What Is Probate Tax?

by Cecelia Owens ; Updated July 27, 2017
A vintage picture of a grand estate

Probate tax is an important tax that is imposed on the probate of every will and/or grant of every estate that surpasses $15,000. The tax is not an estate tax or an inheritance tax. The probate is the copy of a will when someone dies and leaves you money.

Significance

For state and federal tax purposes, probate taxes are handled during two events. The probate tax ends the decedent's last tax year (in order to file income taxes) or the tax establishes a new entity for tax purposes.The probate tax is a tax on the items that were left by the deceased.

Types

With probate taxes, it's necessary to file one of the following tax forms. The correct tax form depends on the size and income of the estate and the decedent's income. The Form 1040 Federal Income Tax return, the Form 1041 Federal Income Tax return, the Form 709 Federal Gift Tax return and/or the Form 706 Federal Estate Tax return will have to be filed.

Geography

Probate taxes are usually handled by the court in the same county and/or state where the deceased lived at the time of his or her death. If the county is small and does not have its own probate court, the decedent can go to a court in a neighboring county. The court must have proper jurisdiction. The probate court has the ability to distribute all of the deceased's personal property.

Time Frame

The time it takes to issue a probate depends on the estate and if the deceased left things in order. In addition, the time also depends on the procedures your state requires. Each state has its own laws on probate. In general, a probate can take anywhere from three to six months or several years. The state of California averages between seven and nine months. The cost of a probate can range from three to seven percent of the total estate value.

Warning

Probate taxes can provide some miscellaneous income, though the decedent of these taxes/items should be vigilant to the possibility that the deceased has some unresolved taxes. It will be the representative's responsibility to clear up all of these tax issues.

Photo Credits

  • industrial estate image by Adrian Hillman from Fotolia.com