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Structure

Navigating the complexities of the Kentucky Inheritance Tax form requires a detailed look at its structure, purpose, and implications for estate settlements. After January 1, 2005, the procedure for handling estates in Kentucky underwent significant revisions, necessitating the use of specific forms provided by the Commonwealth of Kentucky Department of Revenue for the smooth and efficient administration of an estate's financial obligations to the state. These documents cater to both residents and nonresidents, ensuring that all taxable assets are accounted for and properly taxed or exempted according to Kentucky law and the specifics of the deceased's estate. The packet includes forms such as the No Tax Due Return, Inheritance Tax Return, and a short form of the Inheritance Tax Return, each with its criteria based on the size of the estate, the residency of the decedent, and the relationship of the beneficiaries to the decedent. Exemptions play a crucial role, allowing for an Affidavit of Exemption under certain conditions, thereby bypassing the need for a full tax return when no taxable assets are transferred outside exempt beneficiaries or if the estate's value falls below federal thresholds for estate and gift tax. Additionally, the packet outlines the importance of valuation, deductions, and the procedures for filing amended returns, protests, and appealing decisions, ensuring that filers are equipped with the needed resources to navigate the inheritance tax process effectively.

Kentucky Inheritance Tax Sample

Kentucky

Inheritance and Estate Tax

Forms and Instructions

COMMONWEALTH OF KENTUCKY

DEPARTMENT OF REVENUE

For Dates of Death on or After January 1, 2005

(Revised February, 2018)

Kentucky Department of Revenue

Mission Statement

As part of the Finance and Administration Cabinet, the mission of the Kentucky Department of Revenue is to administer tax laws, collect revenue, and provide services in a fair, courteous, and efficient manner for the benefit of the Commonwealth and its citizens.

* * * * * * * * * * * * *

The Kentucky Department of Revenue does not discriminate on the basis of race, color, national origin, sex, age, religion, disability, sexual orientation, gender identity, veteran status, genetic information or ancestry in employment or the provision of services.

NOTICE

If all taxable assets pass to exempt beneficiaries and a Federal Estate and Gift Tax Return is not required, it is not necessary to file an InheritanceTax Return with the Kentucky Department of Revenue. An affidavit of exemption will be accepted for the final settlement and closing of the administration of an estate. If inheritance tax is due the Commonwealth of Kentucky, Form 92A200 or 92A205 should be used.

The affidavit of exemption is to be filed only with the court. Do not send a copy of the affidavit to the Kentucky Department of Revenue.

Sample Affidavit of Exemption

AFFIDAVIT OF EXEMPTION

Affiant ____________________________ , being first duly sworn, states that he/she is fiduciary or beneficiary of the

estate of _______________________________ , who died on the _______ day of __________________ , _______ , a resident

of _________________________ County, Kentucky.

Affiant states that all assets of the estate pass to exempt beneficiaries pursuant to Kentucky Revised Statute 140.080* or exempt organizations pursuant to Kentucky Revised Statute 140.060** either by virtue of the decedent’s will, the intestate laws of this state, or by contract (survivorship, payable on death, trust, etc.).

Affiant further states that a Kentucky Inheritance Tax Return will not be filed since no death tax is due the state and a Federal Estate and Gift Tax Return (Form 706) is not required to be filed because the gross estate is less than the required amount set out in Section 2010(c) of the Internal Revenue Code. This affidavit is being submitted to satisfy the requirements of Kentucky Revised Statute 395.605.

__________________________________________________________

Signature

Witness my hand this ________ day of __________________________ , __________ .

Sworn and subscribed to before me by _____________________________________

this _______ day of ____________________________________________ , __________ .

______________________________________________________ Notary Public

My commission expires______________________________________

*Exempt beneficiaries under KRS 140.080 include spouse, children, stepchildren, grandchildren, parent, brother, and sister.

**Exempt organizations include educational, religious or other institutions, societies, or associations, whose sole purpose is to carry on charitable, educational, or religious work. Also, cities, towns or public institutions in this state qualify as exempt organizations provided that any transfer to such an organization is for public purposes.

WHAT’S INCLUDED

INHERITANCE AND ESTATE TAX FORMS

No Tax Due Return (resident and nonresident) and Instructions (Form 92A201) Inheritance Tax Return (resident and nonresident) (Form 92A200)

Inheritance Tax Return (short form) (resident and nonresident) (Form 92A205) Real Estate Valuation Information Form (Form 92A204)

Election to Qualify Terminable Interest Property and/or Power of Appointment Property (Form 92A936) Election to Defer the Payment of Inheritance Tax Through Installments (Form 92A928)

Affidavit of Exemption (Form 92A300) Inheritance Tax Table for Resident Decedent Inheritance Tax Table for Nonresident Decedent Blanket Consent

GENERAL INFORMATION

 

Supplemental Documents

1

Payment of Tax

 

Discount

1

Installment Payments

1

Interest

1

Penalties

1

Property to be Included on the Return

1

Valuation of Property—Fair Cash and Agricultural

2

Deductions

2

Federal Estate Tax

2

Qualified Terminable Interest Property (QTIP) and/or Powers of Appointment (POA)

