When someone passes away, it is likely that they are still going to owe taxes. For instance, maybe they own their own home and so they have to pay property taxes once or twice every year. The taxes for the year that they pass away may still be due at that time. Another example could be if they are still employed. They may need to pay income taxes on the money that they have earned over the year.
The government is certainly still going to want this tax money, even if the individual has passed away. So who has to pay for it?
Finances from the estate should be used
The good news for heirs and beneficiaries is that the financial assets in the estate are supposed to be used to satisfy this obligation. In this sense, the person who passed away is still paying their taxes. It’s the job of the estate executor to handle this because someone has to take the technical steps to complete the transaction, but the money itself doesn’t come from the executor. It comes from the estate.
The bad news is that many of these taxes and other debts do need to be paid before assets are distributed to the heirs. If the heirs have already assumed they know what type of financial assets they will receive, they may get less money than they are anticipating. This is because a portion of the money allotted to them has to be paid for the taxes first, and then their portion is paid out of what remains.
Financial situations need to be addressed quickly and accurately. All involved should be sure they fully understand their legal obligations and the steps they can take to do so.