What Does The Federal Priority Statute Have To Do With Estate Taxes And Probate?
The Federal Priority Statute contains provisions that executors need to be aware of when settling an estate. For this very reason, its provisions are important to know about when naming a personal representative or executor in a will. This law, enacted in 1797, states in part that, “A claim of the United States Government shall be paid first when…a person indebted to the Government is insolvent and …the debtor without enough property to pay all debts makes a voluntary assignment of property…or an act of bankruptcy is committed…or…the estate of a deceased debtor…is not enough to pay all debts of the debtor.”
When an estate may be affected by these provisions, executors and personal representatives have compelling reasons to consult early in the probate process with a knowledgeable tax law attorney Kundra & Associates, P.C., offers reliable, focused guidance to help fiduciaries ensure compliance with this law while settling estates.
How Our Firm Can Help
Tax lawyer Chaya Kundra, during her career of more than 25 years, has helped many clients avoid complications and steer clear of liability in connection with the Federal Priority Statute. Among other things, she helps executors:
- Determine whether an estate has more debts than assets
- Properly prioritize debts to repay before settling an estate
- Avoid committing an act of bankruptcy (such as making a fraudulent conveyance, concealing assets to defraud creditors, assigning asset for the benefit of a creditor with lesser priority, or declaring actual bankruptcy) – (An act of bankruptcy is an action by a fiduciary that can be a basis for creditors to file an involuntary bankruptcy petition against the estate.)
- Correctly interpret and handle any existing liens, complying with all applicable laws while also preserving assets of the estate whenever possible
- Comply with the priority rules of the Federal Tax Lien Act (FTLA) in response to any relevant disputes
- Navigate all of these and related issues in such as way as to minimize estate taxes and/or correctly pay such taxes
This is just a partial list of ways in which our firm assists executors or other fiduciaries in such cases.