9 MONTHS

After someone passes and goes to heaven, there is a nine-month deadline from date of death to file an estate tax return, if required. Both Washington state and the IRS allow for a six-month extension. However, this extension only applies to file the return. It does not apply to the payment of estate taxes owed. Interest begins to accrue after nine months.

Further, this nine-month deadline is the absolute deadline for a surviving spouse to formally elect to disclaim, or refuse to accept, assets from the deceased spouse's estate such that those assets transfer from the estate to a bypass trust established under the will or trust of the deceased spouse. The six month extension only applies to the estate tax filing, not to the disclaimer deadline.

ESTATE TAXES

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ESTATE INCOME TAXES

Estate taxes are taxes imposed on the transfer of a deceased person's assets and are based on the total value of the estate at death. In contrast, estate income taxes are imposed on income earned by the estate after death during the administration period, such as interest, dividends, rental income, or capital gains. While estate taxes are generally paid once before assets are distributed, estate income taxes may be incurred annually until the estate is fully settled and closed. Estate income tax filing deadlines can depend on the elected taxable year for an estate, but generally are April 15th for calendar tax year estates.  

Estate income taxes can often be avoided with proper estate planning. Effectively, if all assets are quickly and efficiently transferable to beneficiaries then the estate does not have to martial assets or hold them very long before distributing to beneficiaries. An estate must file an income tax return if it's gross income is $600 or more in a taxable year. For non-complex estates, it can be best to target no income for the estate in order to avoid the need to file an estate income tax return. This can be doable with proper planning.

Commonly, aging parents miss their individual 1040 income tax filings in their last years. This causes delay in estate settling as the executor or personal representative of the estate will have to bring the tax filings current to ensure no taxes are owed. Taxes are always the first lien holder of an estate and must be paid first. Beneficiaries are responsible for a decedent's back taxes to the extent, or to the amount of, the value they inherited and received from the estate.