Dave's Pick: "Worried about inheritance tax? Read this if you’re a beneficiary, executor or trustee"

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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