Article originally published by MarketWatch.com
Written by Bill Bischoff
This is Part 1 of a series on inheritance and taxes.
A loved one has passed away, and you’re an inheriting heir and maybe the estate executor or trustee to boot. What happens now tax-wise? Good question. This the first installment of our series covering the most important tax-related considerations for heirs when a loved one departs.
If you are the executor
When a loved one (the decedent) passes away, someone must tackle the job of handling the resulting tax issues. That person may be identified in the decedent’s will as the executor of the decedent’s estate. If there’s no will, the probate court will appoint an administrator. In either case, let’s call the person who is holding the bag the executor to keep things simple. That person may be you. If so, please pay attention, because you’re responsible for filing any necessary tax returns and arranging to pay any taxes.
Or you may be the trustee of a trust that was set up to avoid probate. If so, you need to pay attention too.
The final Form 1040
If your loved one was unmarried, the final Form 1040 covers the period from Jan. 1 through the date of death. The final return is prepared in the usual fashion. It’s due on the standard date: 4/15/22 for someone who dies this year. You can extend the return for six months, to 10/17/22, by filing IRS Form 4868.
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Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.