2

Property Previously Taxed

2

Example of Credit for Previously Taxed Property

3

Distribution

4

Exemptions for Beneficiaries of a Resident Decedent

4

Exemptions for Beneficiaries of a Nonresident Decedent

5

Bequest of Tax

5

Property Set Aside Under KRS 391.030(1)(c)

5

Estate Tax

5 & 6

Value of a Life Estate

6

Amended Return

7

Acceptance Letter

7

Protest and Appeal

7

Helpful Hints

 

Where to Obtain Assistance

7

Reporting of Intangible Property Tax

7

Fiduciary Return

7

Office of the Taxpayer Ombudsman

7

Website for Forms

7

Definitions

8 & 9

Taxpayer Service Centers Locations and Phone Numbers

10

Kentucky Taxpayers Bill of Rights

inside back cover

INHERITANCE AND ESTATE TAX FORMS IN THIS PACKET

The forms in this packet should only be used if the date of death occurred on or after January 1, 2005.The forms may be dupli- cated on a computer and the space allocated for each item may be decreased or increased depending on the amount of space required. The forms may be used for a decedent who was a resident or a nonresident of Kentucky.

If all taxable assets pass to exempt beneficiaries and a Federal Estate and Gift Tax Return is not required, it is not neces- sary to file an Inheritance Tax Return with the Kentucky Department of Revenue (DOR). An Affidavit of Exemption will be accepted for the final settlement and closing of the administration of an estate. If inheritance tax or estate tax is due the Commonwealth of Kentucky, Form 92A200 or 92A205 should be used.

If the date of death occurred prior to January 1, 2005, contact the Financial Tax Section, Department of Revenue, Station 61, 501 High Street, Frankfort, KY 40601-2103, (502) 564-4810, fax (502) 564-2695.

Three forms are included in this booklet. Choose one unless an Affidavit of Exemption is used.

1.No Tax Due Return (Form 92A201)

This return may be used for an estate (Kentucky resident or nonresident) if: (1) there is no Kentucky inheritance tax due, (2) the date of death is on or after January 1, 2005, and (3) the entire estate passes to beneficiaries listed in the following group either by contract (survivorship, payable on death, trust, etc.), the decedents will, or the intestate laws of this state:

(1)Surviving spouse, parent

(2)Child (adult or infant)

child by blood, stepchild, child adopted during infancy, or child adopted during adulthood who was reared by the decedent during infancy

(3) Grandchild

issue of child, stepchild, child adopted during infancy, or of a child adopted during adulthood who was reared by decedent during infancy

(4) Brother, sister (whole or half)

฀  Refer to KRS 140.080 for (1) through (4) above

(5) Exempt organizations—Refer to KRS 140.060

Exempt organizations include educational, religious or other institutions, societies, or associations, whose sole purpose is to carry on charitable, educational, or religious work. Also, cities, towns or public institutions in this state qualify as exempt organizations provided that any transfer to such an organization is for public purposes.

2.Inheritance Tax Return (Form 92A200)

This return must be used for an estate (resident or nonresident) when: (1) the date of death is on or after January 1, 2005, and (2) any assets of the estate pass to taxable beneficiaries or taxable organizations, or when Forms 92A201 and 92A205 do not apply.

Instructions are on the back of each schedule.

3.Inheritance Tax Return (Short Form) (Form 92A205)

This return may be used for an estate (Kentucky resident or nonresident) when : (1) a federal estate tax return is not re- quired to be filed, (2) the assets of the estate consist of 10 items or less, (3) no gifts or transfers where made within three years of death without full consideration, (4) no real or personal property was transferred with a retained life interest, (5) the decedent did not possess any power to appoint any real or personal property or have the use of any qualified terminable interest property, and (6) the decedent had not received any real or personal property from another decedent within five years and paid inheritance tax on the property.

92A201 (6-16)

Commonwealth of Kentucky

DEPARTMENT OF REVENUE

Kentucky Inheritance

Tax Return

NO TAX DUE

FOR DEPARTMENT USE ONLY

 

4

6

 

 

__ __ __ __ __ __ / __ __ / __ __ / __ __ __ __

Account Number

Tax

Mo

Year

This return may be used if: (1) there is no Kentucky inheritance tax due, (2) the date of death is on or after January 1, 2005, and

(3)the entire estate passes to beneficiaries listed in the following groups either by contract (survivorship, payable on death, trust, etc.), the decedent’s will, or the intestate laws of this state:

(1)Surviving spouse, parent

(2)Child (adult or infant)

child by blood, stepchild, child adopted during infancy,

or a child adopted during adulthood who was reared by decedent during infancy

(3)Grandchild

issue of child by blood, stepchild, child adopted during infancy,

or of a child adopted during adulthood who was reared by decedent during infancy

(4)Brother, sister (whole or half)

฀Refer to KRS 140.080 for (1) through (4) above

(5)Exempt organizations—Refer to KRS 140.060

Exempt organizations include educational, religious or other institutions, societies, or associations, whose sole purpose is to carry on charitable, educational, or religious work. Also, cities, towns or public institutions in this state qualify as exempt organizations provided that any transfer to such an organization is for public purposes.

