Decedent received a1099 INT on forgotten account five years after passing and the estate closed

[JHW23]

My mother passed away in 2019. Her estate was closed in 2019 and final taxes filed (I was the executor). A forgotten savings account was discovered with the receipt of a 2023 interest statement. I am a co-heirs with two siblings. There is no joint holder on the account nor are there beneficiaries. The bank said there must be an active estate to even discuss the account, let alone get access to it. I believe the cost to reopen the estate will far exceed the funds in the account and I don't want to take that financial loss. Is it a requirement to reopen the estate? If not, what is to be done with the 1099 INT? Any help will be greatly appreciated.

[fanfare]

You should still be able to use the EIN you created in 2019 to allow the bank to open an account,

especially since you are the executor

If they want to charge excessive fees, talk to the branch manager.

[fanfare]

You kept your Letters Testamentary and death cerificate right?

[JHW23]

Yes. I submitted both to the bank, but their legal department  requires "current" estate documents.

[JHW23]

I'm not sure I follow. Do I need to open an new bank account?

[DianeW777]

As for the 1099-INT, it belongs to you and you should report the interest income on your tax return.  It's not important that the estate EIN or your mother's social security number (SSA) is on it or if your SSN is not on it. 

• Where do I report 1099-INT?

An estate is an estate - current or finalized.  The bank has no grounds to hold the money and you have the proof the income and account belong to you. I would pursue this. Once this is resolved, of course you need to move the money to another account.  It's up to you whether you want to pursue it, but you have all the proof you need to show you are the executor.

@JHW23   

[JHW23]

Please pardon my ignorance. Does the 1099 belong to me because I was the executor in 2019? When I enter the 1099 info, am I correct in inputting the EIN and her account number if prompted? Any advice on how to pursue it? The estate attorney even said it'll be necessary to reopen the estate.

[DianeW777]

Yes, if it does belong to you at this point. I was going by the timeframe however you can also nominee the amounts that belongs to any beneficiaries by using the instructions below and enter only your amount on your tax return.  You will not enter the EIN for the estate but you can enter the account number if you wish, it's not required. I'm not sure reopening the estate is necessary but you must rely on the advice of your attorney.  It's definitely up to you to decide if you want to pursue it depending on the amount of the account and the interest.

An estate return is not required if the income for the estate is less than $600, for federal purposes (Form 1041). If this is the case, then there is no purpose to open the estate.  You have the records, the death certificate and any necessary documents the bank needs.

Nominee Returns.  This is how the IRS knows what you are doing.

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list your mother or the estate as the payer and the each beneficiary, as the recipient. On Form 1096, list your mother or the estate as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each beneficiary.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

• Form 1096
• Form 1099-INT

@JHW23 

[Edited: 02/27/2024 | 3:04 PM PST]

[JHW23]

Thank you for your patience and advice. I want to be sure I understand. A Nominee Return is optional, correct? I can claim the interest on my return only? Also, as I complete my return, it doesn't matter if the bank's EIN and/or her account number are used to report the interest?

[DaveF1006]

Yes. A nominee return is optional. You can claim the interest on your own return and be responsible for paying the tax on the interest. A bank's EIN or the decedent's account is not required or reported on the return when you report the 1099 INT in your return.

@JHW23 

[JHW23]

Ok. I think I understand. Thank you so much for your assistance with this.

[fanfare]

I wouldn't pay any tax on income I did not receive.

her income is only taxable on your return if you received it from the estate or  executor !

You didn't say whose SSN is on the document.

I don't see why DaveF1006  thinks the money belongs to you.

It must have her SSN on the  1099-INT

You can nominee out only if your SSN is shown

It is doubtful IRS will audit you if your SSN is not on the document and you ignore it.

@JHW23 

[JHW23]

Ok, I'm confused again. The interest statement in in her name and SSN#. I should mention that my mother lived in Tennessee, in case any regulations are state specific. Even if I claim the interest on my return, I owe no taxes, so they still won't collect anything. However, I do want to follow whatever applicable tax law(s).

[fanfare]

ask your attorney to write a letter to the bank telling them to release the funds.

That should work without any complex re-opening of estate.

meanwhile, don't report another's income on your tax return.

@JHW23 

[JHW23]

I've contacted the attorney for help. Thanks for your advice.