San Diego Estate Litigation Resulting From Executor Tax Mistakes

One of the largest responsibilities of an executor or trustee during the trust administration process is to prepare and file the necessary tax returns. These returns may include federal or state estate tax returns, estate income tax returns, trust income tax returns, gift tax returns, and the decedent’s final income tax returns. The issues surrounding each of these returns are often complex and can have significant consequences if not handled properly. When a fiduciary fails to properly and timely handle these tax matters, he or she may be personally liable for the resulting penalties and expenses.

What are some of the errors that fiduciaries make with regard to tax returns of a trust or estate? The following are eight common examples:

1. Failing to promptly and timely file federal estate tax returns
2. Failing to promptly and timely file the decedent’s final personal income tax return
3. Failing to report the income that the estate earned
4. Failing to use a tax preparer skilled in preparing estate, personal, and fiduciary income tax returns
5. Failing to make certain tax elections
6. Failing to include supporting information with returns, such as valuations
7. Failing to consider whether to use a date of death value or an alternate valuation date value
8. Failing to consider whether to report income on the estate’s income tax return or on the decedent’s final income tax return

For those without a background filing and preparing tax returns, the potential for costly mistakes is high. Our article, “Six Types of Tax Returns During a California Estate Administration,” provides a helpful overview about the various types of tax returns that the fiduciary of an estate is responsible for. To learn more about whether you may have a claim against a fiduciary for failure to properly prepare and file a tax return, contact an experienced San Diego probate litigation attorney today. Call The Grossman Law Firm at (888) 443-6590 for a consultation.

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When Is an Income Tax Return Fiduciary

The Grossman Law Firm, APC (951) 523-8307