Decedent’s Name Last

First

Middle Initial

Date of Death

 

 

 

 

 

Social Security Number

Occupation (If decedent was retired

Age at Death

Cause of Death

HR Code Number (if known)

 

at death, state occupation prior to

 

 

 

 

retirement.)

 

 

 

 

 

 

 

 

Residence (Domicile) at Time of Death

 

Number and Street

City

State

ZIP Code

County

 

 

 

 

 

 

Name and Address of Executor/Administrator/Beneficiary

 

Name and Address of Preparer

 

 

 

 

 

 

 

 

Exec

 

 

Atty

 

 

 

 Admr

 

 

 CPA

 

 

 

 ________

 

 

 ________

 

 

 

 

 

 

 

 

 

 

Did the decedent have a will? No Yes If Yes, attach a copy of the will.

Did the decedent have a trust agreement? No

Yes If Yes, attach a copy of the trust agreement.

Filing status of Federal Estate and Gift Tax Return for this estate (check one):

Not Required

Required (enclose copy)

Not Required, but filed for Portability (enclose copy)

Schedules for listing property (real and personal) and beneficiaries are on the reverse side of this form. Listing of property is optional. Listing of beneficiaries and their relationship is required.

Total Value of Property from Reverse Side

(optional)  $

 

 

 

 

 

 

฀Under criminal penalties, I declare that this return, including accompanying documents, has been examined by me, and is, to the best of my knowledge and belief, true, correct and complete.

 

 

 

 

(

)

 

 

Signature of Executor/Administrator/Beneficiary

 

Date

 

Telephone Number

 

E-mail Address

 

 

 

 

(

)

 

 

 

 

 

 

 

 

 

Signature of Preparer

 

Date

 

Telephone Number

 

E-mail Address

Mail to: Kentucky Department of Revenue, Frankfort, Kentucky 40620

92A201 (6-16)

PART I—PROPERTY (Optional Listing)

Description and Location

of Real or Personal Property

Fair Cash Value at Date of Death

Total Value of Property

฀

PART II—BENEFICIARIES (Must be completed)

$

Name of Beneficiary

Relation to Decedent (Required)

If all taxable assets pass to exempt beneficiaries and a Federal Estate and Gift Tax Return is not filed, it is not necessary to file an InheritanceTax Return with the Kentucky Department of Revenue. An affidavit of exemption will be accepted by the courts for the final settlement and closing of the administration of an estate. If inheritance tax is due the Commonwealth of Kentucky, Form 92A200 or 92A205 should be used.

92A200 (6-16)

KENTUCKY

Commonwealth of Kentucky

INHERITANCE TAX RETURN

 

DEPARTMENT OF REVENUE

 

FOR DEPARTMENT USE ONLY

 

4

6

 

 

__ __ __ __ __ __ / __ __ / __ __ / __ __ __ __

Account Number

Tax

Mo

Year

Requirements for use of this return—This return is to be filed when (1) the date of death is on or after January 1, 2005, (2) any assets of the estate pass to taxable beneficiaries or taxable organizations, (see page 4 of general information) and (3) Forms 92A201 and 92A205 do not apply. Pursuant to KRS 140.190, the beneficiaries as well as the personal representative(s) may be held personally liable for the tax.

Return Status (check one):

Original Return

Amended Return—Refund

Amended Return—Tax Due

 

Decedent’s Name

Last

First

Middle Initial

 

Occupation (If decedent was

Age at Death

Date of Death

 

 

 

 

 

 

 

 

 

retired at death, state occu-

 

 

 

 

 

 

 

 

 

 

 

 

 

pation prior to retirement.)

 

 

 

 

 

Social Security Number

 

 

 

 

 

 

 

 

 

Cause of Death

HR Code Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residence (Domicile) at Time of Death

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number and Street

 

 

 

City

 

 

State

ZIP Code

County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and Address of Executor/Administrator/Beneficiary

 

 

 

Name and Address of Preparer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exec

 

 

 

 

 

 

 

Atty

 

 

 

 

 

 

 Admr

 

 

 

 

 

 

 

 CPA

 

 

 

 

 

 

 ________

 

 

 

 

 

 

 

 ________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Did the decedent have a will? No

Yes

If Yes, attach a copy of the will.

 

 

 

 

 

Did the decedent have a trust agreement? No

Yes

If Yes, attach a copy of the trust agreement.

 

 

 

 

 

 

 

 

 

 

 

 

Filing status of Federal Estate and Gift Tax Return for this estate (check one):

 

 

 

 

 

Not Required

Required (enclose copy)

Not Required, but filed for Portability (enclose copy)

 

Gross Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

Individually owned assets

 

 

 

 

 

$

 

 

 

 

 

 

2.

Jointly owned assets

 

 

 

 

 

$

 

 

 

 

 

 

3.

Qualified terminable interest property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and/or powers of appointment

 

 

 

 

 

$

 

 

 

 

 

 

4.

Previously taxed property

 

 

 

 

 

$

 

 

 

 

 

 

5.

Gifts and transfers

 

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

Total Gross Estate

 

 

 

 

 

 

 

$

 

 

Deductions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.

