My brother died in 2013 and I was the executor of his estate. A final 1040 was submitted in 2014. A 1041 was not submitted since the estate had less than $600 in income. In 2019, my brother received a $24,000 class action settlement and a corresponding 1099. Do I submit another "final" 1040 for my brother? Do I now submit a 1041 for my brother's estate? Do I disregard the 1099 as coming after the estate was already closed, and treat the settlement as income on my own 1040?
The executor needs to go back to the payer of the settlement and advise that your brother has passed away. The check should be reissued in the estate’s name. You will then need to file a 1041/PA-41 for the estate in the year the money was received. If your brother was a Pennsylvania resident, you will also have to file a supplemental inheritance tax return for this new asset.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.
Answered by: Paul K. Rudoy, CPA, PFS, is managing partner of H2R CPA in Pittsburgh, Pa.