How is executor fee reported to IRS?

Fees of the executor of a will

The assignment usually consists of the administration of the assets of the estate, and the division or partition and/or adjudication and, if necessary, distribution of the assets among those called to the estate. An executor may also be entrusted with minor matters such as burial arrangements and, in general, the carrying out and execution of any testamentary disposition.

In principle, this is a remunerated position unless the testator has expressly instituted it as free of charge. The remuneration that the executor will receive will be that which the testator has prefixed, and failing this, the law establishes that it will be around 5% of the liquid assets of the estate, if he is a universal executor, and if he is a private executor and a partitioning accountant, 2% of this value or that of the assets to be partitioned. That is to say that his remuneration is charged to the inheritance.

Professional Executor

The testator is free to designate an executor to whomever he deems appropriate, whether or not he is an heir, whether a natural person or a legal entity. Although the law does not contemplate it, the doctrine is in favor of the possibility that a legal person can be appointed executor.

In relation to the declared prodigal, it does not admit doubt because he lacks full capacity to bind himself. Neither can the bankrupt be executors, based on the restrictions that the law imposes on them, to manage their own interests and those of others. And with respect to those declared unworthy to succeed the testator, as listed in Art. 756 CC and among which the executor is not related, as the unworthiness of succession must be incompatible with a position of trust, he/she will have to be removed – removed by judicial resolution – from the executorship, Art. 910 CC (which lists the causes of extinction of the executorship).

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Exceptionally, in the exercise of the office, situations “cases of extreme urgency” may arise that require immediate action without the delay that would be imposed by the meeting or agreement of the other executors. In these urgent situations “one of the joint executors may perform, under his personal responsibility, the necessary acts”. But the action of the “joint” executor in case of extreme urgency requires that he immediately inform the other “joint” executors.

An heir may be an executor of a will.

The procedure for the declaration of intestate heirs has undergone changes with the entry into force of the Law of Voluntary Jurisdiction (July 2015), among which stands out, that the competence for this file will be carried out by a Notary. more information about the heir here.

In order to initiate the probate proceeding, it is necessary that the distribution is not to be made by an accountant-partitioner or an executor accountant-partitioner expressly designated by the testator in the will. If the deceased designated these offices, the designated persons must carry out the partition.

Any heir or legatee of an aliquot part will be entitled to file a testamentary or judicial division of inheritance lawsuit. Once promoted, the creditors of any of them are also entitled to intervene in the partition, at their own expense, in order to prevent the partition from being carried out in fraud or to the detriment of their rights.

1) The probate proceeding is initiated by request of any of the legitimated parties, signed by a lawyer and attorney. The content of the request can be twofold: the simple petition for the division of the inheritance and also, if deemed necessary, it can be requested as a precautionary measure the intervention of the estate and the formation of an inventory of the assets and rights.

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Donations are taxed in Chile

At the death of a person, several procedures must be carried out to settle the rights and obligations that he/she would have had; among these are those related to the tax regime to which he/she was subject during his/her lifetime.

For income tax purposes, the executor will make the provisional payments and will pay the tax in each fiscal year on behalf of the heirs or legatees, considering the income jointly, until the liquidation of the estate.

The heirs or legatees who have not exercised this option during the probate proceeding may do so after the liquidation of the estate. For this purpose, they may file complementary tax returns for up to five years prior to the year in which the liquidation took place.

One of the following options may be applied: – be considered as income received by the author of the succession for purposes of the executor filing within 90 days following his appointment the annual income tax return and covering the corresponding tax, if any, or – the heirs and legatees accumulate it with their other income.

How is executor fee reported to IRS?
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