It's not common for a retirement account to not have any listed beneficiaries, as that's commonly identified at the time the 401(k) and/or IRA are first established. Then, it gets passed outside of any will or estate. So if you haven't already, I would suggest you check with the administrator of the account(s) and confirm there is "in fact" no designated beneficiaries.
Even though the money was used to pay bills, is the Estate responsible to pay the taxes owed on the withdrawal on the 1041?
Yes, especially since the money will be used to pay the bills of the estate.
The amount is about $32,000. If so, what if there is no money left?
Then you have nothing to be distributed to any heirs. If there's not enough left to pay taxes with, then those taxes just flat out don't get paid. I would assume you have already done the personal 1040 tax return of the deceased and marked the box to indicate the tax filer is deceased.
