Managing the probate process is relatively challenging. Personal representatives have to communicate with many different parties and attend court hearings. They need to review estate planning paperwork or learn about intestate succession laws if there is no will.
They also have an obligation to secure and properly manage estate resources before distributing them to beneficiaries or liquidating them to cover estate administration expenses. Taxes are among the probate expenses that personal representatives may need to address. The failure to handle tax obligations can lead to financial liability for personal representatives. It is therefore critical that they understand their tax obligations and fulfill them.
What taxes can impact the probate process?
Estate taxes
Personal representatives may need to set aside resources to cover estate taxes in certain circumstances. The obligation to pay estate taxes depends on the total value of the estate.
Although South Carolina does not currently collect an estate tax, the federal government does. If a person dies with millions of dollars in assets, then federal estate taxes might apply. As of 2025, the threshold for estate tax exemption is $13.99 million. Estates worth more than that could be subject to large estate tax obligations.
Income taxes
While most estates are not subject to estate taxes, income taxes affect many estates. Personal representatives frequently need to file a final income tax return for the decedent. Even in cases where they have not worked in years, a final tax return to reconcile what they may owe to the Internal Revenue Service (IRS) is necessary. The personal representative must use estate resources to cover any income tax debt owed by the deceased individual.
If they sell estate resources during estate administration, then the estate itself could be subject to income taxes. Sales generating $600 or more in revenue can lead to estate income tax obligations. Personal representatives must retain funds to pay taxes and file an income tax return on behalf of the estate.
Overlooking financial responsibilities can quickly complicate probate proceedings. Personal representatives may need help protecting themselves from liability. Consulting with an attorney familiar with state law and tax regulations can take much of the risk out of overseeing probate matters.