Will we have to pay our inheritance to the IRS because of back taxes? How? 19 Answers as of August 25, 2015

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?

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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.
Answer Applies to: California
Replied: 7/16/2015
Ronald K. Nims LLC | Ronald K. Nims
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.
Answer Applies to: Ohio
Replied: 7/14/2015
Law Office of Pamela Braynon | Pamela Y. Braynon
No they wouldn't. Grandmother does not owe the IRS, the father does. However if his name is on any property along with grandmother (IRS could seize any property that he owns), your inheritance could be less unless the probate is done on grandmother's estate before the IRS takes action against the father.
Answer Applies to: Florida
Replied: 7/10/2015
Goldsmith & Guymon
Goldsmith & Guymon | Dara Goldsmith
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.
Answer Applies to: Nevada
Replied: 7/10/2015
O'Keefe Legal Services, L.L.C.
O'Keefe Legal Services, L.L.C. | Sean P. O'Keefe
The wife's father will be responsible for his tax liabilities, not his mother's or mother in-law's estate. In Maryland, one's estate may need to pay the decedent's [delinquent] tax liabilities prior to distributing assets to legatees/beneficiaries.
Answer Applies to: Maryland
Replied: 7/10/2015
    Wellerstein Law Group, P.C.
    Wellerstein Law Group, P.C. | Elisha Wellerstein
    The facts you gave are not clear. If your wife's grandmother passes, any assets she owns will first be used to pay her debs (including taxes) and then the remainder will be distributed according to the will. If your father in law is not a beneficiary, then the IRS will not be able to use the money to pay his taxes. Hope that makes sense.
    Answer Applies to: New York
    Replied: 7/10/2015
    Law Offices of George H. Shers | George H. Shers
    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.?
    Answer Applies to: California
    Replied: 7/10/2015
    Attorney At Law | James G. Maguire
    Have your wife's grandmother do a will leaving her assets to someone other
    Answer Applies to: Louisiana
    Replied: 7/10/2015
    Law Office Of Victor Waid
    Law Office Of Victor Waid | Victor Waid
    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.
    Answer Applies to: California
    Replied: 7/10/2015
    Law Ofices of Edwin K. Niles | Edwin K. Niles
    This is not gramma?s debt, so why should IRS be involved?
    Answer Applies to: California
    Replied: 7/10/2015
    Vandervoort, Christ & Fisher, P.C. | James E. Reed
    That would be a no.
    Answer Applies to: Michigan
    Replied: 8/25/2015
    Ashcraft & Ashcraft, Ltd.
    Ashcraft & Ashcraft, Ltd. | Randall C. Romei
    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.
    Answer Applies to: Illinois
    Replied: 7/10/2015
    Sebby Law Office
    Sebby Law Office | Jayne Sebby
    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.
    Answer Applies to: Nebraska
    Replied: 7/10/2015
    Goldstein and Peck. P.C.
    Goldstein and Peck. P.C. | William J. Kupinse, Jr
    The answer to the question is no. If your wife's grandmother does not owe the taxes and your wife's father is only the executor and whether or not a beneficiary, then the IRS can only proceed against your wife's father's fee as the executor and any amount due him as a beneficiary.
    Answer Applies to: Connecticut
    Replied: 7/10/2015
    Minor, Bandonis and Haggerty, P.C.
    Minor, Bandonis and Haggerty, P.C. | Brian Haggerty
    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.
    Answer Applies to: Oregon
    Replied: 7/10/2015
    Kokish & Goldmanis, P.C.
    Kokish & Goldmanis, P.C. | Bernard H. Greenberg
    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.
    Answer Applies to: Colorado
    Replied: 7/10/2015
    Irsfeld, Irsfeld & Younger LLP | Norman H. Green
    That would be a no.
    Answer Applies to: California
    Replied: 8/25/2015
    Danville Law Group | Scott Jordan
    Probably not, but I would need more information to provide a more definitive answer.
    Answer Applies to: California
    Replied: 7/9/2015
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    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.
    Answer Applies to: Michigan
    Replied: 7/10/2015
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