What taxes are due during Texas estate administration?

On Behalf of | Jan 29, 2024 | PROBATE & ESTATE ADMINISTRATION - Estate Administration

The personal representative of a Texas estate has numerous obligations. They must fulfill these obligations appropriately or risk personal liability for those oversights.

Debts are often a major consideration during estate administration. The legitimate debts of the decedent are the obligation of the estate and take precedence over the inheritance rights of their beneficiaries. There may also have taxes due that could affect what people inherit from the estate.

Several different kinds of taxes can impact the value of an estate and the rights of beneficiaries. What taxes may require payment during estate administration?

Income and estate taxes are the main concerns

The personal representative of an estate must settle someone’s final financial obligations. To do so, they typically need to file a final tax return on behalf of the decedent. Even if someone did not earn any income for the previous tax year due to retirement or illness, a final income tax return to settle their obligations and notify the IRS of their passing is likely necessary.

In scenarios where the estate is worth millions of dollars, federal estate taxes may apply. Texas does not collect an estate tax, but the federal government does. Estates worth more than $13,610,000 could be subject to estate taxes for Tax Year 2024.

There could be income taxes due from the estate. If the probate process requires the sale of estate property, an income tax return on behalf of the estate could also be necessary. Proceeds in excess of $600 could necessitate an income tax return. The sale of valuable inherited assets could also lead to capital gains taxes for beneficiaries.

Properly fulfilling tax obligations is a key component of Texas estate administration both for the fulfillment of someone’s outstanding obligations and the protection of the representative. Having professional estate administration guidance can help.