Tennessee Probate Inheritance Taxes

While it seems as though you can be taxed for almost anything these days, there is good news for those who may be worried about potential inheritance taxes in Tennessee. Many states have made a push to eliminate inheritance taxes in an effort to draw new residents and businesses. Tennessee has followed suit. The Tennessee state legislature has enacted legislation to gradually increase the inheritance tax exemption amount before completely eliminating the tax in 2016.

The Tennessee inheritance tax exemption allows for any estate valued under the set amount to be exempt from paying the inheritance tax. Only if the value of the estate rises above the set exemption amount is the estate required to pay the Tennessee inheritance tax. The tax rate ranges from 5.5% at the lower end to upwards of 9.5% at its highest. The exemption amount for a decedent’s estate is currently $2,000,000 for any decedent’s death occurring in 2014. That exemption amount increases to $5,000,000 beginning January 1, 2015. On January 1, 2016, the Tennessee inheritance tax is completely eliminated.

The Tennessee Department of Revenue is the organization tasked with levying the state’s inheritance tax. Although an estate may be well under the exemption amount, the personal representative of an estate is still required to provide the Tennessee Department of Revenue with the value of the estate. If the estate is valued at under $1,000,000, a sworn affidavit can be filed with the probate court attesting to the fact that the estate is indeed under the exemption amount and therefore is not owed. This sworn affidavit is known as the Affidavit Waiving Tennessee Inheritance Tax Return, and it functions to release the estate from any taxes owed. If the estate is valued at more than $1,000,000 but still less than the exemption amount, the personal representative is required to file a Tennessee inheritance tax return with the Department of Revenue outlining the assets comprising the estate. The Tennessee Department of Revenue then grants a release to the personal representative of the estate which is filed with the probate court.

Although Tennessee is phasing out its inheritance tax, the federal government imposes an inheritance tax only for larger estates. The federal exemption amount in 2014 is $5,340,000. That amount increases by $90,000 to $5,430,000 in 2015.

If you have questions regarding a Tennessee probate matter, contact The Higgins Firm. Our Nashville based probate lawyers would be happy to speak with you.