Fiduciary Tax

Definition

Fiduciary tax refers to the income tax obligations of estates and trusts, where a fiduciary (such as a trustee or executor) is legally responsible for filing returns and paying taxes on behalf of the entity. The fiduciary must allocate income between the entity and its beneficiaries, often issuing Schedule K-1s to report each beneficiary's share. This area of tax law carries heightened professional liability because the fiduciary has a legal duty of care to beneficiaries.