People think of the executor of an estate as the person who has to locate and sell assets, possibly in an estate sale. They also have to distribute proceeds from that sale and remaining property among the beneficiaries of the estate.
However, before an executor can take those important steps, there is something else they must do first. The primary responsibility of an executor is to fulfill the financial duties of the deceased individual. That means repaying debts. It may also mean filing and paying certain taxes. What taxes apply to an estate in Texas?
Texas does not assess estate or inheritance tax
There are several kinds of taxes that can apply to an estate. The best-known are estate taxes, which some people call death taxes. This tax applies to the value of the estate itself. Texas does not have an estate tax, and the federal estate tax only applies to estates whose assets are worth well over $11 million.
Inheritance taxes require that those who receive assets from an estate pay tax on the value of that property. Texas does not assess inheritance taxes either.
Both the deceased individual and their estate may have to pay taxes
When someone dies, there is still an obligation to file a final tax return for the last year of their life. The executor of the estate has the responsibility for filing this final tax return. In cases where they have to sell property, like stocks or real estate, hey they have to file an income tax return for the estate itself.
Familiarizing yourself with the tax and probate obligations of an estate in Texas can help you avoid mistakes that could personally affect you as the executor.