Can the IRS Make the Executor of a Will Pay Off the Deceased's Debts?

If the liquid assets in the estate are not sufficient to pay the deceased individual's debts, you must sell his possessions.

If a deceased individual names you as executor of his estate and you accept the position, you are responsible for overseeing his final affairs. If the deceased individual owes debts such as delinquent taxes, you must repay them using the assets from the estate. In most cases, you are not personally liable for these debts, even if the deceased person owed them to the Internal Revenue Service.

Executor Responsibilities

As executor of the estate, you must take charge of the deceased individual's assets, use the assets to pay his debts and distribute the remaining property to beneficiaries named in his will. Most states only probate estates with net values in excess of a predetermined amount, so you must determine if the estate qualifies for probate. Choose a lawyer to represent the estate.

Paying Debts

To pay the deceased individual's debts, you must make a list of all known debts owed by the deceased individual. You must also advertise to creditors in the local newspaper and give them the minimum amount of time determined by your state to file claims against the deceased person's estate. After creditors have filed their claims, you must begin paying debts according to your state's priority. Most states require executors to first pay the cost of estate administration, funeral expenses and expenses related to the deceased individual's final illness. Next, you typically pay debts that have preference under federal law, including back taxes the deceased person owed to the IRS. Other judgments and creditor claims typically receive payment last.

Insolvency

If the estate hasn't the funds to pay all creditors, the estate is insolvent. If you are the executor of an insolvent estate, you must pay creditors in order of importance until you have depleted the estate's assets. If you don't follow your state's procedure, creditors including the IRS may be able to file a lawsuit against you for the payment of their debts.

Considerations

In most cases, the deceased individual's creditors cannot collect from you as long as you follow procedure, nor can they collect from any family member of the deceased person. If you or a family member cosigned for a debt the deceased person owed but the estate did not pay, creditors may be able to collect from the cosigner. Creditors may also be able to collect from you if you were the deceased individual's spouse and you live in a community property state.

References

• Estate Settlor: What Are the Responsibilities of the Executor?
• Federal Trade Commission: Paying the Debts of a Deceased Relative--Who Is Responsible?
• Wa-Probate: An Insolvent Decedent's Estate