Serving of the executor or administrator of someone else’s estate typically means needing to micromanage financial transactions and the distribution of assets to their family members and loved ones, all while maintaining meticulous records.
In certain circumstances, if you make mistakes, either you or the people who receive certain assets could wind up financially liable for those mistakes. Tax issues are among the most significant problems that can cause financial complications during estate administration or probate. Once you understand what tax obligations you have while handling an estate in Washington, you will be able to avoid mistakes that could have legal or financial consequences.
Will you need to pay estate taxes on the value of the estate?
The state of Washington does not assess any state-level estate taxes. Regardless of the value of the estate itself, Washington will not claim a portion of the assets that someone leaves behind for their loved ones or charities when they die. However, very large estates may have to pay federal estate taxes. In 2020, the value of the estate must be $11,580,000 or higher for there to be any federal estate tax liability.
You have to file a final income tax return the year after the death
If you have just begun administering the estate of someone who died in 2020, you will need to file that individual’s income taxes next year, even if you have already filed a return for 2019 on their behalf. A final income tax filing is a critical requirement that allows the IRS to update their records. If you fail to file taxes, there could be financial repercussions for the beneficiaries of the estate.
Managing someone’s estate can be overwhelming. Don’t hesitate to seek experienced legal assistance whenever necessary.