Trust and Estate Accountants

Accounting, tax preparation and consulting services for Estates and Trusts.

We are one of a few small CPA firms that offer accounting, tax preparation and consulting services for estates and trusts. If you are the fiduciary of the estate or trust, you will have several new responsibilities potentially: keeping track of the assets, distributing the assets, tax compliance, and fiduciary accounting. Our CPA firm’s role in this process is to assist the fiduciary. The fiduciary is a “person” who has a responsibility to act primarily for the benefit of another person commonly called a beneficiary. A fiduciary can be an individual or a corporation such as a bank trust department. The fiduciary of a decedent’s estate is called the executor, administrator, or personal representative. The fiduciary of a trust is called a trustee.

Estate and Trust definition:
An estate is everything a person owns at death, managed for one-time distribution through probate (court), while a trust is a legal arrangement holding assets for ongoing management and distribution, either during life or after death, often avoiding probate for privacy and control. The key difference lies in timing (estate starts at death, trust can start anytime) and process (probate vs. private management)

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Estate and Trust accounting services:

Fiduciary accounting – The fiduciary of an estate or trust is entrusted with the safekeeping, management, and disposition of assets on behalf of others. As a result, that fiduciary is accountable to various parties, including the courts, beneficiaries, taxing authorities, and other interested parties. Our CPA firm provides professional assistance in the preparation of estate or trust accounting. This may include creating and maintaining the accounting records of the fiduciary entity, preparing financial presentations, or reporting on the fiduciary presentations.

Judicial settlement of accounts-

In accounting, the fiduciary can disclose what he/she has done, show what assets he/she has received and paid out, and absolve himself/herself from further liability.

A fiduciary can settle the account in any of three ways: by an informal accounting on receipts and releases, by obtaining a decree on the receipts and releases, or by a formal judicial accounting. Our CPA firm can assist with the preparation of informal accounting on receipts and releases and formal judicial accountings. A formal judicial accounting is rare but may be necessary because the parties refuse to agree to an informal settlement, court intervention or the necessary parties are legally disabled or very numerous or scattered widely about.

Estate and Trust tax preparation services:

We are here to guide you through the tax process as you handle the affairs of your loved one. The fiduciary is responsible for filing the tax return for the entity (estate or trust) The fiduciary has personal liability for his/her duty in filing the tax return. In the case of an estate, this liability attaches to the personal representative up to and potentially after his or her discharge if, prior to distribution and discharge, the fiduciary had notice of tax obligations or neglected to exercise due diligence in ascertaining whether or not such obligations existed.

Some estates are required to file Form 706 Estate tax return that lists all the assets of the estates (balance sheet tax return). Form 706 is not commonly filed because of its high gross estate reporting threshold. Some estates may also need to file a tax return that reports the income earned from the date of death to the date assets are distributed to the heirs. Called Form 1041 – Income tax return for Estates and Trusts. Form 1041 is commonly prepared due to its low-income reporting threshold. We mention form 709 Gift tax return below because it is used to track the reduction of the lifetime gift/estate tax exemption and allocate GST exemptions. IRS form 709 acts as a crucial record-keeping tool that may protect against future estate tax audits. All estates must also prepare the final Form 1040 individual income tax return. This return reports the income earned from January 1st until the date of death.

Who must file a form 1041 U.S. Income tax Return for Estates and Trusts

Decedent’s estate

1. Gross income of $600 or more, or
2. A beneficiary who is a non-resident alien.

Trust

1. Any taxable income for the tax year,
2. Gross income of $600 or more (regardless of taxable income), or
3. A beneficiary who is a non-resident alien.

Grantor type trusts

1. If all or any portion of a trust is a grantor type trust, then that trust or portion of a trust must follow special reporting requirements.

Estate or Trust tax preparation checklist:

• Copy of prior Fiduciary Income Tax Return (Form 1041)
• Copy of final Form 1040, U.S. Individual Income Tax Return
• Taxpayer identification number of estate or trust
• Copy of will and/or trust
• Copy of death certificate
• Copy of Letters of Administration/Letters Testamentary
• Name, address, taxpayer identification number, and email fiduciary.
• Name, address, taxpayer identification number of beneficiary(ies)
• Beneficiary(ies) date of birth and relationship
• Forms 1099’s issued to decedent
• Forms 1099 issued to trust or estate
• K1’s from partnerships, trusts or S-Corporations
• Estate’s probate inventory filing
• Estate’s probate account filing(s)
• Bank and investments statements
• Basis of assets in estate or trust
• Detail of distributions made to beneficiary(ies)
• Statements of any credit card balances as of date of death
• Statements of any as of date of death liabilities not paid

Form 706, United States Estate (and Generation - skipping Transfer) Tax Return

The purpose of the form 706, to figure out the estate tax levied on the entire taxable estate and or used to figure out the generation-skipping transfer tax (GST) on direct skips.

Which Estates must file Form 706- For decedents who died in 2025, Form 706 must be filed by the executor of the estate of every U.S. citizen or resident:

• Whose gross estate, plus adjusted taxable gifts and specific exemption is more than $13,990,000 for 2025 or
• Whose executor elects to transfer the deceased spousal unused exclusion (DSUE) amount to the surviving spouse, regardless of the size of the decedent’s gross estate
  • Portability of estate and gift tax allows a surviving spouse to inherit any unused portion of their deceased spouse’s estate and gift tax exemption.

Form 709, United States Gift (and generation-skipping transfer) Tax Return.

Purpose of the form 709 is to report-

• Transfers subject to the federal gift tax and certain generation-skipping transfer (GST) taxes and to determine any tax due, if any, on those transfers, and
• Allocation of the lifetime GST exemption to property transferred during the transferor’s lifetime.

Who must file the form 709

• If you gave gifts to someone in 2025 or 2026 totaling more than $19,000 (other than to your spouse). The IRS adjusts the limit periodically.
• Certain gifts called “future interests” are not subject to the $19,000 annual exclusion, and you must file Form 709 even if the gift was under $19,000.

Accountant Consulting services for Estate and Trust:

You will have questions about accounting and taxes as it affects your estate or trust. Each trust and estate are unique, but some of the questions are repeated: How do I defer or reduce my estate or trust taxes. What are the tax effects of the sale of estate or trust real estate holdings and businesses. As the fiduciary, what is my calculated commission? etc. We can help with these questions with written responses and calculations.

CPA collaboration with estate and trust professionals.

We get referrals from attorneys, financial advisors and other CPAs. We welcome the collaboration with the goal of serving the client with quality professional service. Please contact us at 631-486-6855 or email us at info@hpocpa.com. Se Habla Espanol

Call: (631) 486-6855 Book a Consultation