Q: In NC, can the administrator of an estate pay property taxes out of the estate account?
County property tax is due and heirs cannot pay the tax. Can it be paid out of the estate before distributions to heirs?
A:
In North Carolina, the Administrator or Executor should only pay the expenses of maintaining real property (such as property taxes, insurance, etc) in two situations: (1) where the real property was willed directly to the estate in the decedent’s will, and (2) where the proceeds from the sale of the real property are needed to pay claims against the estate. If neither of those situations apply, the personal representative should not pay costs of maintaining real estate out of the estate account. Those costs are now the obligation of the individuals who inherited the property.
Instead, you may be able to make distributions to the heirs, thereby enabling them to pay the property taxes themselves. It is prudent to wait at least until the end of the 90 day creditors' notice period before making any distributions, however. You want to be sure that the estate will have enough funds to pay all debts before making any distributions to any of the heirs. If the estate owes debts greater than its assets because the personal representative made distributions too early, the Administrator/Executor will be personally liable to pay those debts (up to the amount that the estate otherwise would have been able to pay).
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