Estate Planning Implications of Deceased Individuals Receiving IRS Stimulus Checks

A new wrinkle in the estate planning world occurred when Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act. The CARES Act provides economic relief to millions of Americans through economic impact payments (EIP). Unfortunately, Congress sent payments to thousands of deceased persons creating confusion for estate fiduciaries and family members regarding their obligations, rights and responsibilities for the payments.

Common questions presented are whether or not an estate fiduciary is permitted to spend the payment, if the fiduciary can transfer a payment to beneficiaries or if the payment can be kept in a trust. Addressing these issues, Secretary of the Treasury, Steven Mnuchin, stated that stimulus checks sent to deceased individuals should be returned. People who died do not qualify for an economic impact payment. The IRS requires fiduciaries to return the entire payment unless the payment was made to joint filers and one spouse had not died before receipt of the payment. In this case, the surviving spouse need only return the portion of the payment intended for the decedent. 

For stimulus checks that were physically mailed to deceased individuals, the IRS requires fiduciaries to return the check with “VOID” written in the endorsement section on the back of the check. The IRS also asks that fiduciaries include in the mailing a statement as to the reason for the check’s return. For Michigan taxpayers, the check can be sent to: Kansas City Internal Revenue Service, 333 W Pershing Rd., Kansas City, MO 64108. Do not stable, bend or paperclip the check.

If the stimulus payment was deposited into a deceased individual’s account electronically by direct deposit, the IRS requires a money order or personal check to be sent and made payable to the U.S. Treasury. Included on the check should be written “2020EIP” along with the social security number or taxpayer identification number of the recipient (deceased). Also, include with the check a brief explanation why the check is being returned.

Instructions on how to return economic impact payments are subject to change and notwithstanding the instructions given above, one should check the IRS guidelines before sending a check as updates occur frequently. The IRS provides information for people who have questions regarding the stimulus checks with a “Questions and Answers” page which can be found here.

If you have any questions regarding IRS stimulus checks sent to deceased individuals or any other estate planning questions, please feel free to contact one of the attorneys at Wakefield, Sutherland & Lubera, PC at 248-457-9860 or visit www.saynotoprobate.com.

*This article is meant for informational purposes only. Please recognize that nothing in this article constitutes legal advice. If you have any questions, comments, or seek legal assistance, please call one of the attorneys at Wakefield, Sutherland and Lubera, P.C.