Hmmm. Perhaps nothing. Then again, perhaps nothing good.
Did you know the executor of an estate may be held personally liable for failing to execute his or her duties according to Hoyle (i.e., the law)?
Yep, it is true.
Peace of mind is a great reward for connecting all of the legal dots.
This topic was taken up recently by New Jersey 101.5 in its recent article titled "Why it's important for executors to report all estate assets."
As you may already suspect, the executor of an estate must prepare and file the necessary tax returns. In doing this, he or she has to collect, value and report all of the assets of the estate.
What if you, the executor, find $100,000 cash in the personal safe of your deceased mother ... but never added it officially to her list of assets?
Note: If a failure to include the cash in the inventory of the estate assets keeps the estate below as estate tax reporting threshold and no return was filed, the unpaid tax on the cash will accrue interest.
Plus, the estate and executor (i.e., you) may be subject to penalties for nonpayment, as well as face civil and criminal penalties if this failure to file is deemed fraudulent.
Unlike cases where a return is filed, there is no statute of limitations when assets are not reported.
The assets have not been disclosed, so the taxing authorities have not had an opportunity to review and evaluate reported information.
What if the failure to file is an honest mistake?
It does not matter.
If the estate is audited, the executor can be personally liable for the unpaid tax, interest and penalties because he or she has distributed the estate's assets.
In the end, this is another clear example of why it is essential to engage experienced estate planning counsel early in the probate or trust administration process to keep you out of hot water.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: New Jersey 101.5 (April 5, 2016) "Why it's important for executors to report all estate assets"