How are debts handled in an estate?

Uncle dies. Next of kin discovers uncle owed the IRS $30K in back taxes. Uncle left behind a total of $5K. Does the IRS get that $5K (i.e. are they first in line)? If yes, once the $5K is paid to the IRS, does the remaining $25K still have to be paid?

Asked on January 11, 2013 under Estate Planning, Minnesota


Tricia Dwyer / Tricia Dwyer Esq & Associates PLLC

Answered 8 years ago | Contributor

When a loved one dies, the estate of the decedent (meaning, the person who died) is responsible to pay the debts left by the decedent. It is a common misconception that ‘debt dies with the debtor’.   A debt owed for taxes is a priority debt.    In the event that the decedent’s estate is insolvent, heirs have no personal responsibility or personal liability to pay the debts of the decedent from their own money.  I have seen certain situations in which a debt was ‘arguable’ in nature but the heirs chose to repay the debt because it was ‘the right thing to do’.

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