Legal Question in Wills and Trusts in California
Who pays the estate tax?
My grandmother (96) in Alabama died, leaving my mother (70) and her brother about 195K each mostly from cash accounts and some from a small house. My mother resides in California. It is a will, not a living trust. She is not the executor, her brother is. Is my mother responsible for paying any estate taxes in Alabama or California or to the Feds? Does the executor pay the estate tax BEFORE funds are distibuted? When she gets her share, is she free and clear? What does she have to do? We are very confused! Thank you for your help.
2 Answers from Attorneys
Re: Who pays the estate tax?
First since your grandmother only had a will, it must be probated in the state of death. Only after the proper court proceedings may the moneys be distributed to the heirs. The debts must all be paid prior to disbursement. As far as the federal estate tax, this year every individual's exception is $1.5 million dollars.
Re: Who pays the estate tax?
The executor is responsible for paying any state or federal estate/inheritance taxes. It sounds like federal estate taxes won't be due, but Alabama may have an inheritance tax.
If the assets earn income, she may have to report her share of it on her own income taxes--this is because her income tax rate is likely to be lower than the estate's income tax rate.
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