What Impact does the Probate Process have on Estate Taxes?

None at all! Upon initial glance, it appears there is a connection between probate and estate taxing; they both initiate at a testator’s death and are both based on property ownership. The two processes, however, are distinctly separate. While estate tax liability is initially based (“gross estate”) on all of one’s at-death property, the probate process encompasses a more narrow class of property that excludes many types of assets (“nonprobate property”). The following nonprobate items are subjected to the estate tax but are not probated:

-Insurance policy payouts
-Bank accounts held jointly
-Qualified trust-held property
-Real property held as either Community Property or Joint Tenancy with right of survivorship
-Other Beneficiary-designated assets

As you can see, probate and estate taxing really are unrelated. That is not to say that they are handled by different parties; the estate’s personal representative is responsible for both administering probate as well as filing the estate tax return, if one is required. Furthermore, he can be held personally liable for unpaid estate taxes if he distributes the estate’s assets without first satisfying the estate tax liability.

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