Estate administration is a challenge even when someone leaves behind very clear instructions about their wishes and when there aren’t any complicating factors. There are still numerous parties that need formal notification, financial obligations to meet and court hearings to attend before the executor or administrator of an estate can distribute assets to beneficiaries.
Premature distributions from the estate can lead to liability for the executor. Both creditors and tax authorities can hold the executor or personal representative of the estate accountable for unmet obligations when the estate had sufficient resources but failed to fulfill someone’s obligations. There are two different types of taxes that could potentially lead to some personal liability for the executor of an estate in Ohio.
1. Estate taxes
Ohio does not levy a state estate tax. However, every estate that makes its way through probate court in Ohio will be subject to federal estate taxes if its overall value is high enough. Federal estate taxes apply to high-value estates anywhere in the country. In 2023, the cutoff for federal estate taxes was $12,920,000. An executor may have to use as much as 40% of the total value of an estate toward paying those estate taxes.
2. Income taxes
Estate administration often necessitates income tax filings. The executor of an estate will frequently file the final tax return on behalf of the deceased individual. They might also have to file an income tax return on behalf of the actual estate itself. When sale proceeds exceed $600, then the executor of the estate will very likely need to file an income tax return on behalf of the estate for the year in which they conducted the sale.
So long as those who have accepted the role of executor or administrator understand the obligations that stem from their position, they can take appropriate steps to fulfill the tax obligations for the estate and the decedent while simultaneously protecting themselves from personal liability. Learning more about the financial responsibilities involved in estate administration in Ohio probate proceedings by speaking with a legal professional can benefit those who are accepting a role of responsibility in re: someone’s estate.