contact Madison Consulting for more info.

Additional information on the duties of an estate administrator is available in IRS Publication 559, Survivors, Executors and Administrators.

Excerpts from: IRS.GOV. As of Update: 03-May-2016