What Is a Decedent?

What Is a Decedent?

"Decedent" is a legal term used in tax and estate planning for a deceased person. When an individual dies, their possessions become part of their estate, and they are denoted as decedent or deceased. The legal will of a decedent defines the final transactions of their estate.

Key Takeaways

  • "Decedent" is a legal term used to refer to a deceased person.
  • Decedents have financial obligations after death, such as the filing of taxes.
  • Attorneys and trustees are responsible for carrying out a decedent's wishes as outlined in their wills and trusts.
  • A decedent's life insurance policy is not considered part of an estate, but funds are distributed directly to named beneficiaries on the policy.

Estate and Tax Implications for a Decedent

When a person dies, they become a decedent, and their will and trust remain to provide directions for handling their money and other assets. The legal process of executing a will or trust always refers to the deceased as a decedent. Attorneys and trustees carry out a decedent's wishes after their deaths by executing what is in their wills and trusts.

A decedent may owe federal or state taxes and their estate will be responsible for and requires the decedent to file a final tax return. Other taxes that involve a decedent are estate and inheritance tax. Until 2025, the estate federal tax exemption is $12.06 million.

State tax exemptions either match the federal level or vary depending on the state the decedent resided in at the time of their death. The federal government does not take an inheritance tax, but six states impose inheritance taxes, including Pennsylvania and Nebraska.

Trust

Intended to provide peace of mind for a decedent that their assets are allocated correctly, a trust establishes a fiduciary duty for a trustee and the trustee is legally responsible for making decisions in the best interests of the beneficiaries outlined in the trust.

Example of a Decedent

Mary has created an estate for her family after retirement. After her death, Mary became a decedent. She leaves life insurance, $15,000 in a checking account, and a small retirement fund. The decedent's remaining debts are paid from the decedent's estate, along with any money owed in taxes on the decedent's final tax return.

In addition, Mary names the beneficiaries for her life insurance, and on her death, those funds are paid out to the individuals named on her benefits.

Frequently Asked Questions

How Do I Report Income in Respect of a Decedent?

The income in respect of a decedent and final earned income must be reported to the IRS, and their final taxes must be filed by the trustee of the decedent's estate. Both forms of income can include wages, social security payments, tips, sick pay, vacation time, and retirement income, to name a few.

What Is the Difference Between Deceased and Decedent?

A deceased person is a dead person. A decedent is a legal term for someone dead often used in estate planning documents. When a person dies, they become a decedent. Still, in some ways, their name lives on due to their financial obligations after death, such as paying taxes, closing bank accounts, and other items—all carried out by their trustee who acts on behalf of the decedent.

What Type of Trust Is a Decedent Trust?

A decedent trust is another name for a joint trust called an A-B trust. A married couple sets up this type of trust to minimize estate taxes. An A-B trust is formed between two spouses, but the trust divides once the first spouse dies. The parts represent the survivor (trust A) and the decedent (trust B).

The Bottom Line

Decedent is a legal term used in tax and estate planning for a deceased person. Decedents have financial obligations after death and attorneys and trustees are responsible for carrying out a decedent's wishes as outlined in their wills and trusts.

Article Sources
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  1. Internal Revenue Service. "Estate Tax."

  2. Internal Revenue Service. "Estate and Gift Tax FAQs."

  3. Tax Foundation. "Does Your State Have an Estate or Inheritance Tax?"

  4. Guardian Life Insurance. "Life Insurance Death Benefits: What You Need to Know."

  5. Policygenius. "How to Set Up an Estate Account."

  6. Internal Revenue Service. "Section 691—Recipients of Income in Respect of Decedents."

  7. Internal Revenue Service. "Topic No. 356 Decedents."

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