Estate FEINs

[Nashville]

IRS discourages application for a FEIN for estates that are going to be closed out. They encourage application only when the estate is going to drag out over a year, or crosses into multiple calendar years.

However, immediately upon death, banks are now requiring that old accounts be closed and new accounts be opened under an Estate FEIN. They will go so far as to freeze access to money.

How does one reconcile or deal with making both institutions happy?

[Burke]

Make the bank happy. If you don't give them a FEIN, they often put the executor's SSN or whoever's on there. They won't leave it blank. Also, same with brokerage accounts. If you sell the stock, or if dividends/interest are credited to the account, they want an FEIN to report. Or they will use the decedent's SSN, or whoever's. Boatload of problems. Ignore IRS advice. I have not seen anything on this. Where did you hear it? Also, very rarely is a Form 1041 not required for an estate. If it does not meet the income requirements, then probably one should be done for deduction pass-throughs to the bene's. You must have an EIN to put on this return. I find the average life of an estate is 12 - 18 months from start to finish where a spouse is not a survivor. The problem is, you do not know how long it is going to take in the beginning, especially if you have real estate to sell. And any attorney will put those funds in escrow for a year after date of death.

[newbie]

What if the estate has next to nothing in it? Deceased had just made an insurance payment so the refund is just under $400 made out to The estate of.......

The bank will not cash it without a FEIN and will not let them deposit it into the POD account. An return does not even need to be filed because under $600 so it seems a wast to apply for a FEIN just to cash this check.

If a FEIN is obtained will the IRS be looking for a return?

[taxxcpa]

Ein

I would apply for the EIN and file a 1041 since failure to do so would cause more problems than any other course of action.

Just make sure you get the EIN a week or two before you try to e-file the return so the number will be in the IRS data base.

A form 1041 for the type account you have would only take a few minutes to prepare.

[JG EA]

Also you may ask someone else in the bank. Sometimes someone may have limited knowledge and think this is necessary. For example, I had a client that the bank insisted on an EIN for a living trust. She got one because of it, but we corrected the matter over time. I know this is a different thing, but if it is not necessary, it is not necessary and someone at the bank may know. But, as the others said you may have to do what will cause less trouble in the long run.

[JohnH]

Not trying to hijack the discussion, but I have a question because I don't usually do any estate work but I have to help out with one. The individual died in March and initially it was believed that the estate would have well over $600 in interest income. A FEIN was obtained and an estate account was opened. However, as it turned out, the cash was assembled and then distributed to the heirs quickly (most of it within a matter of days). The final report for the estate was filed this month with the Clerk of Court and the estate account closed. Total interest income was only $300 or so, and no dividends or other income.

As a result of the above, I believe a Form 1041 isn't required, but I'm wondering if one should be filed and marked "Final" in order to close the loop with the IRS. Anyone have any suggestions pro or con on this?

[JG EA]

Not trying to hijack the discussion, but I have a question because I don't usually do any estate work but I have to help out with one. The individual died in March and initially it was believed that the estate would have well over $600 in interest income. A FEIN was obtained and an estate account was opened. However, as it turned out, the cash was assembled and then distributed to the heirs quickly (most of it within a matter of days). The final report for the estate was filed this month with the Clerk of Court and the estate account closed. Total interest income was only $300 or so, and no dividends or other income.

As a result of the above, I believe a Form 1041 isn't required, but I'm wondering if one should be filed and marked "Final" in order to close the loop with the IRS. Anyone have any suggestions pro or con on this?

Nope. If it is not required - it is not required. However if they filed a Form 56 it is a good idea to send it in again to revoke.