Can executors ask for money back after it has been dispersed? How? 7 Answers as of September 14, 2015

My aunt died July 2014 without a will. She was never married and had no children. Her 2 surviving brothers petitioned the probate court to be the administrators of her estate. They closed the estate 12/2014, all documents were accepted by the probate court and monies (after expenses were paid) were dispersed to the heirs-at-law (the 2 surviving brothers, 1 surviving sister, and the children of another deceased brother and me, my mother is deceased). I received a letter from them today explaining that they did not consider taxes being due on any of my aunt's retirement accounts or life insurance. They have chosen to pay these taxes out of my grandfather's trust account (he is deceased and his estate has not been settled yet). They are requesting that I return a portion of my funds to 'pay back' my grandfather's trust account. In my opinion, this was their error and their decision to use my grandfather's trust account to pay it. Am I obligated to return these funds? Also, would they legally be able to deduct the amount from my portion of my grandfather's estate once it is settled?

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Law Office of Pamela Braynon | Pamela Y. Braynon
Only if the trust states it will be legally responsible for this debt would you be* morally *obligated to return the funds to the trust. The trust may very well give them the right to pay this debt. You are asking a question that is dependent upon the trust agreement itself. If you have read or are able to read the trust agreement and see within the document that the executors were granted the duty to pay the taxes of your aunt's then you probably return the funds, otherwise I suggest that consult with an attorney to solve this dilemma.
Answer Applies to: Florida
Replied: 9/14/2015
Law Offices of George H. Shers | George H. Shers
An executor is a person named in a Will, so they are administrators not executors. There should be no taxes due on a life insurance policy. I am not an expert on probate law and I do not know in which state she lived, but i don't see offhand why she would get anything from a retirement account [dying is not retirement] and why it would be taxable to her estate [if she had already retired and her employer had not made all the payments she was entitled to, those payments might be treated as income to the estate so subject to income taxes as being wages]. You need to find out their rationale for any taxes being due. They should not have paid anything from her husband's estate as there appears to be no connection to her estate. But what is the legal harm to you? You are only entitled to the funds your state's probate laws grant to you. If you were overpaid, why should they not be allowed to take back the over payment as you were never entitled to that amount. You want them to pay for their mistake in giving you more money then they should have! If you want to follow the law, on behave of the estate, they should sue you, get a judgment against you [which effects your credit rating] which you then have to pay, which then further reduces the amount you get because the estate has to pay for the lawyer to sue you and collect from you, so you end up with even less money. Her husband's estate would then have to sue them to collect back the money they should not have taken from his estate, the estate will not collect back all of its expenses, so the amount distributed from his estate will be less. Sounds to me the only ones who benefit from what you suggest are the attorneys who get involved.
Answer Applies to: California
Replied: 9/11/2015
Edward L. Armstrong, P.C. | Edward L. Armstrong
All of this would depend on what your grandfather's trust says. What you have presented here would lead me to believe this is the trustee's problem, not yours. They could file a lawsuit to deal with this situation. As far as taxes go, the IRS would be able to recover unpaid taxes from distributees (persons receiving funds or property from the trust) but because the taxes were paid the IRS would have no interest in recovering these funds (no "transferee liability").
Answer Applies to: Missouri
Replied: 9/10/2015
Sebby Law Office
Sebby Law Office | Jayne Sebby
The taxes will have to be paid. You can either return some of what you inherited to the executors or you can pay the taxes due on what you inherited yourself. Your grandfather's estate should not be used to cover this debt. It sounds like the executors made a mistake but I doubt any court will require them to pay the taxes on the aunt's estate personally.
Answer Applies to: Nebraska
Replied: 9/9/2015
Minor, Bandonis and Haggerty, P.C.
Minor, Bandonis and Haggerty, P.C. | Brian Haggerty
Yes, the personal representative sometimes has to ask for money back to pay unexpected bills. There is nothing unexpected about taxes, though; I think you have a good argument that they screwed up and they should pay (especially if they were paid a PR fee for administering the estate). Always, though, look at the dollar amounts is they amount they need you to repay less than the cost of fighting over this?
Answer Applies to: Oregon
Replied: 9/9/2015
    Goldsmith & Guymon
    Goldsmith & Guymon | Dara Goldsmith
    Possibly, you should retain an attorney to review all of the documentation to advise you.
    Answer Applies to: Nevada
    Replied: 9/9/2015
    Ashcraft & Ashcraft, Ltd.
    Ashcraft & Ashcraft, Ltd. | Randall C. Romei
    Using the assets of the Grandfather's estate to pay the taxes of another entity is not appropriate and a probable dereliction of duty to the grandfather's estate. As an heir or legatee of the grandfather's estate you have an absolute right to the proper share that estate without any offset due to a possible debt to another entity. The representatives of the grandmother's estate can reopen the estate and seek to collect the over distribution to the heirs and legatees. You may have a right of offset against the sum that is to be returned to the estate based upon your reliance on the distribution and the closing of the estate. If you have been harmed by having to return funds you relied upon and the harm is quantifiable then you may have a claim against the estate and representatives that may be used to reduce the funds that must be returned to the estate.
    Answer Applies to: Illinois
    Replied: 9/9/2015
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