Section 645 Election: A Quietly Powerful Tool In Estate Administration

After a decedent’s death, fiduciaries face income tax decisions that directly affect how quickly assets become available, when tax payments come due, and what returns must be filed. Often, the most meaningful opportunities for tax savings, and the most common missteps, arise not during the planning phase, but during the administration itself. This article focuses on a specific and frequently underutilized administrative tool – the Section 645 election.

When a decedent dies with a funded revocable trust, fiduciaries must promptly determine how that trust will be treated for income tax purposes. The Section 645 election allows the executor and trustee to temporarily combine both the estate and the revocable trust into a single taxable entity. While the election does not affect estate tax liability, valuation, or dispositive outcomes, it can meaningfully simplify income tax compliance and create flexibility in the timing of income, deductions, and tax payments during the administration