What happens when you inherit a business

[Jayewo]

New York.

What happens when you inherit a business and cannot afford the taxes and the business does not sell for a couple of years or more?

 

[justalayman]

I don't know. What?

If property taxes, you are likely to lose the building to the state.

If some other type of taxes, you will likely be subjected to a lien against the company and all of it's possessions until it is paid or until who ever you owe the money to decides to foreclose on the lien and sell everything to recoup the money owed.

 

[Jayewo]

clarification

I have been told that when I inherit the business I will immediately owe 40% [or whatever the % will be then] to the state. If I can't pay for it and I can't sell the business to pay the estate taxes will I lose the business to the state?

 

[LdiJ]

I have been told that when I inherit the business I will immediately owe 40% [or whatever the % will be then] to the state. If I can't pay for it and I can't sell the business to pay the estate taxes will I lose the business to the state?

Ok, slow down here. You are talking about inheritance taxes (state) or estate taxes (federal).

I doubt very much if any state has a 40% inheritance tax. Also, federal estate taxes only kick in after a certain amount, and many state inheritance taxes only kick in after a certain amount as well. We don't know what that amount will be at the time that you inherit, but I think that you can count on it being at least somewhere in the neighborhood of 1 million dollars on a federal level.

I also suspect that whoever you will be inheriting from is doing some estate planning as well.

Get yourself a consult with a local tax professional to get a better idea of what you will be facing...however, its very unlikely that its anywhere near 40%.

 

[FlyingRon]

And just what is the nature of the business? Is it a corporation? The deceased's sole prorietorship, etc...