Funeral expenses

 

 

 

 

 

 

$

 

 

 

 

 

 

7.

Administration expenses

......................................................................

 

 

 

 

 

$

 

 

 

 

 

 

8.

Debts of decedent

 

 

 

 

 

 

$

 

 

 

 

 

 

9.

...................................Federal estate tax— paid or  estimated

 

 

 

 

$

 

 

 

 

 

 

 

 

 

Total Deductions

 

 

 

 

 

 

 

 

$

 

 

 

 

 

Net Estate (Total Gross Estate less Total Deductions)

 

$

 

 

 

 

 

Total Tax Due from Tax Computation Form 92A200

$

 

 

Interest and Penalty

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.

Interest for late payment (see general information)

....................................................................

 

 

 

 

 

 

$

 

 

11.

Late filing penalty (see general information)

 

 

 

 

 

 

 

$

 

 

12.

Late payment penalty (see general information)

 

 

 

 

 

 

$

 

 

13.

Total Due (tax plus interest and penalties, if applicable)

 

 

 

$

 

 

14.

Total previously paid

 

 

 

 

 

 

 

 

 

$

 

 

15.

Balance due/Refund

 

 

 

 

 

 

 

 

 

$

 

Attach check payable to “Kentucky State Treasurer” to this return and mail to Kentucky Department of Revenue, Frankfort, KY 40620

฀Under criminal penalties, I declare that this return, including accompanying documents, has been examined by me, and is, to the best of my knowledge and belief, true, correct and complete.

( )

Signature of Executor/Administrator/Beneficiary

Social Security Number

Date

Telephone Number

E-mail Address of Executor/Administrator/Beneficiary

( )

Signature of Preparer

Date

Telephone Number

E-mail Address

Estate of:

92A200 (6-16)

 

 

 

Individually Owned Assets

Page ____ of ____

 

 

List in this schedule all items individually owned by the decedent including life insurance payable to the estate.

(Please review instructions on reverse side for details.)

Item

Description of Property/Name of Corporation

Accrued Rents/

Number

Fair Cash Value

Number

or Obligor/ Name of Bank or Debtor

Interest/Dividends

of Shares

on Date of Death

1.

Total (including continuation page(s)) (enter on page 1, line 1)

฀

 

 

If additional space is needed, duplicate this page and attach as a continuation page(s).

 

INSTRUCTIONS

INDIVIDUALLY OWNED ASSETS

All real proper t y individually owned must b e lis ted in this schedule . For re por ting agricultural or horticultural land, see General Information—Valuation of Property—Fair Cash and Agricultural.

Stocks and bonds individually owned are includable in this schedule. Stock values are determined by using an average of the high and low quoted selling price on the decedent’s date of death. In case of inactive stock such as closely held corporations, explain the method used in computing the value at the date of death. A balance sheet, at a date nearest the decedent’s death, together with a statement of net earnings and dividends paid for the five-year period immediately preceding the date of death, must be supplied in support of these valuations (ex. financial institution’s monthly statement.)

Dividends declared and of record in the decedent’s name but not paid prior to death must be included in this schedule. Provide statements, lists, etc. supporting valuation of these assets.

United States bonds individually owned as well as those payable upon death to another should be included in this schedule. Indicate series, maturity value and date of purchase of all United States bonds.

In some instances, the estate will include stocks and bonds listed on a stock exchange that did not make sales on the date of the decedent’s death. When this occurs, their value must be determined by averaging the high and low for the last working day preceding the date of death and the first working day subsequent to the date of death. For reporting stock of a corporation owning qualified real estate passing to a qualified person(s), see General Information—Valuation of Property—Fair Cash and Agricultural.

Mortgages, notes and cash individually owned must be listed in this schedule. List accrued interest to date of death. The description of mortgages and notes must include interest rate, the date the last payment of interest was made preceding the date of the decedent’s death, and the due date

of the mortgages or notes. If an account is held out of state, show name and address of financial institution on the tax return.

List life insurance payable to the insured or to the estate. Life insurance payable to a designated beneficiary, including a testamentary or inter vivos trustee, is tax-free.

List in this schedule other individually owned items of the gross estate, such as debts due decedent; business or partnership (attach balance sheet showing capital accounts); claims, exclusive of those claimed under KRS 411.130 (wrongful death); rights; royalties; leaseholds; judgments; shares in trust funds; contracts; household goods and personal effects, including antiques, jewelry and collections of any type; farm products and growing crops; livestock; farm machinery; automobiles; etc.

The value of an annuity or other payment made to a beneficiary of a deceased employee (other than the executor or equivalent) under (1) an exempt trust or qualified nontrusted annuity plan as described by the Internal Revenue Code or (2) a contract purchased by an educational or charitable organization as referred to in Section 170(b)(1)(A)(ii) or (vi) of the Internal Revenue Code or a religious organization exempt from tax under Internal Revenue Code Section 501(a), is taxable in the proportion that the total contributions made by the decedent bears to the total contributions made. The proceeds from a Retired Serviceman’s Family Protection Plan or Survivor Benefit Plan are exempt under KRS 140.015(2). Refer to KRS 140.063(3) and (4) regarding the taxation of individual retirement accounts and annuities as described in Section 408(a) and (b) of the Internal Revenue Code. Lump-sum distributions of an IRA are taxable.

