Before your parents died, each named you as executor of their estate. Now that both have passed away, you’ve had a few offers on their home here in Delaware County.
As an only child, there are no siblings with which to split the profits. But, don’t forget your good old Uncle Sam.
Estate tax liens apply
Under the Internal Revenue Code, Section 6324, an estate tax lien is initiated on a person’s date of death. It is attached to the decedent’s assets of their (gross) estate that must be reported to the government on Form 706 of their federal Estate Tax Return.
Unlike other types of liens, there is no need to record an estate tax lien to validate it. However, under IRC § 6321, assessment liens stemming from assessed taxes can be recorded.
Buyers must have clear title to purchase
In terms of the sale of your late parents’ property, before the sale goes through, the IRS has to first discharge the property for sale from the assessment tax lien or from the estate. Only then will the buyer be able to purchase the property with a clear title and no tax lien.
If this is not accomplished by the time you go to sale with the potential buyer, the deal may simply collapse. In some cases, a buyer might agree to continue with the purchase and assume the tax lien, but this would be unusual and typically only occur when there were extenuating circumstances surrounding the sale of the property.
Overwhelmed at the responsibility?
You want to do everything right to enable the sale to go through and you definitely don’t want to do anything that would cause you to run afoul of the complex United States Tax Code. You know that the Internal Revenue Service is serious about making sure everyone complies with their laws and regulations.
That can be a lot of pressure, especially if you are still grieving the loss of your parents or other loved ones. Take some of the responsibility off of yourself by seeking legal guidance from someone well-versed in both federal and Pennsylvania tax laws.