Who Is Considered an Executor Under IRC 2203?
Learn who the IRS considers responsible for estate taxes under IRC 2203. The duty can extend beyond a formal executor to anyone controlling a decedent's assets.
The federal government imposes an estate tax on the transfer of a person’s property after their death. For this tax to be calculated and paid, the Internal Revenue Service (IRS) must identify a party responsible for these obligations. This ensures a clear point of contact for settling the decedent’s final tax matters, whether the decedent left a will or not. The identification of this responsible party is governed by federal law.
The Definition of an Executor
The term “executor” is defined under Internal Revenue Code (IRC) Section 2203 for federal estate tax purposes. The primary definition refers to the executor or administrator who has been formally appointed by a probate court, is qualified, and is actively serving within the United States. This individual or institution is legally charged with managing the estate’s assets, paying its debts, and distributing property to beneficiaries.
The code includes a secondary provision for situations where no executor or administrator is formally appointed by a court. In such cases, the title of executor is assigned to any person who is in either actual or constructive possession of any of the decedent’s property. This “statutory executor” concept prevents estates from avoiding tax obligations simply because a formal legal process has not been initiated.
Who is Considered in Possession of Property
The concept of a “statutory executor” applies to any individual in “actual or constructive possession” of the decedent’s assets when no formal executor is appointed. A person does not need a court order to be considered an executor by the IRS. For instance, the trustee of a decedent’s revocable living trust is deemed to be in possession. This also applies to a surviving joint tenant on a bank account or real estate, as they have immediate control over that property.
Other examples are common and can create an executor status without the person realizing it. A beneficiary who directly receives life insurance proceeds is in possession of that property. An heir who takes possession of tangible personal items like jewelry or vehicles also fits this description. Debtors or companies holding assets that belonged to the decedent, such as a safe deposit company or a brokerage firm, are also considered in possession. It is possible for multiple individuals to be in possession of different assets, making them all co-executors in the eyes of the IRS.
Executor Responsibilities for Estate Tax
The person identified as the executor, whether formally appointed or by possession of property, assumes significant responsibilities. A primary duty is to file Form 706, the United States Estate Tax Return, if the decedent’s gross estate exceeds the federal filing exemption for the year of death. For 2025, this exemption amount is $13.99 million. The executor must gather all necessary financial information to complete the return.
Beyond filing, the executor is responsible for paying any estate tax due from the estate’s assets. If an executor distributes assets to beneficiaries before satisfying the federal estate tax liability, the IRS can hold that executor personally responsible for the unpaid tax. This liability is limited to the value of the property that the executor controlled and distributed.