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In this paper we consider state estimation carried over a sensor network. A fusion center forms a local multi-hop tree of sensors and gateways and fuses the data into a state estimate. It is shown that the optimal estimator over a sensor tree is given by a Kalman filter of certain structure. The number of hops that the sensors use to communicate data with the fusion center is optimized such that either the overall transmission energy is minimized or the network lifetime is maximized. In both cases the fusion center provides a specified level of estimation accuracy. Some heuristic algorithms are proposed which lead to suboptimal solutions in the energy minimization problem, while an algorithm that leads to the global optimal solution is proposed in the lifetime maximization problem. In both cases, the algorithms are shown to have low computational complexity. Examples are provided to demonstrateand algorithms.