It’s a big responsibility to be appointed the executor of a loved one’s estate. You have many obligations in your role. One of those is to pay any taxes associated with the deceased or their estate.
There are differences between the types of taxes you may need to handle, so read on to learn more.
What is an inheritance tax?
Some states assess a tax for a percentage of an assets’ value that a testator leaves behind for them. An heir generally doesn’t qualify to have that property transferred to them until they pay the state the assessed inheritance tax. Only six states have inheritance taxes in effect. Florida is one of many that doesn’t, so that may not be an issue if the deceased’s assets were all located within this state — but it’s better to get specific guidance before you proceed.
What are estate taxes?
At least 12 states have estate taxes on their law books. Florida isn’t one of them. The federal government doesn’t levy an estate tax unless the inherited property has a value of over $11.58 million as of 2020. Just the same, you will be well-advised to make sure that the estate you are handling owes no taxes to either the state or federal government before you disburse any inheritances.
What about the deceased’s final taxes?
As the executor, you’re responsible for filing the deceased’s last tax return, if necessary. You may not know if it is required until you have a clear picture of the deceased’s income during their final days. If you fail to do so, you could be penalized.
You don’t want to be on the hook for paying a testator’s taxes down the road out of your own pocket because of a preventable mistake. Speaking with an experienced attorney about the probate and estate process can make things easier.