Which heir/legatee is responsible for paying the state estate taxes and paying off the mortgage?

Asked over 1 year ago - Duluth, MN

My dad (mom died many years ago) has a will that directs the residuary estate to pay all debts, taxes, and last encumbrances; however, all of her assets have either beneficiary designations (3 IRAs) or TOD designations (1 of 2 bank accounts and even her home). So, the only asset going to the residuary estate is 1 bank account worth $25,000. With a $300,000 mortgage and $100,000 due in state estate tax, I am unsure which of us 5 kids will bear the brunt of the taxes and debt or how that is distributed. (Also, as 3 of us are step children, the assets are not evenly divided, further complicating matters.)

Attorney answers (3)

  1. Steven M Zelinger

    Pro

    Contributor Level 20

    3

    Lawyers agree

    Answered . This is an excellent question and one that requires an attorney to assist you. These tax issues when the "tax allocation" clause is bad are rather common these days. I cannot speak for MN but in NJ I dealt with a similar case and the brunt of the death taxes were borne by the beneficiaries of the individual assets on a pro-rata basis (there was nothing in the residue, it was all either specific bequests in the will or joint/beneficiary property).

    This is not legal advice nor intended to create an attorney-client relationship. The information provided here is... more
  2. Joseph Michael Pankowski Jr

    Contributor Level 18

    2

    Lawyers agree

    Answered . Who is the Executor of your father's will? He or she would bear the primary responsibility for making sure taxes are collected. As for whose share bears the taxes, an attorney in your father's state would need to review the will and, possibly, that state's statutes, to determine the answer. Good luck to you.

    This information is presented as a public service. It should not be construed to be formal legal advice nor... more
  3. Adam S. Bernick

    Contributor Level 13

    Answered . You need to contact a probate attorney in the state where your father died domiciled to determine what action to take. Generally during the administration of the estate the expenses in question are paid from estate assets but an attorney needs to read the will to determine this and may need to research the matter.

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