Norristown Pa Estate Taxation Lawyers

When an individual acts in a fiduciary capacity such as a Pa Executor of a Pa Last Will or a Pa Trustee of the financial assets of another person or entity, they have the responsibility of keeping accurate financial records.

Those records should show how money was spent, invested or distributed while under the fiduciary’s care and control. Proper accounting can bring to light the mismanagement or bad investment of funds should an issue arise with an interested party.

Interests Served

There can be a number of interested parties who may want to examine the financial records and approved fiduciary accountings. They are entitled to receive copies of all the materials such as profit and loss statements, expense reports and tax returns. You may request documentation if you are:

a beneficiary of an estate or trust

a principal of an agent acting on your behalf

a minor whose care is being administered through a third party fiduciary agent

the court who must evaluate financial matters in relation to a trust or estate

Approved Fiduciary Accountings

Certain procedures must be followed when reports are prepared to explain how the assets in an estate or trust were managed. Approved fiduciary accountings require the separation of principal and interest. You can not commingle funds that are considered principal with those that are considered income.

Principal = original investment + capital gains – capital losses – expenses – distributions

Income = money generated from the investment or use of principal

The main reason for keeping principal and income in separate accounts is that the beneficiaries of income in a trust or estate may be different than the beneficiaries of the principal in the same estate or trust.

Fiduciary Tax Returns – Form 1041

A trust or an estate is considered a separate legal entity from an individual who may be a beneficiary of that trust or estate. Therefore, it is incumbent upon the fiduciary administering the estate or trust to file a federal tax return under certain conditions.

The IRS requires a trust to file a tax return if it has any taxable income or has gross income of at least $600, regardless of whether it is taxable or not. Estates must file Form 1041 if they have gross income of $600 or more. A fiduciary must also file a return if any of the beneficiaries of the estate or trust is a non-resident alien.

Form 1041 is similar to the 1040 return used by individuals. The form is designed so estates and trusts can report income, deductions, gains, losses and any other pertinent financial information. Before funds or assets can be distributed, any tax liabilities of the estate or trust must be satisfied.

Closing Out a Fiduciary Relationship

Once all of the assets of an estate or trust have been distributed or otherwise settled, it is customary that the fiduciary is released from further responsibility. That may be done by signing a release form through the court or an agreement with the beneficiaries of the estate or trust.

Dealing with estate taxation can be complex. Estate taxation attorney John B. Whalen, Jr., provides guidance to his clients when dealing with these complicated issues.

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Norristown Pa Estate Administration Lawyers

Pa Estate Settlement (known as Pa Estate Administration) is the process of settling a decedent’s affairs.

When a loved one passes away, it can be an emotional time. In addition to grieving their passing, those that survive them must tie up all the legal and financial loose ends related to their life and estate. This includes addressing their Pa Last Will and following its instructions.

The first step of the Pa Estate Administration requires the named executor to apply for Pa Probate. Pa Probate grants the Pa Executor the legal right to be able to administer the Pa Estate.

The Pa Executor must then have the Pa Estate valued in order to determine if any Pa Estate Tax and/or Pa Inheritance Tax is owed upon its proceeds.

If any taxes are due, the amount owed must then be paid by the Pa Executor of the Pa Estate before any other monies are distributed to the departed person’s beneficiaries. The Pa Beneficiaries may eventually have to file Pa Inheritance tax returns as well.

This includes addressing their will and following its instructions. The first step of the Pa Estate Administration requires the named executor to apply for Pa Probate.

Pa Probate grants the Executor the legal right to be able to administer the Pa Estate.

The Executor must then have the estate valued in order to determine if any tax is owed upon its proceeds.

If any taxes are due, the amount owed must then be paid by the executor of the estate before any other monies are distributed to the departed person’s beneficiaries.

The beneficiaries may eventually have to file Pa Inheritance tax returns as well.

Probate

In United States law and terminology, “probate” refers to proving that a will is valid. In many U.S. states, a person would petition the court for probate, and then add the will that is to be considered to their petition. Once probate is approved by the court, the petitioner officially becomes the executor and then has full legal rights to be able to deal with the deceased individual’s estate.

Pa Inheritance Tax

An “inheritance” refers to what a benefactor receives from the estate of a relative who has passed on and included them in their will. Inheritance tax is the tax that is paid to the government on the money that has been inherited. In the United States, not everyone must pay inheritance tax; an estate must be worth a certain amount before a tax payment is required. In addition to federal inheritance taxes, state taxes are required in some states. Inheritance tax returns must be filed as well.

Estate Administration

Pa Estate Administration is the process of settling a decedent’s affairs. When a loved one passes away, it can be an emotional time. In addition to grieving their passing, those that survive them must tie up all the legal and financial loose ends related to their life and estate. This includes addressing their will and following its instructions. The first step of the Pa Estate Administration requires the named executor to apply for Pa Probate. Pa Probate grants the Executor the legal right to be able to administer the Pa Estate. The Executor must then have the estate valued in order to determine if any tax is owed upon its proceeds. If any taxes are due, the amount owed must then be paid by the executor of the estate before any other monies are distributed to the departed person’s beneficiaries. The beneficiaries may eventually have to file Pa Inheritance tax returns as well.

Norristown Pa Estate Administration Lawyers – Steps

Most executors have never probated a will; many are surprised to learn the decedent’s will named them as the responsible party. I provide indispensable service for executors who have no prior experience in the probate court on matters that include:

Filing the will with the Pennsylvania probate court
Developing the best strategy for fairly and expeditiously settling the estate
Finding and assembling assets
Pay creditors and claimants
Collecting amounts owed the estate
Closing and opening bank accounts
Transferring assets from the deceased to the estate
Paying current and delinquent taxes as well as estate taxes
Valuing, managing, preserving and liquidating the estate
Locating beneficiaries
Hiring experts, when appropriate

Executors can easily make mistakes due to inexperience, stress and hasty decisions. This can be costly, as executors can be held personally liable for beneficiaries’ losses. I guide executors through every step of the probate process, with reliable, detailed advice, so you can settle the testator’s estate as efficiently, quickly and easily as possible.

Capable Management of Probate Disputes

Even in apparently straightforward estate cases, there are sometimes disputes between disappointed beneficiaries and the will’s executor. When representing executors, I strive for the utmost professionalism in negotiations and in the courtroom. Whether the issue is a will challenge or an accusation of mismanagement of estate assets, I advocate vigorously for the testator’s estate and the executor.

Contact an experienced and knowledgeable probate lawyer

John B. Whalen, Jr. Esq. provides will and probate court services in Wayne and throughout Pennsylvania. Call me at 215-253-8127 or contact my office online to schedule a consultation.

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