Estate & Trust Taxes

If you are the executor of an estate, you will have quite a few responsibilities that you need to take very seriously. One of the most important of these is making sure the taxes are paid on time, and in full, for everything you are responsible for. Estate taxes may be deferred in whole or in part and it will be your responsibility to make sure that you make all the right elections timely (this is especially true for an estate that is highly illiquid, i.e. holds assets other than cash or marketable securities). You need to analyze how taxes are going to be allocated among the beneficiaries and how funds are going to be raised to pay taxes. 


Just like your own personal income taxes, if you fail to make the required payments you can face fines and penalties that can add up quickly. Learn more about estate taxes here, and get the help you need to ensure they are handled correctly.

Never File with Your Taxes

Remember, you will have to file taxes for an estate or trust completely separately from your own. If you are an executor, you are just managing the estate or trust, you earn’t the owner of it. You can not mix your personal estate and the one for which you are executor.

Determine value of the estate assets

If you are executor, one of your responsibilities is to determine value of assets owned by the decedent at death. Easy enough, right? Not really, IRA and New York state demand what is a called a “qualified appraisal” for certain types of properties. Certain mistakes in valuation may lead understatement of gross estate that may trigger various penalties and interest. You may become a subject of a law suit by the beneficiaries if you do not ensure that your valuations are prepared properly.  There are many rules for valuing assets of the decedent and those rules get more complicated with each year as the IRS looks at various approaches that the taxpayers take in valuating assets on the lower end of the spectrum. Valuation should not be arbitrary, it should not be subjective and it should not be influenced solely by the desire to lower taxes. Reach out to us and we will gladly help by working directly with your appraiser or by recommending various specialized qualified appraisers in the area.


Understanding Important Terms

For many people who are not used to handling taxes for an estate or trust, it can be quite confusing. You’ll need to learn a lot of new terms so you can be sure to take care of things correctly. Some key examples of this are as follows:


Assets incurable in federal gross estate

QTIP election

Reverse QTIP election

Basis step-up

For fiduciary income taxes, you will need to understand the following concepts: 


Alternative Minimum Tax

Income Distribution Deduction

Fiduciary Accounting Income

Adjusted Total Income

Distributable Net Income

Taxable Income of Trust

Charitable Contributions by ESBTs

Keep Up with Recent Changes

There have been quite a few changes related to taxes on estates and trusts thanks to the Tax Cuts and Jobs Act signed into law in 2017. Many of the changes took effect right away, and others the following years. Even if you have been managing the taxes of an estate or trust for years, things will be quite different now so you may need to get assistance from an attorney or accountant. For many people, the updated tax laws will save them thousands of dollars, which will be a most welcomed adjustment.


We are Here for You

If you would like help handling the taxes for an estate or trust, we are here for you. We serve clients from throughout Brooklyn, Queens, Manhattan, Bronx, Long Island, and Staten Island. You can ask us any type of questions you may have, and get the answers you need. We can also help prepare the taxes and get them filed with the IRS correctly so you don’t have to worry about a thing. If you’d like to set up a meeting, please give us a call at 212-596-7039.


Our policy is to communicate clearly, concisely, and on a timely basis. To be responsive to clients. If we can’t take your call immediately, you can expect that a telephone message left in the morning.