Tax advisor. Terminally ill with tax arrears.

[Beachcomber]

I posted this already in the Tax discussion group and received some very helpful advice. However, I am still looking for a recommendation for a tax advisor.
Summary of situation:
A friend is terminally ill with less than 12 months life expectancy.
He is very concerned about the financial implications for his family.
He is a contractor (not an employee). His mortgage is circa €300k and he has life assurance to pay off the balance when he dies. As far as I am aware he has no other life assurance policy.
He has circa €50k in a pension scheme. He is 56 years old.
He has 2 kids, the youngest about 8 years old.
His main concern relates to a tax bill. He is on a repayment plan with Revenue for the last 12 months but still owes approximately €50k. His wife does not work but is in receipt of a disability allowance.
I understand that a tax bill stays with the estate on death. However, would Revenue force a house sale to cover the liability? Can anyone recommend an advisor who could assist him in dealing with Revenue?
Thanks all.

 

[Sue Ellen]

Hi Beachcomber,

Very sorry to hear of your friend's diagnosis.

There is a previous recommendation here from an AAM poster. There may be others here although some are quite old. These days where he is based is probably not important unless he wants to meet up with the advisor so you may want to supply that info.

 

[T McGibney]

A solicitor rather than an accountant might be the best source to answer a question like this.

I understand that a tax bill stays with the estate on death. However, would Revenue force a house sale to cover the liability?

 

[Marsupial]

I agree about a solicitor. But before incurring the expense, might it be worthwhile for the terminally ill man to discuss the situation with both FLAC and MABS who might be in a position to provide advice and possibly liaise with Revenue in order to clarify how they are likely to proceed with the debt recovery?

Both services are free of charge and, in a situation where money is tight, they might be a good way to start the ball rolling.

 

[Dave Vanian]

Sorry to hear about this situation. Not directly related to your original query, but he should contact the life insurance company who has his Mortgage Protection. Many such policies pay out early on receipt of medical evidence of his terminal illness. This would enable him to pay off the mortgage now.

 

[Dave Vanian]

On the original query, if it's a defined contribution pension scheme of some sort, his estate would inherit the €50,000 fund value. So - worst case scenario - his wife could pay off Revenue from the pension fund proceeds and secure the house. But they should explore other avenues suggested above first.

 

[Johnno75]

However, would Revenue force a house sale to cover the liability?

Not unless Revenue obtain a judgement and register it as a mortgage on the property during the lifetime of the tax customer.

The Revenue debt will attach as a debt on the estate of the deceased and it will be up to the Executor of the will to discharge the debt from the assets of the estate. The Executor has a power of sale of the house, but if there was sufficient cash in the estate, the Executor could use this rather than sell the house.

 

[Beachcomber]

Sorry to hear about this situation. Not directly related to your original query, but he should contact the life insurance company who has his Mortgage Protection. Many such policies pay out early on receipt of medical evidence of his terminal illness. This would enable him to pay off the mortgage now.

Thanks Dave. Yes he has been in contact with the life assurance company.

 

[Beachcomber]

Not unless Revenue obtain a judgement and register it as a mortgage on the property during the lifetime of the tax customer.

The Revenue debt will attach as a debt on the estate of the deceased and it will be up to the Executor of the will to discharge the debt from the assets of the estate. The Executor has a power of sale of the house, but if there was sufficient cash in the estate, the Executor could use this rather than sell the house.

Thanks Johnno, how likely is it that Revenue would force a sale? If he has insufficient cash/assets apart from the family home his wife may have to sell and buy a smaller property.
He has contacted Revenue requesting a meeting. I have asked him to have all financial details ready (full statement of means, assets, debts etc.).
Calls with palliative care team have already taken place. It is scary how quickly your life can change.

 

[Johnno75]

Thanks Johnno, how likely is it that Revenue would force a sale? If he has insufficient cash/assets apart from the family home his wife may have to sell and buy a smaller property.
He has contacted Revenue requesting a meeting. I have asked him to have all financial details ready (full statement of means, assets, debts etc.).
Calls with palliative care team have already taken place. It is scary how quickly your life can change.

Revenue won’t force anything unless they’ve a charge on the property. They will expect the Executor to discharge the liability and will leave it to the Executor to best decide how to do that. Revenue are quite sympathetic, and moreso since Covid. It’s wise that the taxpayer is engaging with them.

 

[Johnno75]

I would strongly urge that the taxpayer seek the advice of a Solicitor immediately, and in any event before meeting with Revenue. Revenue’s position will be that the debt be paid.

The Solicitor will be in a position to best advise on how to arrange the taxpayer’s affairs during their lifetime which may minimise the impact of the outstanding Revenue debt on the estate and on the surviving spouse and family.