Settling someone’s financial matters is a big part of the probate process. If you are the executor or personal representative of an estate, you must fulfill the deceased person’s financial obligations to others. You will have to pay their final bills, contact their creditors and close their accounts.
You will also need to file tax returns on their behalf and possibly pay taxes for the estate. What taxes might affect the administration of an estate in Kentucky?
Estate taxes apply directly to the assets owned by someone at the time of their death. While Kentucky does not assess estate taxes, the federal government does. Thankfully, these taxes only apply to estates worth more than $12,060,000.
The executor will not be responsible for covering inheritance taxes, but they will need to communicate with beneficiaries about these taxes. The state expects those who receive property from an estate to pay taxes. Closer family members and those who pay their inheritance taxes early will limit how much they must pay.
Oftentimes, it is the executor of someone’s estate who files their final income tax return. If you have to liquidate or sell off property from the estate, you may need to file an income tax return for the estate itself as well if those sales generate more than $600 in revenue.
Executors need to know the tax obligations that apply to the estate they help probate or risk making mistakes for which they could ultimately be financially responsible. Learning more about the Kentucky probate rules will help you avoid financial mistakes during estate administration.