Iowa Estate & Trust Tax Preparation | Expert Fiduciary Support
Need Expert Estate Tax preparation & Planning? Our Iowa CPAs guide executors and trustees through tax preparation and fiduciary responsibilities across the state.
Corridor Consulting Takes a Comprehensive Approach
At Corridor Consulting, headquartered in Cedar Rapids, we provide comprehensive estate and trust tax services to clients throughout Iowa. Our CPAs specialize in estate tax returns, trust tax preparation, and fiduciary tax compliance. We assist executors with Iowa inheritance tax planning, estate & trust income tax returns (Forms 1041), and trust tax management.
If you’ve recently assumed the role of executor after the loss of a loved one, we strongly recommend enlisting the services of a qualified attorney licensed in your state to guide you through the current legal proceedings and preemptively address any potential future legal complications that may arise in your fiduciary duty. While we do not typically make specific recommendations, we can assist you in locating an attorney or advisor who can tailor their expertise to your unique needs.
Given that it’s common for an executor to also be a beneficiary of the will, we can further aid you in understanding the tax implications pertaining to your interest in the estate, as well as those affecting other beneficiaries. We can help devise strategies to manage current and future tax obligations that may arise from the estate that impacts you and other beneficiaries. It is critical for a fiduciary/executor to seek proper tax advice early, as prolonging the estate can have negative tax consequences for all of the beneficiaries involved
Key Support Areas
- Federal & state Personal (1040), Estate & Trust (1041) Income Tax Return Preparation
- Multi-State Beneficiary & Estate Tax Planning
- Asset Consolidation and Organization
- Tax & Asset information retrieval
- Debt and expense categorization
Below, is a general overview of the typical executor process
Understanding the Probate Process
If applicable, you may have to go through court probate where the court would handle legal matters of the estate, in many cases probate court can proceed with or without a will in hand. If there is a will, the probate court is responsible for ruling on the authenticity of the document and the mental stability of the person at the time who signed it. Without a will, the probate court would allocate the decedent’s assets according to state law, which generally is their next of kin. Probate can be a long and costly process, or it can be straightforward depending on the assets and beneficiaries of the estate. In general, it is typical to see about 5% of the assets of the estate be used for administration and legal purposes, and an estate be open greater than a year. The courts have a system in place that will not allow an unduly prolonged estate process, so having a dedicated team in place like your Attorney and Corridor Consulting will expediate the process and ensure you are meeting your fiduciary obligations. If an executor’s inattentiveness or inefficiency leads to significant delays in the estate administration, the court does have the authority to consider removing the executor and appointing a new one to ensure the timely and proper management of the estate.
Executor Appointment & Estate Tax ID Creation
The court will establish who the executor is and grant them something called “Letters of Appointment” which is a legal document showing who the executor of the estate is. Once that is obtained, a Tax ID better known as an Employer Identification Number (EIN), will need to be obtained for the Estate, and a checking account will need to be opened under this EIN, this is something Corridor Consulting can assist you in obtaining. Once obtained, and a checking account is created, life insurance carriers, bankers, brokers and trustees of the decedent’s assets will need to be contacted and informed of the death. It is important you obtain multiple copies of the death certificate, because all of these entities will require a copy to establish the decedent has passed. Those assets will likely be transferred to the new checking account (if they are not payable on death accounts, or accounts belonging to a surviving joint owner). All estate income must be deposited to this account, and estate expenses must be paid from this account. Keep all other funds segregated at ALL times.
Collecting and Reviewing Documents & Verifying Beneficiary Information
As an executor you will have a large checklist of tasks to do. First you will collect and review documents, such as beneficiary forms, wills, trusts, martial agreements. Obtain multiple copies of the Death certificate, and any information regarding assets and liabilities, such as statements, valuations, deeds etc. Additionally, you will need to verify information regarding beneficiaries and heirs, such as their legal names, addresses, telephone numbers, and state of residency (for possible taxation issues).
Transitioning assets into the estate can also prove to be a labor-intensive and intricate undertaking. It encompasses the tasks of recognizing, appraising, and centralizing the assets belonging to the deceased individual, which are to be managed within the framework of their estate. Executors face the challenge of tracking down all the assets of the deceased, often scattered across diverse accounts, financial institutions, and physical locations. Moreover, certain accounts may prove elusive to locate. In our capacity as a Certified Public Accounting firm authorized to represent clients before the IRS, we can provide valuable assistance by procuring tax statements issued to the IRS by financial institutions, ensuring no assets are inadvertently overlooked. We can also help identify assets which may require a valuation to be done to secure the estates tax position in-case a future IRS examination occurs. Additionally valuations are important for beneficiaries to obtain, to establish the fair market value, and ultimately the new cost basis in their new inherited assets.
Once all of the assets have been ushered into the estate, they will need to be organized to determine which will pass through probate, by beneficiary form, and by trust. After establishing the assets, the debts must also be taken into account. Current debts such as utilities, medical expenses, credit cards, and any delinquent taxes will need to be looked at. To ensure no tax debt notices, assessments or audits become a surprise Corridor Consulting will assist you in notifying the IRS that you are the acting executor for the decedent to ensure you receive any potential, or outstanding notices pertaining to the decedents prior and future tax situations. Then expenses of the estate, such as court costs, professional fees, and your executor fee (we recommend you pay yourself, this is very time consuming, and stressful work), will need to be paid. Your attorney along with Corridor Consulting will ensure you can navigate these issues while maintaining enough cash to pay debts, and ultimately close the estate and distribute the assets.
Partnering for Success
All along the way, for all of the tasks above Corridor Consulting will be providing guidance as to the tax implications and assist you and/or your attorneys along the way. After the above has been completed we can then proceed to file the decedent’s final U.S. Individual Income Tax Return (Form 1040), any needed Federal gift tax return (Form 709), the U.S. Income Tax Return for Estates and Trusts (Form 1041), the United States Estate Tax Return (Form 706), and any required State Inheritance or Estate Tax Return.
Ensuring Accuracy in Tax Reporting
During this process if tax forms are missing from financial investments, we can request income and wage transcripts directly from the IRS to ensure we do not miss reporting any income, and we can ensure the tax returns are accurate and reported in a timely manner. Additionally, if prior year tax returns are not available, we can assist in obtaining a prior copy from the IRS for those tax years.
