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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
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Experience:  Over 20 Years experience
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when a shareholder of a "S" corporation dies and the will states

Resolved Question:

when a shareholder of a "S" corporation dies and the will states that the stock will be left to his/her spouse - when does the actual transfer take place (i.e. at date of death or when the stock is titled over)? if the beneficiary is the spouse, does the K-1 go to the spouse after date of death or to the estate until the stock certificate(s) are transferred?
Submitted: 4 years ago.
Category: Tax
Expert:  R. Klein, EA replied 4 years ago.

Randalltax :

Transfers of property occur on the date of death officially.

Randalltax :

Technically, with a change of ownership, an allocation is made for profits and losses up to the date of death for the decedent, and afterwards, the beneficiary gets a separate K-1 for the period of time she owned the stock.

Customer:

if there was a desire to have the K-1 go to the estate, the beneficiary would have to disclaim the bequest, yes?

Randalltax :

The shares, and everything the deceased owned. go to the estate on the date of death, unless an overriding document, like a life insurance policy, indicates a different payee. The estate then distributes property per the will or any other legal document or per stirpes.

Randalltax :

The trustee of the estate distributes the property of the estate.

Randalltax :

If a beneficiary of the estate does not want ot, she can disclaim it.

Randalltax :

Nonetheless, either the estate or someone else owns the shares.

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