Agreeing to serve as the executor or personal representative of an estate is a major commitment. Executors and personal representatives have to locate and preserve the assets that belonged to the deceased individual. They need to find a will or other estate planning documents if they exist. They have to communicate with creditors, heirs and named beneficiaries included in estate planning documents. They have to present documentation to the courts and attend hearings. They may also have to handle certain tax matters.
The failure to properly resolve financial obligations can result in liability for a personal representative. Creditors and tax authorities, for example, could hold them directly responsible for the financial responsibilities they did not fulfill during estate administration. What taxes may require payment during probate proceedings? Consider these:
1. Income taxes
It is common practice for the personal representative of an estate to file a final tax return on behalf of the deceased. They notify the IRS of the individual’s passing, which can limit the likelihood of postmortem identity theft.
They can also use estate resources to cover any outstanding financial obligations still owed by the decedent. Even those who have not earned income in years sometimes have minor income tax responsibilities to cover.
The estate can also be subject to income tax rules. If estate planning instructions require the sale of estate resources, the personal representative may have to file an income tax return on behalf of the estate itself. Generally speaking, any proceeds from estate sales that exceed $400 make an income tax return necessary.
2. Estate taxes
Like most states, Tennessee does not currently impose a state estate tax. Federal estate tax rules may apply to any estate probated in Tennessee. As of January 1st, 2025, any estate worth more than $13.99 million is likely subject to federal estate tax rules.
The more the value of the estate exceeds the current threshold, the higher the tax rate that applies. The personal representative may need to earmark between 18% and 40% of the estate’s overall value for estate tax payments.
Having support during estate administration makes it easier for a personal representative to fulfill all mandatory financial obligations. Taxes are a key responsibility that a personal representative must address during the probate process.