When people die, those left behind have to settle their affairs. Covering tax responsibilities is often a major component of that process. The personal representative of an estate usually needs to file a final income tax return even if the decedent hadn’t earned traditional income in years at the time of their death.
The estate may also be responsible for estate taxes. These special taxes apply to the estate itself and vary depending on the value of the property owned by the decedent. Do estates probated in California need to cover estate taxes?
Federal estate taxes could apply
The good news for those creating, updating or relying on a California estate plan is that there is no state-level estate tax to address. If the estate is large enough, then federal estate taxes might apply.
As of 2025, the federal threshold for estate taxes is relatively generous. Only those with estates with a total value of $13.99 million or more are typically subject to estate taxes. However, the greater the value of the estate, the higher the tax rate that applies.
The personal representative may need to retain between 18 and 40% of the total estate value to cover tax obligations. People who have well-funded retirement savings accounts, business holdings and real estate investments may need to plan in advance to limit estate tax obligations.
Understanding what taxes may apply during estate administration can help personal representatives protect themselves and testators establish effective estate plans. Estate taxes can have a powerful negative effect on the overall value of an estate and can lead to representative liability if not properly addressed.
