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Estate Taxes w/ Few Assets Left Over

Someone close to me owns very large amounts of property, roughly valued at more than $2 million. Most of it is owned JTWROS and will therefore pass to his heirs outside of probate. 100% of their value will still be included in his estate though, since in creating the JTWROS he gave them their "half" and they didn't contribute anything. My question then is this: Let's assume he dies in 2012 or later, when the estate tax exclusion will probably be severely reduced. There are going to be some large taxes on his estate, but most of the property will be in the hands of his heirs. Essentially the estate won't have any money and not enough assets to sell to get the money to pay the estate taxes. What happens at that point? Many thanks, Bill

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Reply to
Furry
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The heirs pay, through either transferee assessment or the estate tax lien.

-- Phil Marti Clarksburg, MD

Reply to
Phil Marti

"Furry" wrote

The heirs owe the tax, and lacking any other sources, may have to mortgage or sell the property to pay the estate taxes. There generally is life insurance purchased to cover this.

-- Paul A. Thomas, CPA Athens, Georgia

Reply to
Paul Thomas, CPA

[snip]

The heirs will be on the hook for the taxes.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro

The heirs (or joint tenants) can be forced to pay their shares of the taxes based on the amounts received. Stu

Reply to
Stuart Bronstein

Transferee liability. See Code section 6324(a)(2).

If the estate tax is not paid when due, then any of the following who receives, or who has on the date of the decedent's death, property included in the decedent's gross estate under Code Sec. 2034 through Code Sec. 2042 (this includes joint property, which is subject to estate tax under section 2040), is personally liable for the unpaid estate tax, to the extent of the value on the date of the decedent's death of the property received or possessed: ... spouse ... transferee ... trustee, other than the trustee of a qualified employee trust ... surviving tenant ... person in possession of property by reason of the exercise, nonexercise, or release of a power of appointment ... beneficiary

If everyone is cooperative, each of the people that receives a share of the estate will pony up their fair share of the estate tax. If not, then the IRS can go after all of them, or any one of them individually. If they go after the beneficiaries individually, then it's up the the beneficiaries to go after the other beneficiaries for reimbursement.

--Chris

Reply to
cballard

If they are not careful (e.g. having the insurance policy owned by a separate, irrevocable trust), half of the death benefit may go to pay estate taxes on the other half. Stu

Reply to
Stuart Bronstein

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