All other annuities, including deferred compensation plans, or payments other than those described in the preceding paragraph made to a beneficiary, executor or equivalent, are fully taxable if the decedent retained ownership at death such as the right to name or change the beneficiary and must be listed in this schedule.

Free Kentucky Inheritance Tax File

Form Features

Fact Number Fact Name Details
1 Effective Date Applicable for Dates of Death on or After January 1, 2005
2 Non-Discrimination Policy The Department of Revenue does not discriminate based on numerous factors including race, color, and sexual orientation.
3 Affidavit of Exemption Used when all assets pass to exempt beneficiaries and no Federal Estate and Gift Tax Return is required.
4 Exempt Beneficiaries Under KRS 140.080 Includes spouse, children, stepchildren, grandchildren, parent, brother, and sister.
5 Forms Included Several forms including No Tax Due Return, Inheritance Tax Return (regular and short), and Real Estate Valuation Information Form are provided.
6 No Tax Due Return Form 92A201 is used when there is no Kentucky inheritance tax due and the estate passes to certain relatives or exempt organizations.
7 Inheritance Tax Return Requirement Form 92A200 or 92A205 is required when assets pass to taxable beneficiaries or if estate or inheritance tax is due.
8 Exempt Organizations Under KRS 140.060 Includes charitable, educational, or religious institutes and public organizations for public purposes.
9 Submission Process Affidavit of Exemption is filed with the court, not the Kentucky Department of Revenue.

Detailed Steps for Using Kentucky Inheritance Tax

Filling out an inheritance tax form for the Commonwealth of Kentucky is a necessary process for managing the assets of a deceased individual's estate. This guide aims to assist executors, administrators, or beneficiaries in understanding and completing the required documentation smoothly and accurately.

When it comes to dealing with an inheritance tax, the guidelines provided by the Kentucky Department of Revenue are fundamental. There are different forms provided depending on whether the estate owes tax or not, and on specific characteristics of the estate and its beneficiaries. Understanding which form to use and how to fill it out correctly is crucial.

  1. Determine the Required Form: First, you must determine whether the estate is exempt from inheritance tax. If all taxable assets pass to exempt beneficiaries as outlined by Kentucky Revised Statutes and no Federal Estate and Gift Tax Return is required, the Affidavit of Exemption (Form 92A300) suffices. Otherwise, choose between the No Tax Due Return (Form 92A201), the Inheritance Tax Return (Form 92A200), and the Inheritance Tax Return Short Form (Form 92A205) based on the estate’s specific circumstances.
  2. Gather Information and Documents: Before filling out the form, gather all necessary information about the decedent, including their full name, Social Security Number, date of death, and details about their residency. Also, prepare information regarding the beneficiaries and the assets of the estate.
  3. Fill Out the Basic Information: For all the forms, the initial section requires information about the decedent and the estate's executor, administrator, or beneficiary responsible for filing the return. This includes names, addresses, and roles associated with the estate.
  4. Answer Preliminary Questions: Indicate whether the decedent had a will or a trust agreement by checking the appropriate boxes. Also, specify the filing status of any Federal Estate and Gift Tax Return related to the estate.
  5. Document Assets and Beneficiaries: For Form 92A201, detailing the property is optional but listing the beneficiaries and their relationship to the decedent is required. If using Form 92A200 or 92A205, follow the specific instructions for documenting assets and designating which assets pass to which beneficiaries, considering the exemptions and tax liabilities.
  6. Review and Sign: Ensure all provided information is complete and accurate. The responsible party (executor, administrator, or beneficiary) must sign the form, verifying under penalty of perjury that the information is true and correct. If someone else prepared the form, their signature is also required.
  7. Submit the Form: Mail the completed form to the Kentucky Department of Revenue at the address provided. If required, include a copy of the will or trust agreement, and the Federal Estate and Gift Tax Return if applicable.

Completing and submitting the appropriate inheritance tax form is a crucial step in the estate administration process in Kentucky. This ensures compliance with state law and helps in the orderly distribution of the estate’s assets. Careful attention to detail and an understanding of the exemptions and requirements can help facilitate a smooth process for all parties involved.

Obtain Clarifications on Kentucky Inheritance Tax

  1. Who needs to file a Kentucky Inheritance Tax Return?

    A Kentucky Inheritance Tax Return must be filed if the deceased was a resident or nonresident of Kentucky and any part of the estate passes to taxable beneficiaries or to taxable organizations. It's also necessary if the estate does not qualify for the No Tax Due Return (Form 92A201) or the Short Form Inheritance Tax Return (Form 92A205).

  2. Is it necessary to file an inheritance tax return if all assets pass to exempt beneficiaries?

    No, if all taxable assets pass to exempt beneficiaries, and a Federal Estate and Gift Tax Return is not required, filing an Inheritance Tax Return with the Kentucky Department of Revenue is unnecessary. Instead, an Affidavit of Exemption can be submitted for the final settlement and closing of the estate's administration. However, this affidavit should only be filed with the court, not the Department of Revenue.

