Tuesday, August 27, 2013

Jill's Probate Priorities

Before his death, Jill’s dad owed about $10,000 in back taxes, $5,000 to the federal government and $5,000 to Illinois.  The probate laws say that the IRS claim is a third class claim, and the Illinois claim is a sixth class claim.

So, after the funeral expenses and expenses of probate are paid and the $30,000 child’s award is paid to support Jill’s little sister, the IRS will receive payment on the $5,000 it is owed.  Only after the IRS receives its whole $5,000 back will Illinois get any of its $5,000. 

If Jill’s dad’s money runs out before Illinois is paid, Illinois and all other “lower class” creditors (like most credit card companies) are simply out of luck and will not ever be able to collect on the debts Jill’s dad owed them.

Sometimes even taxes take a back seat to certain debts.  The probate act is one place that can happen.  And our Illinois Probate Act says that federal taxes get paid before state taxes.

For advice about proper after-death legal procedures, either with or without probate, please call our office at (815) 436-1996 for an appointment.  ©2013 Gruber Law Office, Ltd.


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