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Estate Tax in DC Probate Cases

An estate tax is the tax on the right to distribute a person’s assets upon their death. DC is a territory with its own estate tax. Decedents dying in DC may be subject to both the DC estate tax and the Federal estate tax. The following is information on the basics of the DC estate tax, including exemption and the process of filing a tax return. To learn more information about DC estate taxes, call a DC probate attorney and schedule a consultation.

DC Estate Tax Exemption

The DC estate tax exemption for 2015 is $1,000,000. Therefore, if the gross taxable estate for a decedent dying in 2015 is $1,000,000.00 or more, a DC estate tax return is required to be filed.

Even if a return is due, it does not necessarily mean that DC estate taxes are owed. A DC estate tax return is due ten months from the date of the death of the decedent. Whereas, a Federal return is due nine months from the date of the death of the decedent.

There has been recent legislation passed that may increase the DC estate tax filing threshold, but the increase is not expected for decedents dying in 2016. If the Personal Representative fails to file the return and pay any taxes due, interest and penalties may be assessed from the date of the default.

Filing the Tax Return

As a practical manner, the tax return may be filed early. The Personal Representative is required to complete a Federal estate tax return pro forma to file along with the DC estate tax return, even if a Federal estate tax return is not required to be filed with the Internal Revenue Service.

The Gross Taxable Estate

The gross taxable estate for DC estate tax purposes includes the assets and property in the decedent’s control at the time of his or her death. Jointly titling an asset or naming a beneficiary does not shield the asset from inclusion in the gross taxable estate. For example, life insurance proceeds payable to a surviving spouse are not included in the probate estate but are a part of the gross taxable estate for DC estate tax purposes.

The gross taxable estate includes assets such as bank accounts, life insurance policies, and tangible personal properties such as vehicles, art collections, paintings, investment accounts, retirement assets. All of the assets are valued as of the date of death of the decedent. Real property and tangible personal property are appraised to establish the date of death.

The date of death value of all of the assets is totaled to determine the gross taxable estate. If the gross taxable estate is $1 Million dollars or more for decedent’s dying in 2015, a return may be due. Even a DC estate tax return is required to be filed, deductions for the estate may result is no estate taxes due.

Documentation in Estate Tax Filings

Along with the Form 706, any documentation that supports the date of death values of the assets may be required to be attached to the DC estate tax return. A copy of the last will and testament, trust if any, Letter of Administration from the Superior Court for the District of Columbia, and anything else that would be specific to the case facts may be required to accompany the filing of the DC estate tax return.

Besides the DC estate tax return, a Personal Representative may also be required to file the final income tax return for the decedent and any fiduciary income tax returns required. While Price Benowitz does not prepare any income tax returns, their attorneys can refer you to income tax professionals who can assist you. We can assist with the preparation of any DC and/or federal estate tax returns required.