Executor Liability

Jill2014 · Post by **Jill2014** » Wed Apr 16, 2014 5:19 pm

A friend has asked me to be the designated Executor named in her will. She has dual American/Canadian citizenship; worked in the US till about 1980 and has lived in Canada remainder of her life. She has not filed US Income Taxes since leaving the US. If she had done so my guess is she would not have had any taxes owing. She has never filed FBAR. Her intent is to "Lay low and hope she is not discovered".

I am concerned about my personal liability if I become her executor. I am assuming she would be deemed "Low Risk". I believe my legal responsibility would be to file the 3 years back taxes and 6 years FBAR's.

If the executor did not file these forms and distributed her estate could they be personally liable for paying any penalties? Is there any limit on how far back the IRS can go? I.E. Would the executors liability expire after a certain number of years?

nelsona · Post by **nelsona** » Wed Apr 16, 2014 5:25 pm

As executor, you would hire a tax atty and have them file all required papaerwork, and all back tax, interst and penalties paid by the estate.

That is where your liability would end.

nelsona · Post by **nelsona** » Wed Apr 16, 2014 5:28 pm

Obviously YOU wouldn't be doing any of this.

You might want to beg off being the executor for someone with such a cavalier attitude. She has basically told you that she is leaving you with this headache - quite disrespectful to you, no?

Jill2014 · Post by **Jill2014** » Wed Apr 16, 2014 5:42 pm

No - I don't consider her disrespectful. I am sure she hasn't even realized it is an issue. I think she is afraid of potential penalties if she comes forward now and probably never considered that the IRS could follow her in to the grave. I wanted to be clear on my position before I tell her.

Maybe I am being naÃ¯ve but I had thought that I would personally complete all the forms. My husband has acted as executor for several relatives and I complete our tax returns. It does seem like the US tax system is complex, but I was hoping I could do it. I don't know what a tax attorney would charge, but I don't think she will have a very large estate.

nelsona · Post by **nelsona** » Wed Apr 16, 2014 7:34 pm

You would be silly to try this on your own. A small mistake could wipe out the estate, and just the penalties she is facing now would do the same.

Jill2014 · Post by **Jill2014** » Wed Apr 16, 2014 11:49 pm

I appreciate the warning. Any idea what it costs someone to have this done now if not too complex? I believe all her assets are in Canada. Owns personal residence and a vacation property joint with Canadian husband, a small RRSP and a bank account. They have rental income from the basement suite.

nelsona · Post by **nelsona** » Thu Apr 17, 2014 8:00 am

$1500 per year, and double that on death.

Jill2014 · Post by **Jill2014** » Thu Apr 17, 2014 11:30 am

You have been very helpful. I will pass on the info to my friend. Thank you