Kentucky Inheritance Tax Guide vs. Hiring a CPA: Which Is Right for Your Estate?

For most Kentucky estates, hiring a CPA to prepare the inheritance tax return is the right choice for complex situations but unnecessary overhead for straightforward ones. A Kentucky-specific estate tax guide handles the full process for executors dealing with Class A beneficiaries or moderately sized Class B and C estates — without the $1,000 to $2,500 fee a CPA will charge. Where a CPA earns every dollar is when an estate includes inherited retirement accounts for Class B or C beneficiaries, significant appreciated real estate, or a fiduciary income tax return that requires careful deduction allocation. This page helps you identify which category you are in before you spend money you may not need to spend.

What Each Approach Actually Covers

Who This Is For

• Executors of Class A estates — if every beneficiary is a spouse, parent, child, grandchild, or sibling, you are fully exempt from Kentucky inheritance tax. You still need to file the Affidavit of Exemption (Form 92A300) to clear the real estate title and satisfy the court. A guide handles this without professional fees.
• Executors managing Class B or C beneficiaries with straightforward distributions — if assets are cash and real estate passing to a niece or nephew, the inheritance tax calculation is formulaic. You classify the beneficiary, apply the $1,000 exemption, and apply the progressive rate table. A guide walks through the exact arithmetic.
• Families who need to understand the 5% early-payment discount — Kentucky gives a 5% discount on the total inheritance tax if paid within nine months of the death. Missing this deadline costs money. A guide structures this into a deadline calendar.
• Small estates using Form AOC-830 — if the personal estate is $30,000 or less, Kentucky allows you to dispense with formal administration entirely. A guide explains exactly how this interacts with the tax filing requirements.

Who This Is NOT For

• Estates with inherited retirement accounts going to Class B or C beneficiaries — the decision of whether to take a lump-sum distribution (fully taxable at up to 16%) or a 36-month annuity payout (exempt from inheritance tax under KRS 140.063) requires running numbers on both scenarios. That is precisely the kind of tax modeling CPAs do well.
• Estates where a federal Form 706 is required — if the estate exceeds roughly $13.6 million and must file a federal estate tax return, Kentucky law requires a corresponding inheritance tax return filing even if all beneficiaries are Class A. A CPA is the right resource for Form 706 preparation.
• Estates with an unresolved Medicaid estate recovery claim — if the Kentucky Cabinet for Health and Family Services has placed a lien on the estate, you have 60 days to respond. This is contested administrative action, not form completion. An estate attorney, not a CPA, is the right professional here.
• Fiduciary returns with large, contested administrative expenses — Kentucky prohibits deducting the same administrative expense (attorney fees, executor commissions) on both the inheritance tax return and the fiduciary income tax return (Form 741). When expenses are large, the allocation calculation — which return benefits more from which deduction — is a judgment call that benefits from CPA analysis.

Honest Tradeoffs

Using a self-guided Kentucky estate tax resource

Advantages:

• Fraction of professional fees
• Available at any hour — no scheduling, no waiting for callbacks during a stressful period
• Forces the executor to understand what is actually owed rather than delegating blindly
• Produces organized documentation useful for CPA consultations if you decide to engage one later

Disadvantages:

• The executor owns every decision — there is no professional to absorb responsibility for a judgment call
• Kentucky's inheritance tax rules contain traps (the IRA annuity rule, the $5,000 funeral expense deduction cap under KRS 140.090, the 60-day Medicaid response window) that require careful reading rather than skimming
• Does not provide professional liability insurance; if an error is made, the executor bears the consequences

Hiring a CPA

Advantages:

• Professional prepares and signs the return, providing a layer of accountability
• CPAs with estate tax experience know when to push back on state audit queries
• Optimal for the deduction allocation decision between Form 741 and Form 92A200

Disadvantages:

• Cost: $1,000 to $2,500 for a basic inheritance tax return is typical in Kentucky. More complex estates with multiple beneficiary classes run higher
• Availability: CPAs are often unavailable immediately following a death, and the 9-month early-payment discount deadline does not wait
• Many generalist CPAs have limited Kentucky inheritance tax experience — the six-state inheritance tax system is not common knowledge across the profession

Frequently Asked Questions

Do I need a CPA to file the Kentucky inheritance tax return? No. A CPA is not legally required to file Form 92A200. The Kentucky Department of Revenue accepts self-prepared returns. Where a CPA adds genuine value is when the estate includes retirement accounts for non-exempt beneficiaries, a federal estate tax return obligation, or a deduction allocation decision between multiple tax returns.

What does a CPA charge to prepare the Kentucky inheritance tax return? Expect $1,000 to $2,500 for a straightforward Form 92A200 in Kentucky. More complex estates — those with multiple beneficiary classes, significant real estate, or concurrent Form 741 filing — can run higher. Always confirm the scope of engagement before retaining a CPA.

What is the difference between an estate attorney and a CPA for Kentucky inheritance tax? A CPA prepares tax returns and optimizes financial calculations. An estate attorney handles legal filings — court petitions, affidavits, title clearance, and contested matters. For inheritance tax return preparation, a CPA is the right professional. For court-side matters (Affidavit of Descent, elective share filings, Medicaid lien response), an estate attorney is necessary. Many estates need both.

Is the Kentucky inheritance tax return the same as the federal estate tax return? No. The Kentucky inheritance tax return (Form 92A200 for complex estates or 92A205 for simple estates) is a state filing with the Kentucky Department of Revenue. The federal estate tax return (IRS Form 706) is a separate federal filing required only when the estate exceeds the federal exemption threshold ($13.6 million per individual in 2024). If a federal Form 706 is required, it triggers a mandatory Kentucky Form 92A200 filing as well — even if all beneficiaries are Class A exempt.

Can a surviving spouse handle the inheritance tax return without a professional? For most Class A estates, yes. If the surviving spouse is the sole beneficiary, no inheritance tax is owed — only an Affidavit of Exemption (Form 92A300) needs to be filed with the court. A Kentucky estate tax guide walks through exactly how to prepare and file this document to clear the estate.

What happens if the inheritance tax return is filed late? If filed after 18 months from the date of death, interest accrues at the statutory rate. The 5% early-payment discount applies only if the tax is paid within nine months of death. Missing the 18-month absolute deadline triggers active collection action by the Kentucky Department of Revenue.

For estates where every beneficiary is immediate family or the estate is straightforward enough to handle with a structured guide, see the Kentucky Final Tax & Estate Tax Guide — which covers Form 92A200, the beneficiary classification system, the 5% discount deadline, and the IRA annuity exemption in detail.

See more Kentucky guides →