Estate administration can be a lengthy process. Depending on the extent of the estate and the time of year when an individual dies, the administration of their estate could extend across multiple calendar years.
The personal representative administering an estate must identify financial obligations and fulfill them using estate resources. Their responsibilities include identifying and communicating with creditors. They also need to address tax responsibilities.
What types of taxes may an estate need to cover?
Federal estate taxes
Estate taxes generally only apply to very large estates. While the state does not assess an estate tax, federal estate tax rules apply to estates worth $15 million or more in 2026. The rate for estate taxes is progressive and can be anywhere from 18% to 40% of the total value of the estate.
Income taxes
Personal representatives often need to file a final income tax return for the deceased party. Even if they have a surviving spouse or had not worked in years, the estate is usually responsible for reconciling any outstanding income tax debt they still owed.
In some cases, the estate itself could end up accruing income tax obligations. The sale of estate resources could lead to estate income tax obligations if it generates $600 or more in revenue.
Personal representatives are responsible for filing appropriate tax returns and allocating estate resources to cover tax obligations. Unpaid taxes are a potential source of financial liability during estate administration. Thankfully, working with a probate lawyer reduces the likelihood of a major tax oversight that could inspire future financial liability for a personal representative.