One of the most important aspects of serving as an estate executor is understanding the relevant taxes. Every representative that begins the probate process must determine whether they need to pay these government fees. The scope of these taxes depends on the total value of the estate, prior to repaying debtors. These payments are noteworthy because they are one of the main ways that an estate begins to decrease in value. It is important to recognize that both state agencies and the federal government can acquire a portion of an estate through taxation.
Therefore, quickly determining whether an executor needs to pay taxes on an estate is an essential part of effective administration. If you are serving as a personal representative, a diligent probate lawyer could help you better understand the taxes involved in the Mount Laurel probate process. Afterward, legal representation could submit exemption forms or help you calculate the amount of tax owed to various entities.
How Does the State Tax a Decedent’s Assets?
There are two different state taxes that may apply during the probate process. The first is the estate tax. Historically, the state would seize a portion of a person’s estate after their death. Fortunately, this no longer applies. If anyone passes away after January 1, 2018, their family does not need to worry about this monetary burden.
The second relevant obligation is the inheritance tax. This payment affects beneficiaries listed in a will. Whether someone needs to pay this tax depends on the beneficiary’s familial relationship to the decedent. Spouses, children, parents, and grandchildren never need to pay an inheritance fee. Similarly, siblings, charitable institutions, and children-in-law can claim exemptions from this tax. All other parties will need to surrender at least 15 percent of the value of the relevant assets.
A detail-oriented attorney in Mount Laurel could further explain both of the state’s tax requirements and help a family determine whether probate will subject their estate to these fees.
The Federal Estate Tax Explained
Meanwhile, the federal estate tax applies to people who pass away anywhere in the U.S. However, only high-value estates are subject to this financial obligation. Many properties are exempt from this burden.
As of 2021, estates may exempt up to $11,700,000 of assets from federal taxation. Once an inheritance passes this threshold, the federal government will collect a portion of the value that rises above this level. For example, estates must surrender 18 percent of the total value of the first $1-$10,000. The percentage that an executor must pay rises as the estate increases in value.
An intelligent lawyer in Mount Laurel could help executors to understand if the federal tax applies to their estate and outline how to properly pay this fee.
Contact an Attorney About the Taxes Involved in the Mount Laurel Probate Process
One of the first questions that a personal representative must address during the probate process is whether they need to pay taxes on the estate. Common financial obligations include both state and federal payments.
Fortunately, the federal estate tax eligibility is extremely high, and the state no longer demands payments from people who passed away after 2018. Still, this burden may apply to people with a distant or non-existent familial relationship to the decedent. A knowledgeable lawyer could answer any remaining questions you have about the taxes involved in the Mount Laurel probate process, so call the office today to schedule an appointment.