  3. Who qualifies as exempt beneficiaries under Kentucky law?

    Exempt beneficiaries include the spouse, children, stepchildren, grandchildren, parents, brothers, and sisters of the decedent. Additionally, exempt organizations, such as those carrying on charitable, educational, or religious work, and certain public institutions within the state that use transfers for public purposes, also qualify.

  4. What forms are included in the Kentucky Inheritance and Estate Tax Packet?

    The packet includes forms for both No Tax Due Returns and Inheritance Tax Returns for resident and nonresident decedents, Election to Qualify Terminable Interest Property and/or Power of Appointment Property, an Election to Defer the Payment of Inheritance Tax Through Installments, and an Affidavit of Exemption, among other necessary documents for the inheritance tax filing process.

  5. Can the inheritance tax be paid in installments?

    Yes, the Kentucky Department of Revenue allows for the payment of inheritance tax through installlishments under certain conditions. To choose this option, one must file the Election to Defer the Payment of Inheritance Tax Through Installments form (Form 92A928).

  6. What is the purpose of the Affidavit of Exemption, and where should it be filed?

    The Affidavit of Exemption serves to notify the court that no inheritance tax is due because all assets pass to exempt beneficiaries or organizations, and it fulfills the conditions that exempt the estate from filing an Inheritance Tax Return. This affidavit should be filed with the court handling the estate's administration and not with the Kentucky Department of Revenue.

  7. What information is needed to complete the No Tax Due Return (Form 92A201)?

    To complete the No Tax Due Return, you will need the decedent's name, date of death, social security number, details about the decedent's occupation, domicile at the time of death, and information regarding the executor, administrator, or beneficiary handling the estate. Additionally, a listing of the property and beneficiaries may be required.

  8. How can assistance be obtained when filling out Kentucky inheritance and estate tax forms?

    Assistance can be obtained from the Kentucky Department of Revenue, its website, or by contacting a local Taxpayer Service Center. In cases of confusion or if you require more detailed guidance, consulting a tax professional is advisable.

  9. When should an Amended Return be filed?

    An Amended Return should be filed if any information previously submitted to the Kentucky Department of Revenue was incorrect or incomplete at the time of the original filing. This ensures that the estate's tax obligations are accurately reflected and that any potential penalties or interest for misinformation are avoided.

Common mistakes

Filling out the Kentucky Inheritance Tax form can be a daunting task, leading to common mistakes that could potentially affect the tax liabilities of an estate. Here's a look at five common errors and how to avoid them:

  1. Not filing the correct form: There are different forms for different situations, such as the No Tax Due Return (Form 92A201), the Inheritance Tax Return (Form 92A200), and the Inheritance Tax Return (Short Form) (Form 92A205). Selecting the wrong form can lead to incorrect processing and potential delays. It's important to thoroughly review the estate's circumstances to determine which form suits the situation best.
  2. Omitting exempt beneficiaries: The form provides exemptions for specific beneficiaries, such as spouses, parents, children, and certain organizations. Failing to properly identify these exempt beneficiaries could result in the unnecessary taxation of assets. Make sure all beneficiaries are correctly listed and their relationships to the decedent are clear to capitalize on available exemptions.
  3. Incorrect asset valuation: Accurately valuing estate assets is crucial for the Kentucky Inheritance Tax form. Whether it's real estate, personal property, or investments, providing an incorrect valuation can lead to disputes or reassessments. Using appraisals or fair market value estimates can help ensure accuracy in reporting.
  4. Forgetting to attach required documents: Depending on the estate's complexity, additional documents such as a copy of the will, trust agreements, or a Federal Estate and Gift Tax Return may be required. Neglecting to attach these documents can lead to processing delays or the return being considered incomplete.
  5. Misunderstanding the filing requirement: Some estates may not need to file an Inheritance Tax Return if all assets pass to exempt beneficiaries and a Federal Estate and Gift Tax Return is not required. Instead, an Affidavit of Exemption can be submitted to the court. Understanding when this scenario applies can save a significant amount of time and effort.

Avoiding these mistakes requires careful attention to detail and an understanding of the estate's specific circumstances. When in doubt, consulting with a professional who specializes in Kentucky inheritance law can provide clarity and ensure that the form is filled out correctly, potentially saving time, money, and stress for all involved.

Documents used along the form

When dealing with the complexities of inheritance tax, especially within the state of Kentucky, it's important to understand the various forms and documents that may need to accompany the Kentucky Inheritance Tax Form. The processes around inheritance can be intricate, involving more than just the determination of tax liabilities. Various documents are utilized to present the necessary details about the decedent's estate, the beneficiaries, valuations, and other related aspects.

