Both the federal government and New York State impose estate taxes on high net-worth individuals. Currently, the federal government imposes an estate tax on any individual dying with over $5.45 million in his or her “taxable estate,” for single individuals, and an estate tax on couples dying with over $10.9 million in their combined “taxable estates,” while New York State imposes an estate tax on any person dying with over $3.125 million in his or her “taxable estate,”without regard to whether such person is single or married.
A “taxable estate” is different than the deceased person’s “estate” or “probate estate.” While a deceased person’s “estate” or “probate estate” typically only consists of property held in the deceased person’s name alone, the deceased person’s “taxable estate” includes property of whatever type, without regard to whether the property was held in the deceased person’s name alone or held jointly with another. In many cases, in order to determine the true value of the deceased person’s “taxable estate,” appraisals must be obtained to determine the exact value of both real property and personal property.
If an estate tax is owed both the IRS and the New York State Department of Taxation and Finance require that the estate tax return be filed, and any tax owed be paid, within 9 months from the deceased person’s date of death.
A fiduciary income tax return is a concept foreign to many individuals, as fiduciary income tax returns are only typically required to be filed when a person is either the Administrator or Executor of a deceased person’s estate or the trustee of a trust. The purpose of the fiduciary income tax return is to inform both the IRS and the New York State Department of Taxation and Finance of any income earned by a decedent’s estate or any income earned by a trust during annual administration of the estate/trust. While not always required, the filing of a fiduciary income tax return is appropriate in most cases. As with the filing of an ordinary income tax return, fiduciary income tax returns must be filed by April 15 each year.
The specific rules and regulations regarding the requirements of filing an estate and fiduciary income tax returns are extremely complex and subject to change. If you think you need the services of an experienced estate or fiduciary income tax professional, please do not hesitate to contact our office.