What to do if there is a tax lien ona beneficiary of an estate?

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What to do if there is a tax lien ona beneficiary of an estate?

I am the executor of an estate and it has been brought to my attention that one member of the estate has a tax lien on them. The lien has been filed in the same state that a piece of real estate that is to be liquidated is located in. Will this effect the sale of the house, closing? Do I simply distribute the proceeds directly or will I be directed to send the funds to the IRS?

Asked on August 20, 2011 New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If the tax obligation of one of the beneficiaries of the estate has not resulted in an actual lien filed on the probate proceeding as to that person's inheritance, you have no obligation to send any proceeds to the IRS.

The IRS claim will have no effect upon the sale of any asset of the estate that your are the executor on. The IRS claim will only become an issue for you and the beneficiary if the beneficiary's share of the estate is physically liened.

In the interim, you should consult with the attorney assisting in the probate as well as discuss with the beneficiary who owes the IRS money about how he or she wants to handle disntribution of the estate. Meaning, will the beneficiary voluntarily agree to have the estate send a portion of his or her share of the estate to the IRS or not?

Good question.


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