Estate

Estate tax is a tax on the gross value of an estate transferred at death. North Dakota’s estate tax is perpetually ‘federalized’. North Dakota’s definition of a deceased person’s taxable estate is identical to the federal definition and North Dakota recognizes all federal exemptions and deductions. North Dakota’s estate tax is equivalent to the ‘credit of state death taxes’ allowed on the federal estate tax return, Federal Form 706, or a percentage of that credit equal to the percentage of property located in North Dakota. On the federal return, the credit for state death taxes is allowed as a credit against the federal tax liability. The estate pays the amount of ‘credit of state death taxes’ as calculated to North Dakota. This method of determining state estate taxes ensures that estates pay no more in total estate taxes than the estate’s federal tax liability. North Dakota’s tax is payable without interest for 15 months from the date of death. After 15 months, interest of 1% per month starts to accrue on the balance of unpaid tax.

The Federal Congressional Budget Act Sunset Law under the provisions of the Economic Growth & Relief Act of 2001 changed the liability of paying estate taxes to North Dakota for deaths occurring on or after January 1, 2005. This law expires after December 31, 2009. No estate death tax is due to the State of North Dakota during this time. The North Dakota estate tax will re-instate on deaths occurring on or after January 1, 2011, unless Congress takes further action.

For deaths occurring on or after January 1, 2005, estates are required to file an original North Dakota Form 54-91 Estate Tax Return, copies of the Federal Form 706, the decedent’s Will , and Death Certificate.