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What are options if can not pay ca estate tax?
My uncle passed away last August - leaving an estate worth apx 4 million. He left all his cash to his girlfriend, and my father who is the executor of the estate that is in probate was left with rentals and agriculture land. After the 1.5 million is deducted from the total estate, my father's taxes that are due is apx 600k. He paid 250k at 9 months, and had a six month extension to have the assests reprased. He now owes an additional $350k that he does not have. What are his options if any? Not enough time to sell any of the land before taxes due. The girlfriend did pay her portion of taxes of apx 750k - so the state has already received 2/3 of the taxes due on this estate.
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Datamian:
First, remember this: Your father owes nothing! It is your grandfather's estate that owes this money. The estate will simply have to dispose of the property as quickly as possible in order to pay the taxes. If there is a significant delay, the estate can borrow money and use the rentals and/or land as collateral so that the taxes can be paid. Your father should NOT use his own assets to pay the estate taxes. |
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For an estate this size I sincerely hope your father has engaged an attorney to help him through the estate tax filings. I don't understand this business of the GF paying "her portions of taxes" - what does that mean? The estate owes taxes, not the GF. Any cash that was n your uncle's esate should not have been distrbuted to the GF until AFTER the estate taxes due on that portion of the assets had been deducted. |
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ebaines identified a GOOD point which I failed to properly identify.
The estate pays the taxes BEFORE the assets are distributed to the heirs. That means the girlfriend will have to wait for the property to be sold to get the rest of her inheritance if the cash that she received is the ONLY liquid asset of the estate. The fact that she may already have the money is irrelevant. If the money was disbursed before payment of the taxes, then the executor failed in his fiduciary responsibility to the estate and must recover that money (by legal means, if need be) in order to pay the taxes. Your father should immediately hire an estate lawyer to get this problem fixed before the girl friend either spends the money or otherwise disappears with it. |
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