According to the Internal Revenue Service (IRS), a personal representative of an estate includes an administrator or executor appointed by a probate court or appointed by will to administer the decedent’s estate and distribute the property and assets within his estate. The personal representative also has specific federal and state tax liabilities and is responsible for paying creditors before distributing most of the estate’s assets. This three-part blog series covers a personal representative’s federal tax responsibilities required under the Internal Revenue Code.
A personal representative must first apply for a federal tax identification number on the estate’s behalf. Once you receive the estate’s tax identification number, you must file an IRS Form 56, Notice Concerning Fiduciary Relationship, with the IRS. By filing this form, you are notifying the IRS of your appointment as the personal representative of the estate. Until you request a discharge, the form remains effective, and you remain a fiduciary of the estate for federal income tax purposes. If you are a personal representative, you must pay estate taxes on the estate’s behalf and you will be responsible for filing all of the estate’s tax returns. Because you are entrusted with fiduciary responsibilities, you may want to contact an estate planning attorney to help you comply with your legal responsibilities. Our office can help you understand your legal responsibilities. Note the IRS recommends that large estates or those valued at over $1 million seek professional tax advice from a certified public accountant or tax attorney.