Personal Representative of estate can be liable for decedent’s unpaid taxes

Feb 2014

If you have been named the personal representative of someone’s estate, you have been charged with protecting a deceased person’s property until all debts and taxes have been paid, and seeing that what remains of the assets are transferred to the deceased’s heirs according to their wishes. Unfortunately, being a personal representative can also carry with it some liabilities such as unpaid taxes.

This scenario came to light when a son, who was a co-executor (personal representative) of his father’s estate, failed to pay his dad’s unpaid income taxes with the proceeds of his estate. In this case, the proceeds were from the sale of his parent’s home after they both passed away. As the personal representative, he should have first paid his parent’s debts, including unpaid taxes, and then distributed the remaining assets to heirs, including himself.

Certainly part of the problem is that when someone who is a personal representative is also an heir, there truly is a conflict of interest. In this case, the son sold the parent’s home and reaped $300,000 in proceeds. Unfortunately, the estate owed the IRS more than $400,000 in unpaid taxes, so the son was hoping that he could fool the IRS. Obviously, the chances of that happening are pretty remote, and a district court upheld the IRS’ claim and the son was held liable for the unpaid taxes.

The moral of the story is that if you are the personal representative of an estate, make certain you pay all the deceased’s unpaid bills, including taxes, before you distribute any of the estate’s proceeds. And if you are planning to pick a personal representative for your estate as part of your estate planning, make sure you pick someone with good moral and ethical character to ensure that they don’t play fast and loose with your estate’s assets after your death. And it may not be a good idea to pick someone who stands to get some or all of your assets.

If you have been named a personal representative and would like to find out more about your duties regarding someone’s estate, or if you need to appoint a personal representative for your estate planning, feel free to contact me at

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