03 Feb My grandmother’s estate owes back taxes. What next?

Q. My mother passed and she was an administrator of my grandfather’s estate and the inheritances. The estate accumulated quite a bit of back taxes over the years. Will the IRS put a lien on that estate as well as hers to retrieve funds?
— Concerned beneficiary

A. It sounds like it’s time for you to talk to an estate planning attorney.

Further issues with estate administration could cause some trouble.

The fiduciary appointed to administer an estate is responsible to ensure that all creditors are paid before making distribution of estate assets, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

She said if there are insufficient assets to pay all creditors, a New Jersey statute provides for a priority as to how creditors are paid. The funeral home and taxes get first dibs, she said.

“If the creditors are not paid and funds are distributed to beneficiaries, the creditors may seek the return of such distributions from the hands of the beneficiaries,” she said. “Generally, the fiduciary’s individual assets would not be responsible for payment of estate debts; only such assets received from the decedent.”

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This story was originally published on Feb. 3, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.