The person responsible for preparing a decedent’s 1040 tax return must file Form 56.
A relative died and I will be handling the estate.
He had no trust. He has a will, but it won’t be probated because there are no assets needing probate (all property is jointly owned or has beneficiaries).
In this situation, instructions for Form 56 don’t clearly explain how it should be prepared.
On Form 56, under “Section A. Authority” these instructions and choices appear:
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1. Authority for fiduciary relationship. Check applicable box:
1a [ ] Court appointment of testate estate (valid will exists)
1b [ ] Court appointment of intestate estate (no valid will exists)
1c [ ] Court appointment as guardian or conservator
1d [ ] Fiduciary of intestate estate
1e [ ] Valid trust instrument and amendments
1f [ ] Bankruptcy or assignment for the benefit of creditors
1g [ ] Other. Describe: ____________
2a If box 1a, 1b, or 1d is checked, enter the date of death: _____
2b If box 1c, 1e, 1f, or 1g is checked, enter the date of appointment, taking office, or assignment or transfer of assets: ______
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IRS says Form 56 can be prepared by a “person in possession of property of … decedent’s estate.”
I am that person, but it’s unclear how to prepare Form 56.
As shown above, boxes marked 1a, 1b, and 1c don’t apply because there is no court appointed executor.
Box 1d doesn’t apply because the person had a will, so the word “intestate” does not seem to apply.
Box 1e does not apply because there is no trust.
Box 1f does not apply because there is no “Bankruptcy or assignment.”
That only leaves box 1g.
IRS instructions for box 1g say:
“If you are acting in a fiduciary capacity under circumstances different from those listed on lines 1a through 1f, check the box on line 1g and describe the authority for the fiduciary relationship in the space provided. Enter the date you were appointed or assets were transferred or assigned to you on line 2b.”
After searching online, I found two conflicting recommendations about how to prepare Form 56.
Some sources recommend these steps:
1) Check box 1g.
2) On the line marked “Describe,” add this: “person in possession of property of … decedent’s estate.“
3) Line 2a says: If box 1a, 1b, or 1d is checked, enter the date of death: _____. However, because box 1g is checked, date of death should not be entered on Line 2a.
4) Line 2b says: If box 1c, 1e, 1f, or 1g is checked, enter the date of appointment, taking office, or assignment or transfer of assets: ______.
In this situation, "transfer of assets" refers to date of death, so enter it on Line 2b.
However, other sources say the following:
On Form 56, box 1b is named: Court appointment of intestate estate (no valid will exists).
Box 1d is named: Fiduciary of intestate estate.
The word “intestate” refers to a person who dies without a valid will.
A will becomes valid only when it’s determined to be valid by a probate authority.
So if a person dies with a will but the will is never probated and there is no appointed executor, the person can be described as dying “intestate” because the will was never determined to be valid.
Therefore, in this situation the person handling the decedent’s estate should prepare Form 56 by:
(a) choosing Line 1d Fiduciary of intestate estate.
(b) entering death date on Line 2a.
QUESTION:
In my situation, what is the proper way to prepare Form 56?
