Can the IRS Come Back for Taxes After the Estate Is Closed?

By Beverly Bird

Most people do not owe estate taxes when they die, so they should not be a critical part of your estate planning unless you believe the total value of your estate will exceed the federal estate-tax exclusion amount -- $5.25 million, as of 2013. If the value of your assets is more than this, the burden of filing and paying estate taxes falls to the executor of your will during the probate process. If she doesn't do her job properly, the IRS can look to her for payment after your estate is closed.

Closing the Estate

Your executor cannot – or should not – settle your estate until she has filed all required tax returns. These include your personal returns, as well as an estate tax return if it is required. She has nine months from your date of death to do so. After she determines how much your estate owes in taxes, she's obligated to pay this debt first, before other creditors receive money and before making distributions to your beneficiaries. The IRS will issue a closing letter about six months after reviewing the return, allowing her to make distributions and settle your estate.

Executors' Liability

If your executor fails to file a return or neglects to pay any taxes due, she can be held personally liable. She won't necessarily have to pay all your taxes, but only an amount equal to what she gave other creditors instead, or what she distributed to beneficiaries before paying the IRS. This can occur even after your estate is settled.

Protect your loved ones. Start My Estate Plan
Protect your loved ones. Start My Estate Plan
Can an Executor of an Estate Spend Any Money From the Estate?

References

Related articles

What Expenses Can an Executor Take for Estate Tax?

When a person dies, everything he owns is included in his gross estate. For federal tax purposes, the entirety of the gross estate is not taxed. The executor is permitted to make deductions from the gross estate, decreasing the eventual estate tax obligation. An important set of deductions are expenses related to the estate. It is important to note that only estates valued over $5.12 million are required to pay federal tax. Consider consulting with a licensed attorney or certified public accountant if you are an executor and required to prepare an estate tax return.

Can Executors of an Estate Charge a Monthly Fee Until Probate Is Finished?

There's no question that executors of estates deserve compensation for their work, but they're not usually paid until probate is over. You can override this if you provide for special arrangements or specific remuneration in your will, but if you don't, your state's laws will take over regarding when your executor is paid and how much.

The Fee for the Executor of a Will in North Carolina

The individual selected as executor of an estate doesn't have an easy job. She must inventory assets, notify the deceased’s creditors, decide if creditor’s claims are legitimate, and deal with beneficiaries who may or may not be pleased with the decisions she’s made. Most states allow executors to accept financial compensation for all this work and North Carolina is no exception. When a testator -- the person who makes the will -- sets payment for his executor in his will, the terms of his will prevail; otherwise, North Carolina’s probate code determines payment.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Does an Executor Have to Assume Unpaid Debt in Michigan?

The executor of an estate has a great deal of responsibility in Michigan and elsewhere. Personally assuming the ...

How Long Does It Take to Get a Beneficiary's Inheritance?

It’s not uncommon for the beneficiaries of a will to become impatient with estates' executors as the probate process ...

How Long Does It Take for a New Jersey Inheritance Settlement?

If someone names you as a beneficiary in a New Jersey will, plan on waiting a minimum of nine months before you receive ...

Time Limits on Estate Executor Duties in California

Probating a will is often an exacting job, and an executor must also be able to perform well under pressure. Deadlines ...

Browse by category
Ready to Begin? GET STARTED