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.

Although valuing tangible property may give you scope for some creative research, calculating the value of an estate’s intangible property, those bank and brokerage accounts, and any stocks or bonds that the decedent physically held, should help complete your quest. Provided that you have a complete list of the intangible property, figuring out what it was worth on the date of death should be a simple matter of math.

Not all estate investments are created equal, and certainly not in their treatment by Congress and the Internal Revenue Code (IRC). There are many types of investments, such as wages, rental income, deferred retirement income, royalties, interest, and short-term capital gains that are taxed at the highest applicable rate of the taxpayer (in 2013, that could be as high as 39.

As executor, you should have all the decedent’s bills (or be in the process of collecting them). One of your first tasks is to pay all administration expenses and legitimate debts of the decedent before you make any distributions to beneficiaries. That is, if you have enough assets to do so. How and when to pay claims One of your first duties as executor (after the payment of administration expenses) is to pay the debts incurred by the decedent during his or her life.