Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Bill M:The will is currently in probate; he anticipates settlement by probably early next year. The dividends amount to about $1000 a month,which he understands is accruing to him. He has been advised to consult a tax professional with regard to his probable tax liability, which he is in the process of doing. I think he will owe taxes on the dividends for this year, even though he will probably not receive them until next year.

Maybe, maybe not. It depends on the estate's tax year. If the estate only has one year of existence, and it ends in 2008, the dividends will be taxable upon final distribution. If the estate has a tax year ending in 2007, the income of the estate for 2007 will be taxed to the estate on its own return, unless actual or required distributions make the income taxable to the beneficiary/ies.

His major concern is the taxes on the value of the stock. I'm sure a bequest of this kind falls under different rules than a family inheritance. Would appreciate any information anyone may have.

If there is a federal estate tax, it will be payable by the estate, before the probate process is completed, generally. You didn't indicate how big the total estate is, or what your son's share is. For deaths this year, the exempt amount is $2,000,000. And it doesn't matter what an heir's relationship is to the deceased.

Now if your state has an inheritance tax, it may kick in at a lower amount, and the relationship may matter, too. But again, the taxes would be handled during the probate process. (Which is one big reason they have probate.)

He would do will to address these questions to the attorney handling the estate, to determine the timing questions.

Bill A.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.