Will family’s tax debt stop me getting my inheritance?

If a house is sold upon a death and proceeds are left equally between five siblings, but two of the siblings have Revenue and property tax issues, does Revenue have first call on their part of the sale proceeds and how does that fare out for the other three who have no issues?

Ms S.D., email

The Revenue Commissioners can be sharp in collecting tax debt – which, after all, is their job – but they're not that sharp.

In this case, a parent has died and five siblings are due to inherit equally. The main, or only, asset is the family home and the property is sold. So what now for the executor, or executors?

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Their job is, broadly, to manage the estate, ensure all assets are gathered and accounted for, and all debts paid off, before arranging the distribution of inheritances to beneficiaries in line with the provision made in the will.

But what about those debts? It includes any debt owed to the Revenue, for sure – such as outstanding income or capital gains tax, or even the local property tax – but only where it is owed by the deceased.

Unrelated Revenue and property tax issues are irrelevant as far as the executors are concerned.

These unrelated issues are a matter for the two relevant beneficiaries and the Revenue. Of course, Revenue will be aware that they have come into funds through the Revenue Affidavit (Form CA24). This is a document that is filed by, or on behalf, of the executors to finalise the affairs of the estate. And it sets down exactly who has benefited and by how much.

Revenue will want to know this because individual beneficiaries could be liable for capital acquisitions tax (inheritance tax) as a result of the inheritance – though that is not likely in this case.

It also gives Revenue information – including a person’s address and PPS number – that allows them to join the dots on a person’s tax affairs where there are other tax amounts, interest or penalties outstanding.

Clear response

When I contacted Revenue about the position here, their response was a picture of clarity: “The personal representatives of a deceased person’s estate have no responsibility in relation to any unrelated tax liabilities of beneficiaries of the estate, and these are the responsibility of the beneficiaries themselves.”

So, no, Revenue does not have first call on the proceeds of the house sale. The proceeds are distributed to each of the five siblings as intended.

The two siblings who do have outstanding issues with the Revenue can then discuss their position with the tax authorities. And, on the basis that Revenue always responds better when people with debts approach it rather than the other way around, I would advise that they do so before any inheritance is otherwise spent.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.