The executor of an estate may face many hours of difficult work and if they aren’t careful they may end up working for free.
There are times when an executor cannot collect a fee as The Wills, Trusts & Estates Prof Blog discussed in a recent example in “Section 6166 Lien Causes Executor to Miss Out on Fees.”
In the case discussed the executor took a Section 6166 election which allowed estate taxes to be deferred and an estate tax lien to be put on the property.
In such instances, when the property is sold, the proceeds are used to pay the estate tax.
This executor, however, had not yet collected his full fees and the property declined in value to a point below what was owed to the IRS.
The executor argued in court that his fee claim should take priority over the IRS’ tax claim. However, the court ultimately disagreed and the executor will not be paid.
Executors should take notice of this case and make sure they work with estate attorneys and arrange to be paid their fees before taking Section 6166 elections.
An estate planning attorney can help guide you in choosing an executor and making information available to make their job less difficult.
Reference: Wills, Trusts & Estates Prof Blog (Oct. 18, 2016) “Section 6166 Lien Causes Executor to Miss Out on Fees.”