Estate and Inheritance Taxes

  • Estate Tax
  • Inheritance Tax
  • FAQs

Estate Tax


An estate tax is a tax on the gross value of an estate transferred at death. It consists of an accounting of everything the decedent owns or has certain interests in at the date of death.

Federal

At the federal level, a filing (Form 706) is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004-2005; $2,000,000 in 2006-2008; and $3,500,000 in 2009 and $5,000,000 in 2011-2012. There was no federal estate tax required in 2010.

Montana

Montana’s estate tax is equal to the maximum credit allowed against the federal estate tax described above. The Economic Growth and Tax Reconciliation Act (EGTRRA) of 2001 provided a temporary phase out of the credit that started in 2002 and eliminated the credit for deaths occurring in 2005 through 2010. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 extended the full phase out of the state death tax credit through 2011 and 2012. Therefore, there is no Montana estate tax due for deaths occurring after December 31, 2004.

Filing is required in Montana only if the following conditions exist:

The estate met the federal estate tax filing requirement,
The decedent passed away prior to January 1, 2005, and
The decedent owned property in Montana at the time of death.

Note: Probate proceedings that require the filing of a Montana estate tax return also require a certificate stating that any Montana estate tax due on the assets of the estate has been paid or that no tax is payable. If a certificate is required, it must be filed with the clerk of district court before final distribution to successors may be made and petitions may be granted. To request a certificate, please use the Application for Determination of Estate Tax (Form INH-4).

For more information on estate planning, please see Montana State University Extension Services' list of publications under Estate Planning: 24 Topics You Must Know About.


Inheritance Tax


Montana's inheritance tax was repealed by the passage of I-115 in November 2000. As a result, the inheritance tax will not apply to bequests made on or after January 1, 2001. Therefore, a certificate from the Department of Revenue stating that all inheritance taxes were paid is not necessary. Additionally, consent to transfer stocks, bonds or insurance proceeds (also referred to as an "inheritance tax waiver") is only required for deaths occurring before January 1, 2001.

For questions regarding the inheritance tax prior to its repeal, call us toll free at 1-866-859-2254 (in Helena, 444-6900).

If you have additional questions regarding estate and/or inheritance taxes, please see our Estate and Inheritance Tax FAQs in the tab to the right.


Frequently Asked Questions (FAQs)


General

1. What is the difference between an estate tax and an inheritance tax?

An estate tax is a tax on all of the assets of a decedent before those assets are distributed to beneficiaries. It consists of an accounting of everything the decedent owns or has certain interests in at the date of death. If the estate meets the filing requirements, the estate pays this tax to the Internal Revenue Service and/or the state in which the decedent lived (if the state has an estate tax).

An inheritance tax is also a tax on the assets of a decedent. However, the amount of tax depends on the beneficiaries’ relationship to the decedent and the value of the property inherited. Inheritance tax is owed to the state (if the state has an inheritance tax) where the decedent lived.

Estate Tax

1. Does Montana have an estate tax?

Montana's estate tax is equal to the maximum credit allowed for state death taxes against the federal estate tax. The Economic Growth and Tax Reconciliation Act (EGTRRA) of 2001 provided a temporary phase out of the credit starting in 2002 and eliminated the credit for deaths occurring in 2005 through 2010. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 extended the full phase out of the state death tax credit through 2011 and 2012.

Therefore, there is no Montana estate tax due for deaths occurring in 2005 and thereafter. However, if the decedent passed away before January 1, 2005, there may still be a requirement to file if no documents have been submitted to the Department previously.

2. How do I know if I need to file anything with Montana?

Filing is required in Montana only if the following conditions exist:
1.The estate met the federal estate tax filing requirement,
2.The decedent passed away prior to January 1, 2005, and
3.The decedent owned property in Montana at the time of death.

Please see the IRS website for the federal filing requirements.

3. I have a filing requirement in Montana. What do I do next?

You must complete the Application for Determination of Estate Tax (Form INH-4). Once the form is completed, please mail it to:

Montana Department of Revenue
PO Box 5805
Helena, MT 59604-5805

4. I heard there was no federal estate tax for 2010, but that it is back for 2011 and 2012. How does that affect Montana's estate tax?

It doesn’t. Montana’s estate tax is equal to the maximum credit allowed for state death taxes against the federal estate tax. This credit was phased out completely for deaths occurring in 2005 through 2010 by the Economic Growth and Tax Reconciliation Act (EGTRRA) of 2001. The Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010 extended the full phase out of the state death tax credit through 2011 and 2012.

Inheritance Tax

1. Does Montana have an inheritance tax?

No. Montana's inheritance tax was repealed in November 2000. Therefore, inheritance tax will not apply if the decedent died on or after January 1, 2001.

2. I heard I need some sort of certificate regarding inheritance tax. What certificate is this and do I need it?

The Department of Revenue used to previously issued certificates stating that all inheritance taxes were paid. Because there is no longer an inheritance tax, this certificate is no longer necessary if the decedent died on or after January 1, 2001.

3. What is an inheritance tax waiver, and do I need one?

An Application for Consent to Transfer Stocks, Bonds, or Insurance Proceeds, commonly referred to as an inheritance tax waiver, provides consent to transfer stocks, bonds or insurance proceeds from a deceased person’s name to another individual’s name.

No inheritance tax waiver is required for decedents whose death occurred on or after January 1, 2001.

If you need to obtain an Application for Consent to Transfer Stocks, Bonds, or Insurance Proceeds, please call us toll free at 1-866-859-2254 (in Helena, 444-6900).