As someone going through the probate process, you might wonder if it’s normal to deal with an array of expenses. The short answer is yes. Probate can literally cost over $10,000.
Fortunately, there’s a way to write off those expenses and spare yourself from obliterating your wallet. Here’s some information about those expenses and how you can deduct them to save yourself some money as executor of the estate:
Probate Costs That Accumulate
These are a few of the expenses that come up during the probate process:
Funeral expenses are some of the most common estate-related expenses. You may have to take money from the estate to pay for the burial and services from the funeral home. You’ll also need to pay for whatever type of casket you choose to bury your loved one in. The costs could be thousands of dollars.
Debts and Bills
Your deceased loved one may have some debts and medical bills left over. Unfortunately, you will have to pay for those items with the money from the estate. The amazing news is that you can deduct these expenses from your taxes and get a break.
You will also have to pay state taxes on your loved one’s property. Therefore, you’ll have to pay the annual taxes on the house. If your loved one left behind a car, you’ll also have to pay state taxes for that.
Furthermore, you may have to pay inheritance taxes. Only some states charge people inheritance taxes, but you’ll be subject to them if you live in one of those states. Examples of states that have those taxes are Pennsylvania, Kentucky, Nebraska, and Iowa. Keep that in mind as you are thinking about the costs and how you will repay them.
Estate Administration Costs
Administration fees are any fees you will have to pay regarding the administrative processes. An example of an administrative fee is court costs, and another example of an administrative fee is property maintenance fees.
You may also have to pay tax collection fees. All of these things can be taken off your taxes if you place them where they should be. You can ask a reliable attorney for a little bit of help with your income taxes.
How To Claim Expenses
To claim the expenses, you would simply do it on a separate estate account tax return. The process is similar to being your own business entity.
What you would need to do is keep your documents together and obtain the appropriate tax forms so that you can easily enter the information pertaining to your deductions. If you complete the paperwork as you should, you will be able to benefit from the deductions you have listed.
You’ve just read information about the probate process expenses and how you can deduct them from your taxes. Don’t stress about the expenses because you can get a nice break from your taxes just by filing your forms correctly. Don’t hesitate to take advantage of those deductions to save money on this expensive process.
Categorised in: Estate Planning