My MIL died in November. She owned a condo rental property. We plan to continue renting the property to the current tenant, and then reassess whether to sell when the tenant decides to no longer renew the least. My wife is the executor and sole heir (only child and sole heir named in the will; next-closest relative of MIL is a second cousin). We are awaiting death certificates before we can start the process of having the property retitled. We have gotten varying estimates for the completion of the death certificates, from 1 week up to 6 weeks.
My understanding is:
We need an EIN for the estate. We will conduct business as the estate from the date of death until the condo is retitled in my wife’s name. We will file a final 2023 tax return for her up to the date of death, and a 2023 estate tax return from that date until the end of the year. Subsequently we will file a 2024 estate tax return from Jan 1 until the property is retitled.
The condo is contracted out for management. The management company should update their account to send the 1099-MISC forms using the estate EIN from the date of death until the property is retitled.
Is my understanding correct?
(BTW we also have an appointment to get the property appraised to establish the stepped-up cost basis. I am not asking about that but feel free to tell me something I don’t know.)
IANA pro at this, but I’ve executor on two estates recently and my late first wife was an estates attorney.
Sounds to me like you get the ideas exactly. My advice would be to get the EIN promptly; it’s an online application at IRS.gov and only takes a couple of minutes. And the sooner you get that info to the management company the better. Year-end chaos is a thing in all businesses. Getting incorrect 1099s corrected is a headache better prevented.
Is this a living trust situation (your MIL was trustee during her life, and now your wife is) or does the will need to be probated before transferring assets?
Did you create a bank account for the estate pending settlement of the estate? Someone recommended I do that to avoid commingling of estate funds with ours, but we have to continue to make utility payments, condo fees (for where she lived), etc., and receive rental income from the management company. The bank suggested we not continue to make transactions to her bank account so that it can be closed cleanly when the time comes.
The circumstances of my two recent estates did not need an estate bank account for reasons not relevant here.
But the third estate I did ~20 years ago was a fact pattern much closer to yours and an estate bank account was totally needed for reasons like your bank has said. Open the account using the estate’s EIN. Fund it with some of your own money if necessary to “prime the pump” until the account is receiving the (monthly?) income from the property and has the funds to pay it’s own bills during the pendency of teh estate.