What Does It Mean When You Say That An Estate Is An Independent Entity

“Entity” is one of those concepts that it is hard to wrap your mind around even after you define it. The definitions that fit on a flash card leave more questions than answers. An entity is something that exists. Is it the same thing as a being? A substance? A thing? If you take a class on ontology in a philosophy department at a university, your professor will talk about entities during every class period. It is one of those big questions that make you realize how small you are in proportion to the universe, and how temporary your life is, the kind of thoughts that inspire one to work on one’s estate plan. Another thing that will convince you of the urgency of working on your estate plan is if a recently deceased relative of yours has left a will that designates you as the personal representative of the estate. Fortunately, during probate, you are dealing with a less abstract definition of the word “entity.” To find out more about deceased people’s estates as legal entities, contact a Tampa probate lawyer.

An Estate Has Its Own Taxpayer ID Number

In financial law, an entity is anything, other than a human being, that is responsible for reporting its income to the IRS. By this logic, entities are sometimes called “legal persons,” a piece of jargon that makes you grateful for the word “entity.” The IRS identifies individual humans by their Social Security numbers (SSNs), which is why you write your SSN on all tax forms related to your personal income. Anything else that is answerable to the IRS gets an employer identification number (EIN); not everything with an EIN qualifies as an employer by the commonly understood definition of the term, but they all qualify as entities.

Some of the entity designations you can choose are for businesses, such as corporation, S corporation, or limited liability company (LLC). Others are for nonprofit organizations. When the probate court appoints you as the personal representative of a deceased person’s estate, your first task is to apply for an EIN for the estate. Choose “estate of a deceased person” on the question that asks you to choose the entity type for which you are applying for an EIN.

An Estate Has Its Own Bank Account

Any entity with an EIN can open a bank account in its name, so once you receive the EIN for the estate, your next task is to open a bank account for the estate. This is where the money from the decedent’s bank accounts will go, as will any payments owed to the decedent that were pending when he or she died. The personal representative pays the decedent’s taxes and debts from the estate’s bank account. At the end of probate, when the estate settles, the personal representative closes the bank account and distributes the money to the heirs.

Contact David Toback About Estates as Entities

A Central Florida estate planning lawyer can help you understand the laws underlying the probate process.  Contact David Toback in Tampa, Florida to set up a consultation.

Source:

msn.com/en-us/money/other/10-essential-duties-every-will-executor-has-to-handle/ss-AA1INCyT?ocid=msedgntp&pc=ACTS&cvid=690e3cd5312447eca03a208393086bbb&ei=24#image=11