What Happens to Property Taxes When the Homeowner Dies?

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Attorney, distinguished law professor

Just about everyone has heard the old adage from Benjamin Franklin which goes, “in this world, nothing is certain except death and taxes.” In the case of death and property taxes on your home, this is almost true.  

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When a homeowner dies, someone is still responsible for paying the mortgage and property taxes on the home. If property taxes are not paid, the local taxing authority may obtain a lien and eventually foreclose on the property. As a homeowner, it is important that you establish in your estate planning documents who will be responsible for paying your property taxes upon your death.

But who is responsible for paying property taxes if the homeowner dies? How can you, a property owner, make sure that your property taxes will be paid after you die?

Who’s Responsible for Property Taxes When a Homeowner Dies?

If you have property taxes due on your home when you die, that debt becomes part of your estate just like any other debts you may leave, such as credit card debt or car payments. Depending on how you have prepared your estate to be administered upon your death, there may be a variety of people responsible for paying the debts of your estate. 

Provided your estate has enough money to pay all your debts, your property taxes can be paid out of your estate as part of the probate process. The probate court will order your estate to pay all your debts before distributing your property. If there is not enough money in your estate to pay all your debts, the court may order your home to be sold. The court would then use the proceeds of the sale of the home to pay off your debts.

Who actually is responsible for selling the home to pay your property taxes depends on your estate plan and how you arranged during life for your home to be disposed of at death. The person responsible could be any of the following:

An executor or legal representative

An executor is the person you name in your will to administer your estate after you die. If you do not appoint an executor in your will, the court will appoint someone to serve in that role. This person is called a “legal representative.” The executor or legal representative will be responsible for paying your property taxes out of your estate for as long as the home remains part of your estate. Most likely, your home will remain in your estate until it is sold or legal title is transferred to a legal heir.

A trustee

If your home is held in trust, then your home will not be part of your will or part of the probate process. Your executor will have no authority over the home because it is not part of your probate estate. Instead, the trustee of the trust will be responsible for paying property taxes for as long as the home remains in the trust.

A beneficiary

If you name someone in your will to take legal title to your home after you die, then your estate will be responsible for paying the property taxes until legal title is actually transferred to the named beneficiary. At that point, the home becomes the property of the new owner, who will be responsible for the property taxes thereafter.

Heirs

If you die without a will, you are said to have died “intestate.” When you die intestate, the court will dispose of all your property (after paying all your debts) by distributing your property to your closest living relatives or your “heirs.”

Every state has rules for prioritizing your heirs in terms of who is first in line to receive your property. So, if you die without a will, your home will be distributed to your legal heirs, and they will be responsible for paying the property taxes on the home.

The county where the home is located

If you die without a will and you have no relatives related to you closely enough to qualify under the state’s intestate laws, then your property will “escheat.” This means that the government (usually the county in which you resided) will take legal title to your home and will pay the taxes with the proceeds from the sale of your home.

In most cases, there is going to be someone who will be responsible for paying your property taxes on your home after you die—whether you have a will, die intestate, are survived by close relatives or die with no legal heirs. However, this does not mean that your property taxes are guaranteed to be paid.

If your estate does not have enough money to pay all your debts, including your property taxes, even after including the proceeds from the sale of your home, then it may be the case that your taxes simply cannot be paid. 

How Can You Make Sure Your Property Taxes Are Taken Care of After You Die?

In order to avoid having your home sold via court order, you may want to take responsibility for paying your property taxes via your estate. The way to do this is to expressly provide for the payment of property taxes in your will. 

Whether or not you devise your home to a specific beneficiary in your will, you can include a provision in your will that directs your executor to pay the property taxes out of the estate before distributing any property to any beneficiaries.

You also can also state that if there is insufficient money left in your estate to pay the property taxes or other debts, your executor may sell the home and use the proceeds to pay the taxes.

If you do leave your home to a specific beneficiary in your will, you can still direct your executor to pay any debts associated with the home, such as the mortgage or property taxes. In this case, the beneficiary is said to be “exculpated,” which means they take the property free and clear of any debt. Alternatively, you may require that the beneficiary can only receive the property if they also take on the debt associated with it.

Likewise, if your home is held in trust, you can state your wishes in the terms of the trust regarding the payment of property taxes. The same still applies, even if the taxes are paid out of the trust (in which case the trustee would be responsible for paying the taxes) or whether the beneficiary of the trust holds their interest in the home subject to the property taxes on the home.

Taking Care of Property Taxes When The Owner Dies

If you owe property taxes on your home when you die, you can be almost certain that those taxes are going to be paid by someone. The only question is, “Who?” 

Unless you direct otherwise in your will, your outstanding property taxes on your home will be the responsibility of your estate—at least until your home is sold. If you do not have a will, your estate will pay the property taxes before the court distributes your property to your heirs.

The only real way to avoid having your estate pay your property taxes after you die is to direct in your will that any beneficiary to whom you devise your home must pay the outstanding property taxes. 

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