My answers:My mom just passed away Friday, my sister is her estate executor, and she asked me some questions that I thought BHs could help me answer. My sister had my mom's POA and continues to have my dad's. She knows I'm posting this and she'll read the responses. My parents and the two siblings mentioned below live/lived in California. Thanks in advance for your help. Our questions:
1) Our dad is still living and the estate is in a trust; is there any reason why it would make sense for him to file his 2025 taxes as Married Filing Single? We didn't think so, but someone else suggested it.
2) As POA, my sister has been gifting another sibling funds from both my parents for being especially helpful. All siblings agree this should be happening. The question is, since my mom died in January, can there still be one gift from my mom and another from my dad for this year? If so, would there be a limit on the gift from my mom (beyond what must be reported for estate tax purposes)?
3) Finally, all siblings agree that my sister who is both POA and executor should have compensation for the financial and logistical work she's been doing over the past few years. Is there a way for her to essentially "pay" herself from the trust/estate that doesn't involve her becoming an employee? If so, what's the best way to do that?
1. Almost certainly not. Review the disadvantages of MFS in IRS Pub 17. Assuming he doesn't remarry before the end of 2025, then he can and should file MFJ this year with your Mom because she was living part of this year. The person preparing the taxes should note her date of death on the tax return.
2. As others have said, not from Mom, because she has passed so any Mom POAs are not operative. Even from Dad, since he has dementia, the sister should check state law and the Dad's POA - in my state, a POA cannot use the POA to gift unless gifting is specifically mentioned in the POA.
3. Depending on the amounts and timing, you might decide for the non-POA siblings to gift money in appreciation to the POA sister. That would make it a non-taxable gift rather than taxable compensation.
Statistics: Posted by secondcor521 — Tue Jan 21, 2025 3:59 pm