Probate & Estate Tax
Attorney Riverside

Local Probate Tax Attorney handling US Tax Law, Estates and Trusts, Wills, Living Trusts. California Tax Attorney helping with ALL Tax Problems. Proudly located here in SoCal with Law Offices in Riverside, CA, Palm Springs and San Bernardino, California.

+1 (310) 310-9866     

Probate Tax
& Estate Tax

U.S. Tax Law and Estates and Trusts

An estate is established on the date of death. Your tax professional should obtain an EIN for the estate and file an estate tax return form 1041: but not so quick, if a pre-tax funded investment account such as an IRA is part of the estate, some technical tax planning should first be considered in order to reduce a tax bill that will probably be substantial. Such planning should include a serious look into strategic options such as choosing to liquidate the account over five (5) years or an election for a non-calendar tax year.

Generally, it is true that an inheritance is not taxed to the heir or beneficiary; however, there are important exceptions. Avoid being liable for taxes by giving due attention to federal and state tax issues, even for smaller estates. While most understand that an "estate tax" is levied on an estate over a certain value (sometimes referred to as the "death tax"), many people do not think of the ordinary "income" tax liabilities of an estate-especially those handling smaller estates.

Estate Tax Attorney Riverside

One common surprise is that estates consisting of an account funded by pre-tax dollars (such as an IRA for which no beneficiary was designated) will most likely have a substantial tax liability. In such cases, the entire IRA becomes part of the estate: if the IRA is cashed out and distributed to the heirs, a tax will often be applied at the highest rate as ordinary income. In 2014, if the account is worth $100,000.00, the tax would be about $40,000.00. If this tax is not paid by the estate, the IRS will demand payment from the heirs that received this money.

Another trap for which to watch revolves around the sale of stock held in the estate. If stock is liquidated before it is distributed, the increase in value of the stock, if any, that occurred during the period from the date of death until it is liquidated is taxable to the estate. If a beneficiary prefers to receive the cash value as opposed to the stock itself, it may be better to first transfer the stock to the beneficiary and then the beneficiary can apply tax-reduction strategies that may not be available to an estate.

Probate court in many states require that both federal and state income tax returns be filed-the final 1040 for the year in which the death occurred and a final 1041 for the estate. Do not rush into filing these tax returns without a tax professional's assistance and without obtaining an Estate Tax Closing Letter from the IRS and other applicable tax agencies, otherwise the IRS may be looking for payment from the executor, administrator, trustee, heirs and beneficiaries.


If a family member has recently died, contact us for a Free Consultation.

Legal Disclaimer

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an Attorney / Lawyer for individual advice regarding your own situation. Nothing contained on these pages should be interpreted as establishing an attorney-client and/or lawyer-client relationship through Attorney Riverside . com or with the Law Offices of David DL Horton, Esq. & Associates.

IRS Circular 230 Disclosure

As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code. Furthermore, the contents of this website are neither intended to be, nor should be, construed as either legal OR tax advice. Each individual's circumstances are unique. This site contains general and overall discussions, and as such, the content of this site is not intended as definitive legal or tax advice that would apply to any particular person. Those who view this web site should seek advice from an independent tax advisor with respect to their particular transaction or matters that is based on the reader's particular circumstances. You must have your particular financial and tax situation personally reviewed by a tax professional or attorney in order to obtain tax or legal advice upon which you can rely.

IRS Tax Attorney Riverside

ALL Tax Problems | Estate Tax
Attorney Riverside CA

ALL Tax Problems | IRS Tax Debt | Tax Attorney Riverside CA
Riverside Probate Tax Attorney handling US Tax Law, Estates and Trusts, Wills, Living Trusts. California Tax Attorney helping with ALL Tax Problems.

  +1 (310) 310-9866
  +1 (760) 364-5819
  Mon-Sun 8am - 7pm
  Payment accepted: Cash, Credit Card, Invoice

  4129 MAIN ST, STE 201,
Riverside, California 92501 USA