First, be sure to hire a CPA Firm that has an estate specialty.
Two, the beneficiaries of the TRUST/estate become liable for its taxes (assuming a Trust and Will were set up) and each will receive a K-1 Form for the respective tax years. K forms may cover past years meaning you may have to amend past years returns. Your accountant will prepare K forms for the individual beneficiaries.
Third, I made the mistake of filing a return for the estate which is wrong. The beneficiaries receive K forms because for tax purposes they are the estate.
Four, the estate/trust account can pay expenses of the account which is managed by the Executor. These would include attorneys, accountants, property taxes, appraisals, and so on. Your accountant will advise on allowable expenses. These will impact the value of the estate distributions.
Five, the trust and will may specify different distributions for each beneficiary therefore individual beneficiary tax situation may vary and require separate accountant and attorney advisement.
Finally, the estate may have future tax year distributions which will be determined by the Trust and/or Will. You will receive a K Form for the appropriate tax years. This is why and accountant is important.
Note: I suggest using a large CPA firm that is an IRS Certified Filer. That means the CPA is recognized by the IRS as a first tier representative. This means the IRS trust accountant filings at a highly accurate level meaning the chance of an audit is decreased.
Disclaimer: I am not an accountant or attorney and my comments are based upon the experiences I had with my family trust an as estate executor. Your trust, will and assets will be different so you MUST obtain CPA and attorney advice.