  • Will or Testament: This legal document expresses the decedent’s wishes regarding the distribution of their assets and the care of any minor children. It's a foundational document that may outline exemptions and bequests affecting inheritance tax considerations.
  • Trust Agreement: If the decedent had established a trust, the agreement document is crucial. It details the conditions under which the estate's assets were to be held, managed, and distributed, potentially influencing the inheritance tax assessment.
  • Death Certificate: This official document serves as proof of death, detailing the date, location, and cause of death. It is required for the legal transfer of the decedent's assets to their heirs or beneficiaries.
  • Appraisal Reports: To accurately assess the value of property, real estate, and personal items for tax purposes, professional appraisals may be necessary. These reports provide a market value basis for inheritance tax calculations.
  • List of Assets and Liabilities: A comprehensive inventory of the decedent’s assets and liabilities at the time of death, including bank accounts, real estate, stocks, bonds, and personal property, as well as any debts owed.
  • Federal Estate Tax Return (Form 706): For estates that meet certain value thresholds, a Federal Estate Tax Return may be required. This form details the gross estate and allows for deductions, ultimately determining the federal estate tax due.
  • Affidavit for Collection of Personal Property: This document is used to collect the decedent's personal property without formal probate proceedings. It can expedite the transfer of assets to rightful heirs or beneficiaries under certain circumstances.

Each of these documents plays a crucial role in the administration of an estate, affecting both the process and the outcome of inheritance tax evaluations. Whether you're a beneficiary, executor, or administrator dealing with a Kentucky estate, familiarity with these forms will help navigate the legal and financial responsibilities more effectively. Keeping organized records and consulting with a legal professional can also ensure that all obligations are met and rights protected during this complex process.

Similar forms

The Kentucky Inheritance Tax form shares similarities with the Federal Estate and Gift Tax Return (Form 706), primarily in terms of its purpose to assess tax liability after a person's death. Both forms are designed to calculate taxes due on the transfer of assets at death, with the Kentucky form focusing on state-level inheritance taxes and Form 706 addressing federal estate and gift taxes. They require detailed information about the decedent's assets, deductions, and the beneficiaries of the estate. Each form also distinguishes between taxable and non-taxable transfers, considering various exemptions based on the relationship of the beneficiary to the decedent and the type of asset transferred.

Similarly, the Affidavit of Exemption on the Kentucky Inheritance Tax form resembles the IRS’s estate tax exemption forms. These documents are used when estates are below a certain size threshold, rendering them exempt from paying state inheritance or federal estate taxes. Both types of exemption forms necessitate certification that the estate's value does not exceed the applicable exclusion amount, allowing for a streamlined settlement process. Key information includes the identification of the estate, the assertion of exemption based on specific laws, and the confirmation that no tax return is required due to the estate's size or the nature of asset distribution.

The Real Estate Valuation Information Form (Form 92A204) shares characteristics with local government assessment forms used for property tax purposes. These documents gather detailed data on real estate properties to ascertain their fair market value, which is crucial for both taxation and estate settlement processes. Key attributes, such as property location, size, and condition, are considered to estimate the value of real estate assets accurately. This valuation plays a crucial role in determining the inheritance tax liability in Kentucky, similarly to how property taxes are computed at the local level.

The Election to Defer the Payment of Inheritance Tax Through Installments (Form 92A928) has parallels with federal and state provisions allowing for the installment payment of taxes. Such options are crucial for estates that are asset-rich but cash-poor, facilitating the gradual payment of tax liabilities over time instead of a lump sum. These measures are designed to prevent the forced sale of assets just to satisfy tax obligations, ensuring that heirs can retain significant family assets, businesses, or properties that might otherwise be liquidated to pay taxes.

Last is the No Tax Due Return (Form 92A201), echoing the zero returns filed with various tax agencies when no tax is owed by the entity or individual. This document simplifies the process for estates that, due to their composition or beneficiary structure, owe no Kentucky inheritance tax. Filing such a return is necessary for the administrative closure of the estate’s financial obligations to the state, paralleling the filing of zero income tax returns by businesses and individuals who have no taxable activity within a given tax year.

Dos and Don'ts

When navigating the complexities of the Kentucky Inheritance Tax form, it's crucial to approach the process with care and precision. Here are critical dos and don'ts to help guide you:

  • Do double-check if the estate qualifies for an exemption. If all assets pass to exempt beneficiaries and there's no need for a Federal Estate and Gift Tax Return, an Affidavit of Exemption may suffice and negate the need for an Inheritance Tax Return.
  • Don't overlook the beneficiary categories. Be thoroughly familiar with which beneficiaries are exempt under KRS 140.080 and which organizations qualify under KRS 140.060.
  • Do select the correct tax return form based on the estate's circumstances. For no tax due, estates should use Form 92A201; otherwise, Form 92A200 or 92A205 may be appropriate.
  • Don't forget to attach all necessary documents. This includes a copy of the decedent's will or trust agreement if applicable, especially when indicating that a will exists or a trust was established on the tax form.
  • Do accurately list all property and beneficiaries as required. While listing property might be optional on the No Tax Due Return (Form 92A201), detailing the beneficiaries and their relationships is mandatory.
  • Don't misjudge the estate's value by underestimating property values. Accurate appraisals and fair market value assessments are necessary for both real estate and personal property.
  • Do be aware of deadlines and timely file the form to avoid any penalties. Keeping abreast of submission deadlines ensures the avoidance of unnecessary fines.
  • Don't send copies of the Exemption Affidavit to the Kentucky Department of Revenue. When utilizing an Affidavit of Exemption for estate closure, it should only be filed with the court.
  • Do consider seeking guidance if needed. Assistance can be obtained through the Kentucky Department of Revenue, ensuring the form is filled out accurately and all queries are addressed.

