Not an expert, but I've read up on this stuff too for when I have to do it.
I would not bother with trying to get the bank to use the EIN. They'd probably have to close "her" account with her SSN and roll it into an "estate" account with the EIN. What they are probably hoping you'll do is just withdraw the money from her account and distribute it to the lawful recipients using your state's small estate processes (which in my state would mean providing the bank with a properly completed small estate affidavit). In any case, I believe you can just use the nominee process on Schedule B to reallocate the interest from her to the lawful recipients if necessary.
If you complete K-1s I agree that I think you will need to complete a federal Form 1041 (and maybe state equivalents). If it's for small dollar amounts and there are a few beneficiaries, and a 1041 isn't otherwise required, I think I would just have the beneficiaries report their portion of the interest on their own tax returns as nominee interest and I would bet the IRS wouldn't mind.
Annual gift exclusion amount is $19K per donor/donee per year. It sounds like your portions are below that and so you are fine there with your regifting.
You might elect to file a final 2024 individual tax return for her just to document to the IRS that she passed away in mid-2024 even if you don't need to for any other reason. It seems like they would know from the SSA, but I don't know how that works. It can protect her SSN against identity theft, which some people worry about even with deceased individuals.
You're right, there is no taxes (income or estate) on the inherited principal of the CDs. As you've surmised, the beneficiaries have reportable interest income on their returns starting as of Mom's date of passing.
You're mostly asking about taxes, but two things I would add to my radar: (1) locating any assets you might not be aware of (old life insurance policies, vacant land she may have bought, paper securities) - you could search through her papers for this stuff, or check the state unclaimed property website for the next few years, and (2) any debts she might have that need to be cleaned up and taken care of - final medical bills, insurance premiums, subscriptions, etc. As the executor you might have an obligation for the former and you almost certainly have one for the latter. I'd ask the attorney about the idea of publishing a notice to creditors to start the clock on any debtor claims against Mom's estate. In my state it shortens the time limit from IIRC 3 years to 4 months, which is helpful.
Sorry for your loss.
I would not bother with trying to get the bank to use the EIN. They'd probably have to close "her" account with her SSN and roll it into an "estate" account with the EIN. What they are probably hoping you'll do is just withdraw the money from her account and distribute it to the lawful recipients using your state's small estate processes (which in my state would mean providing the bank with a properly completed small estate affidavit). In any case, I believe you can just use the nominee process on Schedule B to reallocate the interest from her to the lawful recipients if necessary.
If you complete K-1s I agree that I think you will need to complete a federal Form 1041 (and maybe state equivalents). If it's for small dollar amounts and there are a few beneficiaries, and a 1041 isn't otherwise required, I think I would just have the beneficiaries report their portion of the interest on their own tax returns as nominee interest and I would bet the IRS wouldn't mind.
Annual gift exclusion amount is $19K per donor/donee per year. It sounds like your portions are below that and so you are fine there with your regifting.
You might elect to file a final 2024 individual tax return for her just to document to the IRS that she passed away in mid-2024 even if you don't need to for any other reason. It seems like they would know from the SSA, but I don't know how that works. It can protect her SSN against identity theft, which some people worry about even with deceased individuals.
You're right, there is no taxes (income or estate) on the inherited principal of the CDs. As you've surmised, the beneficiaries have reportable interest income on their returns starting as of Mom's date of passing.
You're mostly asking about taxes, but two things I would add to my radar: (1) locating any assets you might not be aware of (old life insurance policies, vacant land she may have bought, paper securities) - you could search through her papers for this stuff, or check the state unclaimed property website for the next few years, and (2) any debts she might have that need to be cleaned up and taken care of - final medical bills, insurance premiums, subscriptions, etc. As the executor you might have an obligation for the former and you almost certainly have one for the latter. I'd ask the attorney about the idea of publishing a notice to creditors to start the clock on any debtor claims against Mom's estate. In my state it shortens the time limit from IIRC 3 years to 4 months, which is helpful.
Sorry for your loss.
Statistics: Posted by secondcor521 — Mon Jan 27, 2025 9:29 pm — Replies 2 — Views 320