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  1. #1
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    Right of the IRS To Seize An Inheritance

    What is the name of your state (only U.S. law)? California

    A beneficiary to a trust that includes a home and life insurance policy owes a fortune to the IRS for unpaid back taxes for many years. The interest along with the unpaid taxes equal if not surpass the money that will be inherited by the beneficiary. Is the IRS entitled to take everything the beneficiary is set to inherit?
  2. #2
    LdiJ is offline Senior Member
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    Quote Originally Posted by FancyForrester View Post
    What is the name of your state (only U.S. law)? California

    A beneficiary to a trust that includes a home and life insurance policy owes a fortune to the IRS for unpaid back taxes for many years. The interest along with the unpaid taxes equal if not surpass the money that will be inherited by the beneficiary. Is the IRS entitled to take everything the beneficiary is set to inherit?
    The IRS can seize an inheritance, but they cannot seize a trust. If the taxpayer receives income from the trust that becomes available for the IRS to seize, but not the trust itself.
  3. #3
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    Quote Originally Posted by LdiJ View Post
    The IRS can seize an inheritance, but they cannot seize a trust. If the taxpayer receives income from the trust that becomes available for the IRS to seize, but not the trust itself.
    I should elaborate. A home was placed into the trust many years back. The home will be sold in the near future and thus taken out of the trust I'm assuming. The money from the sale of the house will be distributed to the beneficiary. From your answer, is it right to say that all that money that will be inherited by the beneficiary from the house sale is money the IRS can take? Also, the trust holds the life insurance money and that too will be distributed shortly, that can also be seized?

    Thank you for your reply.
  4. #4
    tranquility is offline Senior Member
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    The IRS can not only take the money a person takes from an inheritance or trust, it can take the amount the person had a right to take but did not. (Subject to all the other collection rules.)
  5. #5
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    I thought that the IRS would be able to seize the inheritance, but some people have told me of people they know that were able to receive their inheritance despite owing the IRS..don't understand how those people managed to do that, but I'm pretty comfortable with the replies given.

    Thanks.
  6. #6
    LdiJ is offline Senior Member
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    Quote Originally Posted by FancyForrester View Post
    I thought that the IRS would be able to seize the inheritance, but some people have told me of people they know that were able to receive their inheritance despite owing the IRS..don't understand how those people managed to do that, but I'm pretty comfortable with the replies given.

    Thanks.
    If the IRS doesn't find out about the inheritance to seize it, then it wouldn't get taken. That would explain why some people would get their inheritance.

    Particularly things that pass outside of an estate might miss a levy...at least for a period of time.
  7. #7
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    ^^^ Oh, I see. That makes sense.

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