Misconceptions

When dealing with the Kentucky Inheritance Tax forms, misunderstandings can easily occur, leading to potential compliance issues or missed opportunities for tax savings. Here are seven common misconceptions about the Kentucky Inheritance Tax form and the truths behind them.

  • All estates must file a Kentucky Inheritance Tax Return. This isn't always the case. If all assets pass to exempt beneficiaries, such as a spouse, children, or exempt organizations, and a Federal Estate and Gift Tax Return isn't required, only an affidavit of exemption needs to be filed with the court, not the Kentucky Department of Revenue.
  • Only Kentucky residents are subject to Kentucky Inheritance Tax. The Kentucky Inheritance Tax applies to both resident and non-resident decedents if the property transferred is located in Kentucky, highlighting the necessity for non-residents who own property in Kentucky to be aware of these rules.
  • Filing an Affidavit of Exemption concludes the inheritance tax obligations. While it's true that an affidavit can fulfill the requirement for final settlement in cases where no tax is due, it's important for executors and beneficiaries to keep detailed records and ensure all other obligations, such as federal taxes and debts of the estate, are also addressed.
  • There is only one form for filing. In reality, there are three primary forms: the No Tax Due Return (Form 92A201) for estates passing entirely to exempt beneficiaries, the Inheritance Tax Return (Form 92A200), and a short form (Form 92A205) for smaller or simpler estates that do not require a federal estate tax return.
  • The estate's entire value is subject to tax. Kentucky law provides exemptions and deductions that can significantly reduce the taxable value of an estate, such as exemptions for certain family members and deductions for debts and administration expenses.
  • All beneficiaries are taxed at the same rate. The tax rate and exemptions vary depending on the beneficiary's relationship to the decedent. Close relatives may receive significant exemptions or pay lower tax rates compared to more distant relatives or unrelated beneficiaries.
  • The executor needs to pay the tax out of pocket immediately. Kentucky allows for the deferral of inheritance tax payments and, in some cases, payment through installments. This flexibility can ease the financial burden on the estate or its beneficiaries, allowing for more strategic planning regarding asset liquidation and tax payments.

Understanding these nuances of the Kentucky Inheritance Tax can help executors and beneficiaries navigate the process more effectively, potentially saving time, money, and legal hassles down the road.

Key takeaways

Navigating the Kentucky Inheritance Tax form can seem daunting, but understanding a few key points can simplify the process. Whether you're an executor, administrator, or beneficiary, grasping these elements is crucial in fulfilling your responsibilities effectively and ensuring compliance with Kentucky's tax laws.

  • Identify If a Return Is Necessary: Before diving into forms and documentation, determine if you need to file a Kentucky Inheritance Tax Return. If all assets pass to exempt beneficiaries and no Federal Estate and Gift Tax Return is required, you can file an Affidavit of Exemption instead.
  • Choosing the Correct Form: Kentucky offers different forms depending on whether there's inheritance tax due, the nature of the estate (resident or nonresident), and specific conditions related to the estate’s assets and beneficiaries. Understanding the estate's specifics will guide you to the appropriate form.
  • Exempt Beneficiaries: Kentucky law specifies categories of beneficiaries who are exempt from inheritance tax, including spouses, children, stepchildren, parents, brothers, and sisters. Assets passing to these individuals typically do not require an inheritance tax payment.
  • Understanding Exemptions and Deductions: Familiarize yourself with exemptions and deductions available under Kentucky law, as these can significantly reduce the taxable value of an estate.
  • Accurate Valuation: Accurately valuing the estate's assets is critical. This valuation must reflect fair market value as of the decedent's date of death and adhere to specific guidelines for certain types of property, like real estate and agricultural lands.
  • Documentation: Thorough and accurate documentation supports the values reported on the tax forms, the relationships of beneficiaries, and any claims for exemptions or deductions. This might include appraisals, death certificates, wills, and trusts.
  • Installment Payments: If the estate owes inheritance tax, consider whether paying in installments is advantageous. This option can ease the financial burden on the estate but might accrue interest over time.
  • Federal Estate Tax Considerations: While focusing on Kentucky's requirements, don't overlook how federal estate tax laws interact with state inheritance taxes. In some cases, the filing of a federal estate tax return might affect state tax obligations.
  • Electing Special Options: For certain estates, electing to qualify terminable interest property and/or power of appointment property can offer tax benefits. These decisions should be made with careful consideration of the specific circumstances involved.
  • Professional Guidance: Due to the complex nature of inheritance and estate taxes, consulting with a tax professional or attorney knowledgeable in Kentucky's laws can provide invaluable assistance in navigating filings, maximizing exemptions, and ensuring compliance.

Navigating the Kentucky Inheritance Tax filing process requires diligence, attention to detail, and an understanding of the law. Ensuring all documentation is accurate and submitted on time can pave the way for a smoother process, benefiting both the estate and its beneficiaries.

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