Unreported Cash In An Estate is a Recipe for Disaster

Leavenworth prisonRemember: the difference between tax avoidance and tax evasion is Leavenworth Prison.

What do you do when you find an unreported $100,000 in cash in your late mother’s safe? As tempting as it may be to let it slide and pocket the cash, as executor, you now have a fiduciary duty not to mention, multiple beneficiaries. Just how long do you think everyone will be able to keep this secret; avoid banking the funds, bragging to friends or living above their means?  Will every beneficiary be willing to have this toxic secret hanging over their head? Maybe, but guess what – it’s not their crime, it’s yours. It’s the duty of an executor to collect, value and report all of the assets of the estate.  Therefore the failure to include cash, if discovered, will subject you, as executor, and only you, to penalties for nonpayment, as well as civil and criminal penalties when this failure to file is deemed fraudulent.

Unlike cases where an executor performed their duty and filed the necessary tax returns, there's no statute of limitations in cases where assets were are not reported; after all, the assets haven't been disclosed, and the tax authorities haven't been given an opportunity to review and evaluate reported information.

Even if the failure to file is an honest mistake, if the estate is audited, it’s the executor that will be personally liable for the unpaid tax, interest and penalties because it was he that distributed the estate's assets.

Talk with a knowledgeable and reputable estate planning attorney about this situation.

Reference: New Jersey 101.5 (April 5, 2016) "Why it's important for executors to report all estate assets"


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We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.