Addressing Tax Liens in Estate Administration

The personal representative of a decedent’s estate is subject to many duties.

Importantly, the personal representative of an insolvent estate is required to pay a claim of the U.S. government first.

The personal representative is at risk of personal liability if he or she pays any part of a debt of the estate before paying a claim of the government.

This risk is almost as old as the U.S. Constitution, and could potentially be realized years (and, in some cases, more than a decade) after the decedent’s date of death. This risk is particularly relevant today as a result of the Service ending its long-standing practice regarding estate tax closing letters.

To address tax liens in estate administration, this article sets forth the current rules for the priority of claims of the government with respect to a decedent’s estate, case summaries that show recurring patterns that have resulted in personal liability of personal representatives, and options for addressing liens and the risk of personal liability.

Matthew S. Beard, P.C.

3838 Oak Lawn, Suite 1220

Dallas, TX 75219

(214) 434-1813