A Family’s Story: Inheriting Land with a Tax Lien
When the Peterson siblings; Julie, Brian, and Lisa, inherited their late parents’ rural property in western Wisconsin, they expected to carry on the family’s legacy. The 60-acre parcel included the farmhouse where they grew up, along with three additional wooded parcels that had been in the family for generations. But shortly after the probate process began, they were hit with a surprise: an IRS tax lien had been placed on one of the parcels due to unpaid income taxes their father hadn’t resolved before his death.
“We didn’t even know there was a lien,” said Julie. “We found out after the title search when we were getting ready to split the land.”
The Legal and Financial Hurdles of an IRS Lien
An IRS tax lien is a legal claim against a property for unpaid tax debts. When placed on inherited land, the lien does not disappear; it becomes the responsibility of the estate. This can delay probate, complicate property transfers, and force heirs to make difficult financial decisions.
In the Petersons’ case, the lien was for $38,000. The probate attorney informed them that the lien had to be resolved before the land could be legally divided or sold. The IRS required payment in full to release its claim on the property.
“It felt like we were being punished for something we didn’t do,” Brian explained. “We just wanted to keep the land in the family, but the debt made that impossible.”
Evaluating Their Options
The siblings considered several strategies:
- Take out a joint loan to pay the debt.
- Pay the IRS in installments from their own savings.
- Sell a portion of the land to generate the needed funds.
Ultimately, they decided to sell the smallest parcel, a 15-acre tract that had road access and was ideal for recreational use.
“It was the hardest decision we had to make,” said Lisa. “But it was the only way to clear the lien without going into debt ourselves.”
Finding a Way Forward
The Petersons explored their options, weighing whether to list the property with a realtor, try to market it themselves, or work with a buyer who could move quickly. With probate costs and lien penalties looming, time was not on their side.
“There was a lot of pressure to act fast,” Julie said. “We had to figure out a way to make it work, and none of us had experience dealing with this kind of legal process.”
They eventually sold the 15-acre parcel and were able to use the proceeds to pay off the tax lien, allowing them to complete the estate settlement and move forward.
Lessons for Property Owners and Heirs
The Petersons’ experience highlights a few key takeaways:
- Check for liens as early as possible in the probate process.
- Understand that IRS tax debts do not disappear with the passing of a property owner.
- Selling part of an inherited property may be necessary to resolve outstanding debts.
- Consider professional guidance when navigating the legal complexities of probate.
“Looking back, I wish we had known more about estate planning,” Brian said. “The learning curve was steep, and we had to make big decisions quickly.”
Final Thoughts: Resolve the Debt and Move Forward
If you’ve inherited land burdened by an IRS tax lien, you’re not alone—and you do have options. At Liberty Land Traders, we help families like the Petersons sell quickly and confidently, even during complex probate situations. Whether you need to settle a tax debt or simply want to simplify your inheritance, we’re here to help every step of the way.
Contact Liberty Land Traders today for a free, no-obligation cash offer and guidance on how to navigate inherited land sales with liens and legal complications.