If an estate has no money left to any taxes, who is reponsible for them?

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If an estate has no money left to any taxes, who is reponsible for them?

An estate has all assets payable on death (POD) or transfer on death (TOD) in order to avoid probate. There are 3 children who are left assets, divided as follows:( 20%, 40%, 40%); 2 of the 3 children are co-executors. The estate is sizable and will owe taxes. The Will states that the estate shall pay all taxes. Since the estate now has no money, who pays the taxes and how much?

Asked on May 9, 2012 under Estate Planning, Ohio

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If assets belonging to the Estate of the deceased are subject to Estate tax, then the Estate is responsible for any state and federal tax. However, if items are payable upon death and are included in the Estate as assets, the tax should first be paid out of the Estate and then there is to be a distribution to the beneficiaries on a pro-rated basis with his or her gift with respect to the net balance of the Estate post payment of taxes.

If assets are distributed before Estate taxes are paid, then the beneficiaries of the gifts are to pay the amount of taxes requires in proportion to the size of the estate that they received themselves.

I suggest that you consult with an Estate tax attorney right away about the matter that you have written about.


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