# Trust and estate returns, from the same books

When a client dies or sets up a trust, the work grows. Prepare the trust's returns, the estate tax return and the gift returns in one place. Build them from the estate's own books.

## Form 1041 for estates and trusts
Prepare Form 1041 for an estate or a trust. That covers simple, complex and grantor trusts. Income, deductions and the deduction for what was paid out are figured for you. Choose a fiscal year for an estate when it helps. Each beneficiary's share is kept from year to year. The return is e-filed with the IRS, and its postmark and answer are kept in the record.

## K-1s to beneficiaries
Each beneficiary gets a K-1 that shows their share. When the beneficiary is also your client, the K-1 lands on their own return. Beneficiaries who are not your clients get theirs in the portal or by mail. In the final year, the K-1s carry out unused losses and deductions. You see who has a K-1 and who is still waiting.

## State fiduciary income tax returns
Each trust or estate return comes with the state return it needs. Which state taxes a trust can depend on where it is run and where its trustees and heirs live. A Virginia estate files its state return beside the federal one. Credits for tax paid to another state are worked out for you. State estate and inheritance taxes are figured for every state. The state returns are e-filed with the federal return.

## Estate tax returns on Form 706
Prepare Form 706 for a large estate, starting from the family's own plan when your firm keeps one. Each asset is listed with its value on the date of death. Gifts made during life are added back. The deductions for a spouse and for charity are figured. Elect to pass the unused exemption to the surviving spouse. See whether the estate has the cash to pay the tax, or can pay it over time.

## Gift tax returns on Form 709
Prepare Form 709 for each person who gives. Gifts split between spouses are handled on both returns. Each year's gifts add to a running total of the exemption used. Gifts to trusts and gifts at a discount carry their appraisals. The running total carries into the estate return when the time comes. So no gift is counted twice or left out.

## One set of books for the estate
Keep the estate's or the trust's books here. Record what came in, what went out and who received it. Principal and income stay apart. The 1041, the K-1s and the court accounting all read from the same books. So the figures match from one to the next, and your staff enters each item once. See [state fiduciary reporting](/fiduciary-reporting).

## Working with the attorney and the advisor
An estate has more than one professional. Invite the attorney or the advisor into the work on one estate, with the family's consent. Each one sees only what they need. Hand off a question with the facts attached, so no one asks the family twice. Every message and file is kept in the archive. The family sees the whole picture in its portal. [Try the platform](/try?for=accounting) to see the returns your firm would prepare.