Taxes Due!

Taxes Due!

By Melinda Gustafson Gervasi

April 15, 2024

It's Tax Day; specifically, today is the day your federal and state income tax returns are due along with any payments you owe.  I recognize that not everyone finds the tax code to be as interesting as I do, so I will take this opportunity to highlight two areas in estate planning where an income tax may be due that can be a surprise:

1. People who inherit from a Traditional IRA, 401K or other "qualified plan".  Distributions made from these types of inherited assets are likely subject to income tax by the new owner; and
2. Fees paid to a Personal Representative (also called an Executor in other states) for administering an estate through probate.

The tax code is a massive piece of law that is always changing, so it is best to seek the advice of a CPA in your home state for advice.  But do keep in mind when creating or updating your estate plan, that those you leave assets to and those you give a responsibility may owe an income tax.  Knowing this may cause you to adjust what you given and who you empower.

Image by M. Gustafson Gervasi -- power lines in Panama, a visual representation of the US Tax Code

Remember that a blog is not legal advice; it is meant to spark thought and reflection.  Please consult with an attorney in your home state for advice specific to your situation.  Thank you for reading and be well!