01 Mar I’m an executor. How should the taxes be handled?

Q. I’m the executor of an estate where the estate was named the beneficiary of an IRA. Am I required to pay the taxes through the estate or do I have the option to take a distribution deduction on my 1041 form and pass the tax burden to the beneficiaries named in the decedent’s will who can then include the income on their own 1040?
— Executor

A. There are a lot of responsibilities that come with being an executor.

A side note first: Did you know you can charge a fee for your executor’s duties? Learn more here.

The answer to your question depends on how the estate is worded, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

“If the estate says that it must pay out income to the beneficiaries, then when it passes the interest, dividends or IRA distributions to the beneficiaries, it also passes the tax liabilities to the beneficiaries,” Kiely said. “If the estate is not required to pay income out, then the trust must pay the income tax on the income it retains.”

You may want to work with a tax expert or an estate planning attorney who can review the documents to make sure you handle it all correctly.

Email your questions to .

This story was originally published in March 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.