Beneficiary of my uncles will

[zddoodah]

So, none of us have received our share of the estate that we are entitled to because the executor said that she is going to have to wait until after the first of the year to do taxes and that she will not be cutting any checks until April or May?

Despite your use of a question mark, this sentence is not a question.

Is this even the way that it is suppose to happen or is she just holding back still? Do they really have to wait until after the first of the year to do taxes?

Taxes for the year 2022 cannot be filed until 2022 is over. The executor could petition the court to allow partial distributions pending the final tax returns but is not obligated to do so.

 

[swalker2001]

Despite your use of a question mark, this sentence is not a question.
I see that now! Sorry trying to type on my phone!



Taxes for the year 2022 cannot be filed until 2022 is over. The executor could petition the court to allow partial distributions pending the final tax returns but is not obligated to do so.

Yes....I get that. Thanks for your reply! As far as her petitioning the court....that will be a no go!

 

[AlmostThere]

We have not asked for a list of assets. That will be the next thing that we will do.

You need to look at the assets and debts.

I guess I am just asking all of this because my cousin, who is also a beneficiary, called our cousin who is the executor and asked her how things were going and she told her that she is not going to talk about the will and the only info she would say was that she probably won't be cutting checks until April or May. She has been very rude to all of us since my uncle passed and her brother is going all around town saying that we are all money grubbers and telling everyone else how much money my uncle had! Totally disrespectful!

Thanks so much for replying to my post!!

Separate the executor from her brother. She is not responsible for what he is going around saying, and has no effect on the distribution of assets. At this point, you do not know the value of the estate. It is possible that after settling all debts the estate will be bankrupt. It is possible that the decedent had more assets than you expect.

It sounds like the executor is handling this reasonably. She is going to file estate tax returns, pay any taxes, then once she has a final number, cut checks.

 

[swalker2001]

You need to look at the assets and debts.



Separate the executor from her brother. She is not responsible for what he is going around saying, and has no effect on the distribution of assets. At this point, you do not know the value of the estate. It is possible that after settling all debts the estate will be bankrupt. It is possible that the decedent had more assets than you expect.

It sounds like the executor is handling this reasonably. She is going to file estate tax returns, pay any taxes, then once she has a final number, cut checks.

We have had to separate the brother! Just don't like that he is talking about it to everyone but us!

My other cousin actually had some lawyer business to do and she did get a number of his assets because the lawyer got in touch with the courthouse. He definitely had more than any of us thought. I totally understand how disappointing it would be to the cousins that are not going to benefit from the estate, but it was my uncle's will and he did it the way that he did.
Thanks for your reply! We will just let it play out and see how it goes!

 

[swalker2001]

The cousin that is the executor has contacted us via text message that we should wait to do our taxes until we receive a K-1 tax form. We are to include this in our 2022 taxes is what she said. Do we have to claim this on our taxes for 2022 even though we have not received our inheritance moneys? Thanks!

 

[LdiJ]

The cousin that is the executor has contacted us via text message that we should wait to do our taxes until we receive a K-1 tax form. We are to include this in our 2022 taxes is what she said. Do we have to claim this on our taxes for 2022 even though we have not received our inheritance moneys? Thanks!

Ok, this could possibly be problematic. It can be very beneficial to pass the tax burden on to the beneficiaries via a Schedule K1 (because individual tax rates are so much lower than estate tax rates) however you can only do that with the final tax return for the estate, which generally is not filed until after the estate is closed. In this instance, the estate was not closed prior to the end of 2022, therefore it is still open and will remain open until the executor makes the distributions to the beneficiaries. Therefore I do not see how she can pass the income through to the beneficiaries (even though it would mean less tax and more money in the pockets of the beneficiaries).

However, in general it is possible to receive a Schedule K1 and owe tax due to that Schedule K1 even though you have not received a distribution of the money (or haven't received it yet) that is being taxed.

 

[swalker2001]

Ok, this could possibly be problematic. It can be very beneficial to pass the tax burden on to the beneficiaries via a Schedule K1 (because individual tax rates are so much lower than estate tax rates) however you can only do that with the final tax return for the estate, which generally is not filed until after the estate is closed. In this instance, the estate was not closed prior to the end of 2022, therefore it is still open and will remain open until the executor makes the distributions to the beneficiaries. Therefore I do not see how she can pass the income through to the beneficiaries (even though it would mean less tax and more money in the pockets of the beneficiaries).

However, in general it is possible to receive a Schedule K1 and owe tax due to that Schedule K1 even though you have not received a distribution of the money (or haven't received it yet) that is being taxed.

Thank you for your reply!

