CHAPTER XXVI PAYING TAXES DUE § 204. Taxes Due a Preferred Claim As has been stated (see § III), all taxes due by the deceased at the time of his death are to be preferred in payment over all other claims, excepting only the expenses of the funeral and of administration. Any indebtedness to the United States or to the state for any cause other than taxes enjoys the same priority over other debts. Such indebtedness is not usual, but might arise, for example, from some liability of the decedent as surety on a bond. As between taxes due the United States and taxes due the separate states, the federal obligation is preferred. All taxes due at the time of death, whether on real or personal property or merely against the person, are to be paid at once after the expenses of the last illness and the funeral and of administration are paid and without regard to other claims. The funeral expenses to be preferred must be reasonable. (See § 110.) In most of the United States the expenses of the last illness would be allowed, though these, being debts arising before death, would be on a different footing than the funeral expenses. The estate must be administered, and therefore the expenses of administration are preferred to taxes. In each state the local law should be consulted. § 205. Taxes on Personalty At a certain date the decedent became liable for his annual taxes. If the date of assessment came before his death, the amount of such taxes would be a preferred claim. If this date came after his death, the taxes are merely an expense of administration to be paid by the executor or the administrator of his own accord. For this payment he would have credit at any accounting. The taxes would not in any such cases be a preferred claim if the estate was solvent, and it would not require any action by the court to authorize payment. After distribution the new owners would pay, and the personal representative would have no responsibility. In some cases there might be trouble as to where taxes should be paid. If the executor or the administrator lived in a county other than the domicile of the decedent, the general rule is that he would pay where he, the representative, lived. In some localities the rule is otherwise. If tangible property of the decedent is in another state, the ancillary administrator will pay there. In the case of intangible property, as shares of stock, debts owing, etc., a tax may have to be paid in both states. The fact that a note is kept in another state does not make it taxable there. § 206. When Taxes on Realty Are Paid from Personalty All taxes assessed against real property belonging to the decedent up to the date of death are an obligation of the estate, and are to be paid as a preferred claim by the personal representative and cannot be passed on to the heir or the devisee. The statute in New York specifies "taxes assessed on the property of the deceased, prior to his death." This is held to include all taxes that are debts of the decedent and, if he had lived, could have been collected from his personal property. This is the general rule throughout the United States. Where, however, a charge for improvements is assessed against realty by a municipality in such shape that it lies as a lien against the land itself and cannot be collected personally from the owner of the land, then the executor or the administrator does not pay it, but the heir or the devisee takes the land subject to the charge. Assessments for paving, sewage, and similar charges, that are supposed to add to the value of the land, should not be paid by the executor unless they could have been collected from the personalty of the decedent had he lived, but should be paid by him who takes the land. Such assessments are encumbrances, as is a mortgage. In such cases, the local laws authorizing such levies should be examined. When the executor is empowered by the will to sell real estate, or when he is obliged to sell real estate to obtain funds to pay debts, it is his duty to insure, repair, and pay taxes on the realty to be sold. Otherwise he has no duty to pay any taxes on real estate that are assessed after the death of the testator. § 207. Taxes on Realty Are Not Apportioned In New York all taxes on real property assessed before death are a charge on the personal estate and are to be paid by the personal representative. The representative should . . . pay assessed taxes which became a lien on decedent's real estate before his death . . . but save so far as he may have special authority over the real estate to sell or manage it, or may need it specially to sell for the payment of debts, he is not warranted in paying taxes on it assessed or levied after decedent's death, since these are charges on the land for the heirs or devisees to pay.' The exact time when a tax is assessed is sometimes of great importance in ascertaining whether it should be paid by the personal representative or by the heir or devisee. If that time occurs before death, the personal representative pays it; but if the tax becomes a lien after the death of the testator, the devisee must pay the whole tax. It is not prorated or apportioned; the 1 24 C. J. 294. |