San Jose Estate Taxation Attorney

Lawyer Assisting With Fiduciary Taxes in the San Francisco Bay Area

Many people are familiar with the idea of the estate tax, which is commonly known as the "death tax." However, this is only one tax issue that must be addressed by the person appointed to manage a person's estate or trust after his or her death. In these cases, an executor of an estate or a successor trustee should work with a skilled tax law attorney to ensure that all requirements are met.

John D. Teter Law Offices can provide invaluable legal help when addressing issues related to taxes for a deceased person's estate. With more than 30 years of experience, our tax attorney understands the laws related to fiduciary taxes and can provide guidance to assist in filing tax returns and resolving any tax issues that may arise.

Fiduciary Tax Issues

A person or organization that acts on behalf of the estate of a deceased person is referred to as a fiduciary. The person named as the executor in the person's will is a fiduciary. Other parties, such as a successor trustee of a living trust, may also need to address fiduciary tax issues. These issues include:

• Individual income taxes - A final income tax return must be filed on behalf of the deceased person for the year that he or she died. The executor will typically file a standard Form 1040, reporting the income that was earned during that year and claiming any eligible deductions for the deceased person. If taxes are owed, they will be paid by the estate, and any tax refund will be added to the assets that will be distributed among the deceased person's heirs. If the deceased person was married at the time of death, his or her surviving spouse may file a joint tax return for that year.
• Income taxes for the estate - The estate itself must pay taxes on any income earned by the estate's assets prior to when they are distributed to the beneficiaries. This includes profits earned by business interests, dividends paid on stock investments, or other forms of income earned by the assets held in a trust. If the estate earned a gross income of $600 or more during a tax year, the fiduciary must file a federal tax return with the IRS using Form 1041. If an estate or trust earned a gross income of at least $10,000 or a net income of at least $1,000 in California, Form 541 must be filed with the State of California Franchise Tax Board.
• Estate taxes - Estates above a certain threshold are subject to a 40% federal estate tax before the estate's assets can be passed to the beneficiaries. However, only large estates are subject to the estate tax. The Tax Cuts and Jobs Act of 2017 significantly increased the estate tax threshold; in 2019, the first $11.4 million of an estate is excluded, and only assets above that threshold will be subject to the 40% tax. An executor will file Form 706 with the IRS and pay any estate taxes owed. California does not currently have a state estate tax.
• Gift taxes - Gifts made by a person prior to death may be subject to gift taxes if they exceeded the annual exclusion amount. In 2019, the exclusion amount is $15,000 for a gift to a single person. If a deceased person made any gifts larger than the applicable annual exclusion amounts during his or her lifetime, the estate may owe gift taxes on those gifts. However, a person's lifetime taxable gifts may be added to the taxable estate, and no taxes will be owed if the value of the estate falls under the estate tax threshold.

Contact a Silicon Valley Estate Tax Lawyer

Determining the tax obligations for an estate can be a complex matter. John D. Teter Law Offices is prepared to work with executors or other fiduciaries to ensure that all tax returns are filed correctly while working to minimize tax burdens and ensure that assets can be passed to beneficiaries. Contact our office at John D. Teter Law Offices to arrange a consultation.