This has been quite a mess since the beginning! I didn't think that we should be getting the K-1 until after the close of the estate but, the executor will not even talk about or answer any simple questions. The lawyer is really not alot better! Thanks so much again! What do you suggest should be our next step?

 

[LdiJ]

Thank you for your reply!

This has been quite a mess since the beginning! I didn't think that we should be getting the K-1 until after the close of the estate but, the executor will not even talk about or answer any simple questions. The lawyer is really not alot better! Thanks so much again! What do you suggest should be our next step?

Someone needs to let her know that it cannot be done at this point and needs to suggest that she consider using a tax pro to handle the taxes.

 

[swalker2001]

Someone needs to let her know that it cannot be done at this point and needs to suggest that she consider using a tax pro to handle the taxes.

Will do! Thanks so much!

 

[swalker2001]

An Update: We have still not received our inheritance and my brother actually contacted the lawyer to ask if we are to wait to do our taxes until we receive the K-1 form. The lawyer said yes we are going to be receiving a K-1. My brother asked why we are going to get the form for 2022 taxes if we have not received any of the money from the inheritance and the lawyer didn't really have an answer. I have been doing some research online and as far as I can tell we are not to receive a K-1 until we get our inheritance. So, I am assuming that the IRS will also get a copy of the K-1 so if we don't claim it on our taxes it will be a red flag. How shall we handle this? I really don't have the money to pay taxes on it before I get the money. Thanks for any info!

 

[Zigner]

Someone needs to let her know that it cannot be done at this point and needs to suggest that she consider using a tax pro to handle the taxes.

Will do! Thanks so much!

The tax pro will know how to handle it.

 

[swalker2001]

The tax pro will know how to handle it.

Sadly I think that she is going to do the taxes and the lawyer is the one sending out the K-1's. The one thing that we are all concerned with is that we will have to pay taxes on money we have not received and that the IRS will expect us to pay it thinking that we did receive the money already. Sadly a mess!

 

[LdiJ]

Sadly I think that she is going to do the taxes and the lawyer is the one sending out the K-1's. The one thing that we are all concerned with is that we will have to pay taxes on money we have not received and that the IRS will expect us to pay it thinking that we did receive the money already. Sadly a mess!

It doesn't work that way. The K1s are part of the estate tax return therefore there is no way to generate them unless it is part of the tax return. They are generated from the tax return data and the IRS recieves copies as part of the estate tax return...with separate copies sent to the beneficiaries.

What needs to happen is that someone, with some authority (ie a CPA or IRS Enrolled Agent) needs to tell both the attorney and the executor that they cannot issue Schedule K1s for any year other than the final year. Even if the executor wanted to elect a fiscal year instead of a calendar year your uncle has been deceased for more than a year, so at least two estate returns are going to need to be filed. The first one covering either 2022 or the first 12 months since your uncle passed (which is basically 2022) and another one for the remaining period that the estate is open (basically 2023).

That probably means that one of the heirs (or all of the heirs working together) need to pay a CPA or Enrolled Agent to notify the attorney and the executor. It is a problem that the attorney doesn't know the tax law on this one, but it is not a huge surprise. Attorney's who are not tax attorneys often get that kind of thing wrong. I have argued with many of them over tax issues, over the years.

 

[swalker2001]

It doesn't work that way. The K1s are part of the estate tax return therefore there is no way to generate them unless it is part of the tax return. They are generated from the tax return data and the IRS recieves copies as part of the estate tax return...with separate copies sent to the beneficiaries.

What needs to happen is that someone, with some authority (ie a CPA or IRS Enrolled Agent) needs to tell both the attorney and the executor that they cannot issue Schedule K1s for any year other than the final year. Even if the executor wanted to elect a fiscal year instead of a calendar year your uncle has been deceased for more than a year, so at least two estate returns are going to need to be filed. The first one covering either 2022 or the first 12 months since your uncle passed (which is basically 2022) and another one for the remaining period that the estate is open (basically 2023).

That probably means that one of the heirs (or all of the heirs working together) need to pay a CPA or Enrolled Agent to notify the attorney and the executor. It is a problem that the attorney doesn't know the tax law on this one, but it is not a huge surprise. Attorney's who are not tax attorneys often get that kind of thing wrong. I have argued with many of them over tax issues, over the years.

Thank you so much!! You have explained it so well!! I will definitely share this with everyone! Thanks again!!

 

[swalker2001]

Well, we are all still waiting for the estate to be finished. The lawyer says that he sent in the estate taxes on March 13, 2023 and I just heard from him today that he called to the Iowa Dept. of Revenue and says that he has not had a response from them. Is the lawyer the only person that can inquire about the estate taxes from the Iowa Dept. of Revenue or can one of the beneficiaries of the estate ask them for an update as to when they will be finished?

Thanks in advance for any info!