Legally, when does an estate become an estate?

[AZ-Tax]

Is it after the date and time immediately after the death of the decedent? I was asked this by a client whose last parent passed. My client is named executor and PR and my client agreed not to charge any executor fees if her siblings agree to donate their time to help out with settling the estate. My client said that one of her sisters helped arranged the funeral and decedents estate will need to pay that sister but my client wants to know that if the help her sister provided with the funeral arrangements was in the status of the Estate.

[TXEA]

The estate begins for tax purposes the day after death. Income and Expenses up to and including the date of death are reported on the decedent's final 1040. Income and Expenses beginning the day after death belong to the estate.

The funeral expenses are part of estate administration.

[Bees Knees]

It is true that for tax purposes, the estate begins at death.

But the question had to do with legality. Technically, the executor or personal representative does not have any power until the court appoints such person to that position. Even so, assuming funeral expenses were incurred prior to the executor gaining legal status and/or prior to an estate bank account being opened and a Federal ID number being assigned to the estate, once established, the estate can reimburse expenses incurred on behalf of the decedent by the beneficiaries. This can be done even after the estate is established and a beneficiary pays an expense that is legally the responsibility of the estate.

[Lion]

I also agree the question is legal, if the siblings are in disagreement. Or, a family matter if they're talking. It sounds like your client wants to know if the estate has to pay her sister for sister's TIME in arranging the funeral. Or, if that time falls under the agreement between the siblings that they will donate their time to help settle the estate in exchange for your client not taking any executor fees. Are funeral arrangements part of settling the estate? Sounds like a family squabble and not a tax question.

[TXEA]

I agree the question is legal in nature. The estate administration would under all reasonable circumstances include final expenses of the decedent. No individual is responsible to pay for the burial of the deceased. This is an estate responsibility and most reasonable minds would agree to reimburse the sister for any expenses she paid personally if she requests such reimbursement from the estate.

If the sister paid for the funeral as a gift to the estate, that is fine as well. The only circumstance I could see where there might be some conflict is where one party incurs expenses for the estate without first securing the approval of the estate executor and only if such expense was extravagant and beyond the reasonable needs of the estate to properly reimburse.

It is not uncommon (and in fact quite common) that the burial and immediate expenses are handled by the person most closely attached to the decedent. These expenses are generally during a time when most estates have not properly dealt with all the legal issues related to the estate.

I would not expect that the estate would under normal circumstances reimburse someone for their time in managing the affairs of the decedent immediately following the death; however, funeral expenses would generally be reimbursed.