Estate taxes

Forum|Forum|5 years ago
April 3, 2021
3 replies
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Looking ahead to next year, my mother passed on Jan 2, 2021 and I am the executor of her will. Her only income was social security and it ended up she owed nothing. We are selling her house, and had money from a checking account, a savings account, and have money from a single CD. I had opened a special account (per lawyer) as an estate account in order to pay power bills, water bills, etc. We will close on the house on the 8th of April and all monies are scheduled to go into the estate account. However, we still have about $20,000.00 left in a CD. My question is: is it better to put the CD monies in the estate account, or just close out the CD and split the money there into 4 separate checks (4 children still living), or should it go into the estate account ? My thinking is that if we split it up now, that will be income on our taxes for next year. If it is in the estate, is that taxed more or less than regular taxes ? thank you

SweetieJean

Alumni - Champ

You really need to ask an Estate attorney.

NCperson

Level 15

you are over thinking it,

those CD's are not taxed (only the interest will be taxed); they are assets no different than the house.

What is going to occur is that income from the estate will be distributed on K-1s to the 4 beneficiaries. each of you will place the income on their respective tax return and pay whatever tax is due. The estate is not going to pay any tax; each beneficiary is going to pay any income tax due on their respective tax returns.

HarryS1

Level 2

Agree with first response, but you can probably handle this. Need STATE locations to answer. First, note you have fed and state taxes potentially. Estate tax relates to your mother and inheritance tax relates to you and siblings. No fed estate taxes here but could be STATE estate taxes. Only 6 states have inheritance taxes, and 11 have estate taxes. You are probably not affected at all at such low dollar amounts but just some internet searching can get you specifics pretty fast. Just google estate and inheritance taxes for your state and your mothers state.