QUESTION
Will we have to pay our inheritance to the IRS because of back taxes? How?
Asked on Jul 09th, 2015 on Estate Planning - Colorado
More details to this question:
So my wife's grandmother is dying and her father is the executor of the will or trust. He owes the IRS a pretty large sum of back taxes. When grandma passes will everyone who is a recipient of an inheritance have to forfeit their inheritance due to the back taxes from my wife's father?
14 ANSWERS
That would be a no.
Answered on Aug 25th, 2015 at 8:34 PM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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That would be a no.
Answered on Aug 25th, 2015 at 8:34 PM
Civil Litigation Attorney serving Ventura, CA
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The Law Office of Robert I. Long
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Grandma's debts get paid out of her estate. The estate does not pay anyone else's debts. If your wife is entitled to a share, it will not be affected by her dad's tax mess, but if her dad is sole beneficiary the entire inheritance is exposed to the claims of his creditors the instant it becomes his money, maybe even before it reaches him.
Answered on Jul 16th, 2015 at 6:29 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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No, the executor's debts cannot be paid out of estate assets. He sounds like a poor choice as executor because of his history of bad Financial decisions.
Answered on Jul 14th, 2015 at 8:37 AM
3 Awards
Without knowing more it is difficult to say. Is the father the only beneficiary? Seek legal counsel to address specific as well as the possibility of a qualified disclaimer.
Answered on Jul 10th, 2015 at 7:22 AM
Definitely not. ?Heirs do not directly pay any taxes on their inheritance, it is the estate and there is a $5 million exemption. ?It matters as to distribution whether it is a trust or a Will. ?When her grandmother dies, the money goes to her heirs. If her father gets anything, the IRS will go directly against him, not the others who get anything from the grandmother.?
Answered on Jul 10th, 2015 at 2:45 AM
Probate Attorney serving New Orleans, LA
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James G. Maguire
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Have your wife's grandmother do a will leaving her assets to someone other
Answered on Jul 10th, 2015 at 2:42 AM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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Assuming your father is an heir of your grandmother's estate, only his portion may be subject to back taxes, if the IRS liens the mpney.
Answered on Jul 10th, 2015 at 2:39 AM
Edwin K. Niles
This is not gramma?s debt, so why should IRS be involved?
Answered on Jul 10th, 2015 at 2:36 AM
Commercial Attorney serving Chicago, IL
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Ashcraft & Ashcraft, Ltd.
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Only creditors of your wife's grandmother can file claims against her estate. All of grandmother's debts must be paid before her assets can be distributed. The assets distributed to her son, your wife's father, would be susceptible to attachment by the IRS. As an executor of the estate the father does not personally own any assets of the estate and thus the IRS would not be able to lien , attached or execute a claim against such assets for his personal debts. Your wife's father may be able to disclaim any distribution from grandmother's estate, in which case the assets would be distributed as if the father predeceased his mother. You should consult with an attorney.
Answered on Jul 10th, 2015 at 2:35 AM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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No. The debts of the personal representative cannot be satisfied out of money of the estate (except to the extent such money is due to him). However, in order to avoid any seizures which would be difficult to undo, your wife's father might best choose not to serve as PR. Her will should name an alternate PR; if it doesn't, any family member can do the job. A person is NOT PR of the estate until appointed PR by the court.
Answered on Jul 10th, 2015 at 2:33 AM
The IRS can only require the grandmother's estate to pay off any taxes she owes personally or through her business. Only your father-in-law's inheritance from his mother's estate can be seized by the IRS to cover his back taxes, (assuming the IRS has that authority at the time the inheritance is delivered). The rest of the heirs should be able to keep their inheritances.
Answered on Jul 10th, 2015 at 2:33 AM
Only if he is the first beneficiary. Other beneficiaries should see no reduction in their inheritance caused by his tax liability. Go see an estate tax attorney for more complete information.
Answered on Jul 10th, 2015 at 2:32 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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You should discuss the details with an attorney, but generally no. A trustee does not only assets but is only in administering them in a fiduciary capacity. Therefore his tax problems would affect any here he might personally be entitled to, but not affect other beneficiaries. If this pertains to Michigan you are welcome to call Musilli Brennan Associates PLLC with details and to engage the firm.
Answered on Jul 10th, 2015 at 2:32 AM