I have a family member who have found themselves executors in a will. They really don't know what they're doing, and you know how everybody "knows" what to do and most of it is wrong, and I'm thinking that maybe this is more complicated for them than it needs to be. They asked me about a 1041 today, and I'm thinking maybe they don't need to do an estate tax form?????? The person who died has a substantial amount of land and tractors etc. willed to the children but no real income from what I can tell except for a man paying for cows on his land of like $125 a month. Anybody out there have experience in this that can maybe advise me? It's in NC. Thanks!!!!!
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The executor(s) should have been given written instructions by the local probate court where they qualified as to how to marshall the assets, account for all income and expenses, and the proper recordkeeping, when reports are due, etc. etc. And they could query the local clerk of court for many questions they might have regarding these things. They are not expected, however, to understand tax consequences or filing of tax forms, and may retain professional help to accomplish that. If death occurred this year, they have no federal Estate Tax worries. And it appears the NC Estate Tax is repealed also for 2010. However, you state the estate is receiving $125 per month rental income and that puts it over the limit of $600 for the estate tax year assuming you elect a full fiscal year of 12 months or a short year of more than 4 months. So a Form 1041 Income Tax Return needs to be filed or will be needed at the end of such term if there is one. If the land is willed to the children, and the estate has no power of sale over it, then the income is probably taxable to them rather than the estate. Is the estate solvent? In other words, is there enough cash or income to pay its bills and final expenses of the decedent? Will it have to sell assets? In some cases, they may be able to file a simplified accounting or statement in lieu of accounting (agreed to by all beneficiaries) if there are no complications. They could also contact an attorney for guidance in the administration. Check the NC State Code (see library or internet) for Administration of Wills and Estates. Also, refer to www.nccourts.org/Forms/Documents/735.pdf.
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