They say nothing is certain except for Death and Taxes. It is no different during Probate!
As the Executor/Administrator of an estate, your duty will entail among other things the duty to prepare and file all the tax returns for the Decedent and for the Estate. To help you get started, we will discuss the most common Tax documents that get filed during Probate.
1) The Decedent’s Final Personal Income Tax Return
Because taxes are filed in yearly periods (January 1 – December 31), the Final Income Tax for the year of Death of the Decedent will likely still need to be filed. The Executor as representative of the Estate is the only person who is legally allowed to do this. The Income taxes are filed for the period January 1 – Day of Death. Any income that is generated after the Day of Death must be filed under an Estate Income Tax Return.
2) The Estate Income Tax Return
This usually is filed for income generated after someone’s Death. Examples are dividends and interests on bank accounts, oil and gas royalties, etc. General rule is that any income after the date of death must be reported as income by the estate rather than by the Decedent. This means that this income will be reported on a separate tax return, and it is important that your tax preparer understand the coordination of the estate income tax rules with the personal income tax issues of the beneficiaries and heirs of the estate. If you do not have a tax prepared, we can provide you with a knowledgeable referral. Using a professional tax preparer will also help you when you are trying to save taxes during distribution time.
When to file an Estate Tax Return?
The Estate Tax Return is filed within 9 months after the Decedent’s date of death.
As you can see, there might be some hidden surprises in the administration of an estate. It is therefore important that you work with a team of professionals who can help you complete your duties and an Executor to the standards set by Texas Law.
We at GP Schoemakers, PLLC are familiar with the Texas probate process, and have many trusted professionals in our network who can help you complete your duties as Executor/Administration. If you have questions, or would like us to represent you during probate, we are here to talk to you! You can book an appointment here, or contact our office.
If you have a fact-specific legal question, please email me, or communicate with me through my secure client area. To do so, simply login if you are an existing client, or request an introductory conference if you are interested in becoming a new client.