Annapolis Probate Tax Attorney
One of the most critical aspects of handling a decedent’s personal affairs during probates is tax implications. There are three general types of taxes that must be addressed during probate, and you, as the executor/personal representative, are responsible for negotiating these tax implications. In many cases, executors are unprepared at handling this complex aspect of estate administration, and end up making dire mistakes that cost time, money, and even family relationships when things go drastically wrong. Here at Frame & Frame, our Annapolis probate tax attorneys regularly handle complex probate administration, and can help you navigate the convoluted legal aspects of probate tax.
Three Types of Probate Tax at Death
In general, there are three types of taxes at death that apply to probate:
- Decedent’s Income Taxes: As an estate administrator, it is your job to file a tax return for the decadent. If filing your own taxes seems complex, filing for another person, who is not around to answer your questions about all sources of income, is a whole different matter. Roughly 13 million Americans have more than one job, according to the Census. Even the wealthy have multiple sources of income, with 65 percent of self-made millionaires having three sources of income, according to CNBC. It is your responsibility, or your lawyer’s, to get this income tax report right, otherwise you could be facing an audit.
- Taxes Related to Estate Assets: After the filing to open an estate in probate court, the estate becomes its own legal entity. As such, all assets that are part of the estate can be taxed as they would under normal circumstances. For instance, property tax on real estate will need to be paid according to Maryland tax law and any rental income from the property will be subject to income taxes during the probate process. An administrator or executor needs to open a bank account during probate to handle depositing of estate funds and paying taxes.
- Estate Taxes: In Maryland, any estate with a net worth above $5 million can incur estate taxes. These taxes are progressive, which means they increase as the worth of the estate increases with the upper limit being 16 percent. The estates that are worth less than $5 million are exempt from this tax. If an estate is worth over $11.4 million then there will be a federal estate tax to contend with as well. While Maryland also has an inheritance tax, that is paid by heirs after the assets have been dispersed and is not the responsibility of the estate’s executor.
Our Probate Attorneys Can Help You With Taxes Associated with an Estate
It is one issue to have to pay taxes on your own property and income, but it is a whole other challenge to pay taxes on an estate that you are just becoming familiar with yourself as the executor.
At Frame & Frame, our Annapolis probate tax attorneys can help you determine which tax laws apply to the estate and assist you with filing all of the appropriate taxes. Schedule a free consultation with us today by calling 410-255-0373.