A bankruptcy cannot save an Executor. Executors are generally personally liable for estate taxes if they distribute property to beneficiaries before paying an estate tax obligation. And, according to at least one case, the executor may not discharge that personal liability in a later bankruptcy. Carroll v. United States, 2009-2 USTC par. 60,577 (May 6, 2009). In Carroll the estate elected to pay estate taxes on an installment basis. Over the years the businesses inherited from the executor’s father performed poorly and the IRS installment payments stopped. During the same period, however, distributions from the companies were made to beneficiaries. The court stated the executor’s liability could not be discharged if there was a willful attempt to evade or defeat the estate tax. Because the executor knew of the tax, was aware of his personal liability for the tax, actively transferred property out of the estate without adequate consideration and demonstrated an intentional disregard for the liability the debt could not be discharged.
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