Being named an executor can feel like both an honor and a heavy burden. On the surface, it sounds like you’re just making sure a loved one’s final wishes are carried out, but in reality, there’s a lot more to it—especially when it comes to taxes. The last thing you want is to make a mistake and end up personally responsible for unpaid taxes.
If you’re feeling overwhelmed by the financial and legal responsibilities, you’re not alone. Many executors find themselves dealing with complicated tax rules they never expected to navigate. It’s important to fulfill your obligations in order to avoid costly mistakes.
Understanding the Executor’s Tax Role
As an executor, you act as the legal representative of the deceased person’s estate. That means you’re responsible for ensuring all necessary tax returns are filed and any owed taxes are paid before distributing assets to beneficiaries. The following are important tax responsibilities.
Filing the Final Personal Income Tax Return
Just because someone has passed away doesn’t mean their final tax bill disappears. You’ll need to file their last individual tax return (Form 1040) for the year they died, reporting any income earned before their death. If the person was married, their spouse may file jointly for that final year.
Estate Income Tax Return
If the estate generates income after death, such as rental income, dividends, or gains from selling estate property, you may need to file an estate income tax return (Form 1041). This ensures that any income earned before distributing assets is properly taxed.
Federal and State Estate Tax Returns
Most estates won’t owe federal estate taxes, as they only apply to estates valued above a certain threshold ($13.99 million for individuals and $27.98 for couples for 2025). While some states have their own estate taxes, New Jersey does not.
Before distributing assets to heirs, you must ensure that all taxes owed by the deceased are paid. This includes any unpaid income taxes from previous years, as well as any taxes due on retirement account distributions.
Deadlines Executors Must Know
Tax deadlines don’t disappear when someone passes away, and as an executor, you’ll need to keep track of important dates:
- Final Income Tax Return – Due on April 15 of the year following the individual’s death.
- Estate Income Tax Returns – Due by April 15 if the estate follows a calendar year, or within four months after the estate’s fiscal year ends.
- Federal Estate Tax Return – If required, Form 706 must be filed within nine months of the date of death (a six-month extension is available).
Missing these deadlines can lead to penalties, so it’s best to work with a tax professional or estate planning attorney to stay on track.
Can Executors Be Held Personally Liable for Taxes?
If you distribute assets to beneficiaries before paying taxes and other estate debts, you could be held personally responsible for the deficit. This means the IRS or state tax authorities could come after you for unpaid taxes—even if you acted in good faith.
To avoid liability, executors should always:
- Obtain a tax clearance letter from the IRS before distributing assets.
- Work with a tax professional to ensure all returns are properly filed.
- Set aside enough estate funds to cover potential tax liabilities before making distributions.
How to Protect Yourself as an Executor
Being an executor comes with legal risks, but there are steps you can take to protect yourself:
- Keep detailed records – Maintain clear records of all estate transactions, including income received, taxes paid, and distributions made.
- Seek professional guidance – An estate attorney or CPA can help you navigate tax issues and prevent errors.
- File for an extension if needed – If you need more time to handle the estate’s taxes, you don’t have to rush—file an extension to ensure everything is done correctly.
Handle Your Role with Confidence
Handling the tax responsibilities of an estate can be one of the most challenging parts of being an executor. Mistakes can lead to penalties, legal trouble, or even personal liability. If you’ve been named executor, don’t hesitate to seek help from an estate planning attorney or tax professional. With the right guidance, you can fulfill your duties properly while protecting yourself from unnecessary risks.
Need assistance with estate administration? E.A. Goodman Law LLC can help you understand the legal and tax complexities of your role as an executor. Contact us today to ensure the estate is handled correctly and efficiently.
Posted in: Estate Planning