My wife's parents both passed away at the same time in Texas. The Probate Court is processing both wills and therefore two separate estates. All of their property is either joint or was purchased with joint funds/assets. Our Probate Lawyer has advised that the Executor can actually execute the distribution of assets as if it is one estate (except for those accounts such as IRA's which will be divided by estate and then beneficiaries). Each of their estates will have some capital gains, some interest and some dividends in excess of the minimum required to file a returnHow does one go about handling their taxes for this calendar year? =======> I guess it depends; in a community pty state,i..e, CA or TX states or etc, all property is classified as community or separate property depending on when and how it was acquired. Property acquired before a marriage is classified as separate property, while property acquired during a marriage is presumed to be community property, except if acquired by gift, devise or descent, or you agree otherwise . For example, say, Property retains the classification as separate or community regardless of whether it is converted to cash or back again. So for example, if you sell a home that was your separate property, the proceeds from that home will be separate even though you sold the property while you were married and is reported on your own estate I guess not on your spouse?s estate. Or if you receive an inheritance while you are married, the inheritance would be separate property also will be reported on your separate estate not on your spouse?s. However, It?s possible for property to be characterized as both separate and community. For example,say you purchase a home during your marriage for $200k and use the proceeds from the sale of separate property to put down a down payment of $50k 25 percent of your home would be your separate property. However, if you make mortgage payments out of income earned during your marriage, a portion of the home would be owned by the community. so aslongas CG or dividends need to be identified if they
Are coowned or separate ones.
Do I obtain two EIN's for them and process their estate income for the year at one half for each of them?======> Every probate estate must obtain an EIN. A Federal Tax ID number, I mean EIN, is required for an irrevocable trust. The estate of a deceased individual is also required to have a unique Federal Tax ID number.
Could I process one return as a joint estate return? Form 1041 does not seem to provide for this option...=======> Not all estates must file federal estate tax returns. IRS Form 706.Form 706 must be filed when a U.S. citizen's or resident's gross estate plus adjusted taxable gifts he's given during his lifetime are valued at more than $5.49, I guess, million as of 2017.however, more than one Form 1041 can be filed.
Income earned under the EIN assigned to a trust or estate is reported on each Form 1041. However, the joint tenancy approach falls apart if the couple dies at the same time, or under circumstances where it can?t be determined who died first. The problem is that most states, following what?s called the Uniform Simultaneous Death Act, treat each spouse as having survived the other spouse. Deaths may be treated as simultaneous under the law even when one spouse dies within five days after the other one if both died due to a common accident. The result of this law is that the jointly held property of each spouse cannot pass to the other spouse because the other spouse is presumed to have died before the other spouse.
Consequently, the jointly held property of each spouse, including insurance proceeds and retirement accounts, goes into separate probate.