Ok ... you are getting the filing of an estate return form 706 and an estate INCOME tax return form 1041 mixed up. If the estate value was below the current rate then it is not needed to be filed. However if the estate sold the home it was issued a 1099-S at closing so an income tax return must be filed even if the estate will pay the tax bill itself and not pass the tax bill onto the beneficiaries on a K-1. If I were you I would insist on getting a copy of the estate return 1041 to make sure that it was done correctly.
