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Does an estate have to pay taxes after a person's death?

During the first few months of every year, many individuals start to worry about their taxes. Depending on the person's income, individuals can have a large tax burden each April. Individuals might wonder whether their estate also shares in this tax burden after they have passed away.

Unfortunately, a person's death will not help the individual escape tax liability at the state or federal level. Instead, under both federal and Michigan state laws, this burden is passed to the person's estate. More specifically, it becomes the responsibility of the personal representative of the estate to pay the taxes.

In particular, the personal representative is responsible for paying a variety of taxes after a person dies. This includes the decedents final income taxes at the state, federal and city levels. It also includes filing gift tax returns for the year the person died. The estate's personal representative is also responsible for filing payroll taxes for any business of the decedent, including those at the federal, state and city levels.

In addition to these taxes, federal estate state tax returns must also be filed. The Michigan estate tax return is also the responsibility of the personal representative. Other taxes -- including a generation-skipping transfer tax and information returns -- may also be required.

The estate's personal representative may face personal liability if these taxes are not filed in a timely and correct manner. Therefore, individuals and their personal representative should understand the types of taxes that need to be filed and when a person dies. An attorney can give specific legal advice to individuals struggling with these estate administration issues.

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