9 Items to Consider When A Loved One Passes
October 20, 2023

Losing a loved one is an emotional and challenging experience, and dealing with the financial aspects of their passing can be overwhelming. One area that often proves to be a labyrinth of complexities is estate taxation.

In this guide, we will explore key considerations when a loved one passes away and how to navigate the intricate landscape of estate taxation to ensure you make informed decisions while minimizing the tax burden.


1. Deciphering Tax Return Instruction Booklets

Tax return instruction booklets prepared by taxing authorities are notorious for their ambiguity, incompleteness, and difficulty for a layperson to follow. When faced with the task of managing a loved one’s estate, it’s essential to seek professional guidance from an experienced accountant who can decipher these complex instructions and ensure compliance with tax laws.


2. Valuing Real Estate for Inheritance Tax

In Pennsylvania, there are multiple methods to value real estate for inheritance tax purposes. Knowing which valuation method will yield the best results for your particular estate can lead to significant tax savings. Consulting with a knowledgeable tax professional can help you determine the most advantageous approach.


3. Unlocking Tax Discounts

Pennsylvania offers a tax discount in certain situations, but the instructions provided often lack clarity on when this discount is available. A skilled accountant can help you navigate the eligibility criteria and ensure you claim any discounts for which you qualify.


4. Proper Reporting of Income in the Year of Death

Year-end tax reporting documents in the year of a decedent’s death may not accurately reflect which income amounts should be reported on the decedent’s final income tax returns. An experienced accountant can identify and rectify these discrepancies, ensuring accurate reporting.


5. Filing Estate Tax Returns After the Due Date

Contrary to common belief, certain estate tax returns can be filed after the due date without adverse effects if you know the proper procedures. This knowledge can prevent unnecessary penalties and complications.


6. Expertise in Estate Tax Returns

Many CPAs are unfamiliar with the complexities of estate tax returns and may choose not to handle them. It’s crucial to engage an accountant who specializes in estate taxation to ensure your financial affairs are managed effectively.


7. Cost-Effective Accounting Services

Estate attorneys often charge fees based on the size of the estate, while accountants typically charge based on the complexity of the work involved. In many cases, accounting fees can be significantly less than what estate attorneys charge, making it a cost-effective choice for estate administration.


8. Elements of an Estate

Estates involve a multitude of financial elements, including the decedent’s final personal income tax returns, inheritance tax returns, estate income tax returns, beneficiaries’ income tax returns, executor’s fees, and beneficiaries’ distributions. Coordinating these aspects can be daunting but is essential for efficient estate administration.


9. Maximizing Benefits and Minimizing Taxes

To maximize benefits for beneficiaries and administrators while minimizing taxes paid to taxing authorities, it’s crucial to understand how these six elements interact and affect each other. A skilled accountant can help you navigate this intricate web to achieve the best possible outcome.

The journey through estate taxation is fraught with complexities and pitfalls. Seeking the expertise of an experienced accountant can make all the difference in ensuring that your loved one’s estate is managed efficiently, taxes are minimized, and benefits are maximized for all involved parties.

When facing the challenges of estate taxation, remember that professional guidance is invaluable in providing peace of mind during a difficult time. If you are considering working with a tax professional with experience in estates, consider sending us a message.

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