Estate tax question

[thomtax]

Situation:
Client was killed in car accident the week after Christmas. He was married to current wife for about 7 years. He lived with previous woman, not married, and had children who are now grown. Children hate wife. They hired the only attorney in town that had not turned them down and got him appointed executor of estate. Wife has no money to hire attorney to fight, so said attorney immediately went to home and confiscated 6 horses and hauled them off. None of this may matter to my question, but I wanted to try to cover the basic facts, in case it mattered.

From knowledge of his previous dealings, I know that he will not bother filing estate tax return. What I want to know is who is responsible for filing this return, the attorney, the ones who hired him, or the wife? For info, Arkansas is not a community property state.

Thanks to anyone that has any knowledge in this area and will share.

LT

[Koss]

Appointed as executor??

Okay, I guess it's that time of the year... since I finally got my copy of TTB, and was able to update my password, I suppose I can crawl out from under my rock and take a crack at this question...

The short answer is--

The estate is a legal entity, just like a corporation or a partnership. The primary responsibility for filing the estate tax return rests with the person who is acting in a fiduciary capacity to manage the estate. That's usually the executor.

But an executor generally can't be appointed by the court. I'm sticking my neck way out here, dancing on the edge of practicing law. But I know what I'm talking about. If the person left a will, then the will controls who is the executor. If the person died without a will, or if the executor named in the will is unable to or unwilling to serve as executor, then the court will appoint an administrator.

To return to the original question, it is generally the executor or administrator that is responsible for filing the estate tax return.

With that being said, there are a couple things you should keep in mind:

(i) If the executor or administrator distributes assets of the estate to heirs without first making sure that estate tax obligations are satisfied, those assets can, in some cases, be subject to liens or other attachment proceedings by the IRS.

That doesn't change the fact that it is the executor or administrator, and not the heirs, who is expected file the return.

The heirs, including the wife, could be liable for some estate taxes, or might be forced to hand over some assets to the IRS, if they take possession of such assets before estate tax obligations are satisfied.

The administrator has a duty to ensure that such obligations are paid before distributing assets. But if he fails in that duty, the IRS can go after the assets themselves.

(ii) The wife should make sure that her deceased husband properly files an individual income tax return for 2008. Assuming she did not remarry in 2008, she probably has the right to file a joint return. She may or may not be able to claim any refund. The filing of the final 1040 should not be left to that attorney...

[Larmil]

Maybe separate 1040

Okay, I guess it's that time of the year... since I finally got my copy of TTB, and was able to update my password, I suppose I can crawl out from under my rock and take a crack at this question...

Welcome back!

The short answer is--

[portions deleted]


(ii) The wife should make sure that her deceased husband properly files an individual income tax return for 2008. Assuming she did not remarry in 2008, she probably has the right to file a joint return. She may or may not be able to claim any refund. The filing of the final 1040 should not be left to that attorney...

I believe the administrator is responsible for the deceased's return. If he refuses to sign a joint return, the wife should file a separate return.

[thomtax]

Koss

But an executor generally can't be appointed by the court. I'm sticking my neck way out here, dancing on the edge of practicing law.

I thought I had covered everything in the original post, but discovered that I left out, there was NO will. That is what is causing the problem.

Yes, he got appointed. The children went to him, provided information - some of which was false and can be proved, but not my problem - He took this paperwork to the judge and got appointed as executor. The wife has now retained an attorney and quite possibly will get him removed and another attorney appointed as executor.

However, from past experience, I seriously question whether the current executor will bother with filing the estate return.

There is no problem filing the last personal return as joint. It is already being started.

Thanks for your reply. It is appreciated.

[Davc]

bother with filing the estate return.

There is no problem filing the last personal return as joint. It is already being started.

Yes there is a problem as stated by Larmil, the the estates fiduciary determines whether or not a joint return is filed, not the surviving spouse.

[Burke]

I thought I had covered everything in the original post, but discovered that I left out, there was NO will. That is what is causing the problem.
Yes, he got appointed. The children went to him, provided information - some of which was false and can be proved, but not my problem - He took this paperwork to the judge and got appointed as executor. The wife has now retained an attorney and quite possibly will get him removed and another attorney appointed as executor.

Koss is correct in that, when there is no will, the court appoints an administrator. The wife has a primary claim here, and should take steps to protect her interests, which it sounds like she has done. All info will be public and she can access it, including inventory of assets, distribution of those assets, and payment of estate obligations. My state now requires a statement that all taxes (including federal Estate taxes) have been satisfied, or they will not accept the final accounting. She or her lawyer should make their interest known to the court now.