Kathryn A. Murphy

As of January 1, 2013, an additional 3.8 percent tax was added to investment income in estates and trusts, thanks to provisions in the Health Care and Education Reconciliation Act of 2010. It's not an additional tax on every dollar, but only on the lesser of undistributed net investment income or any amount of adjusted gross income in excess of the highest tax bracket in any year.

As the fiduciary of an estate or trust, you have many duties, beginning immediately upon the decedent’s (deceased person’s) passing. You’re also guaranteed to become intimately familiar with a host of tax forms you may not have known existed.Tax forms to know as the fiduciary of an estate or trustWhen you’re administering an estate or trust, you may have to prepare a seemingly endless array of tax returns.

If you are serving as executor for a loved one's estate, you’ll need to consider all the stuff you find in the decedent’s residence (or residences). Everything the decedent owned outright on their date of death is now under your care as executor; you’re responsible for making sure that you account for this stuff and that it ends up where it’s supposed to.

When you’re administering an estate or trust, you may have to prepare a seemingly endless array of tax returns. The following table lists some of the most popular ones. Check with your accountant or attorney if you have any questions. Federal Tax Form Number and Name When It’s Required When It’s Due Form 1040 U.

When you’re asked to administer a trust or estate for a relative or friend (especially if that person didn’t have a will), this important responsibility can feel overwhelming during an already difficult time. Here are ten pitfalls that often trip up unwary administrators — and that you should avoid:Don't fail to terminate an existing real estate purchase and sale agreement.

Just as many states impose an income tax, many also impose estate or inheritance taxes. Most states used to calculate these taxes based on a credit on the federal Form 706. In other words, if the federal government was going to allow a credit for state estate or inheritance taxes, most states said, “Hey, just give us that money instead.

Organization is the key, and no more so than when you’re a trustee. The grantor has relied on you to handle the trust’s assets competently. When you’re organized, you know where the trust’s important documents and records are, which helps you to properly and efficiently administer the trust. Organizational lapses can mean extra time spent searching for a crucial piece of correspondence or, more important, failure to make a required distribution or file and pay the trust’s taxes.

If you’re an executor, personal representative, or administrator of an estate, your job begins at the death of the person whose estate you’re administering. The following list contains tasks you need to take care of in the first days and weeks after the decedent’s death. Determine the decedent’s wishes regarding arrangements such as funeral and burial.