Estate Tax filing needed?

[rrhascall]

Hi,

My mother-in-law passed in 2022 and I filed a final 1040 return for her for that year.  The only assets remaining after her passing is about $30,000 in a trust savings account which was distributed evenly between her 3 surviving daughters.  Do I need to file anything related to her estate in 2023?  Her only remaining asset is the cash. 

[tagteam]

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@rrhascall wrote:

Do I need to file anything related to her estate in 2023? 

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Not unless the estate had income of $600 or more for the tax year.

See https://www.irs.gov/instructions/i1041#en_US_2023_publink1000285942

[rrhascall]

ok, so if the interest earned on money left in the trust checking account is not over $600, then we don't need to file?

[tagteam]

Trust or estate (was there an actual trust)?

Trusts need to file Form 1041 if they have income of $600 or more or any taxable income.

See https://www.irs.gov/instructions/i1041#en_US_2023_publink1000285943

[rrhascall]

I believe it was a trust.  We created a checking account with the trust as the account name.  No interest was earned the remaining funds

[AmyC]

A savings account that distributed money sounds like the estate or trust received funds and distributed them. You need to contact your lawyer to find out what you are in charge of and your obligations. Distributed money needs to be reported.

[tagteam]

Distributed money does not need to be reported if the money is the corpus of the trust. 

[rrhascall]

Could you please explain the meaning of "corpus of a trust"?  To clarify, the funds that remained are in a trust checking account that is in the names of the deceased parents.  These were funds that were remaining from the sale of their home.   The account was used pay for assisted living care.  No interest has earned on these funds.

[rrhascall]

Thanks Amy.

 To clarify, the funds that remained are in a trust checking account in the names of the deceased parents.  Not sure if this is still considered their "estate".  These were funds that were remaining from the sale of their home back in 2021.   They had no other income producing assets  This account was then used solely to pay for assisted living care.  No interest has earned on these funds.

[tagteam]

Yes, that account is the corpus (principal) of the trust.

In other words, it is essentially the property "owned" by the trust and is not taxable (with the possible exception of retirement accounts).

This can be distinguished from the income or gain that the trust earns from, for example, interest on bank accounts and sales (at a gain) from brokerage accounts.