Life Insurance

Can the IRS seize life insurance benefits?


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2015-07-15 20:49:47
2015-07-15 20:49:47

You should have your mother leave the insurance to a trust and then you or your family as trustee, then the IRS cannot get to the money since it will not be yours. Additionally you may receive income from the trust. Your family could "spoon feed" you. You should consult an ESTATE PLANNING attorney to see how to set this up. rw

The insurance company cannot be forced to make a check payable to the IRS or any creditor. But if the person who receives the proceeds owes money to someone like the IRS, it won't be long before they will be forking it over. The trust described above can protect the money from creditors until it's paid out, but once the money is doled out, it's fair game for creditors.


Related Questions

No, death benefits from a life insurance policy which has a named beneficiary is not subject to attachment by the IRS, state tax officials, judgment creditors, etc.

Almost any asset you have can be seized by the IRS on a claim or judgement.

Death benefits are usually not subject to federal income tax. There are exceptions, though, such as, if the IRS deems your insurance policy to be an investment in disguise. Your insurance agent or accountant should be able to give you guidance.

Yes, the debts must be paid before the estate is divided up between beneficiaries.

IRS forn 712 is tax deduction form in case of LIfe insurance statement

Yes some pension income can be seized by the IRS.

The IRS doesn't pay disability benefits; they collect taxes. You may or may not be able to collect disability benefits from a private insurance policy and the Social Security Administration at the same time, but if you can, it's likely the income from one would be reduced to offset some or all of the income from the other. Check your insurance policy or consult with an insurance agent for more information.

No, If this was liability under the individual while he was single, then his/her current spouse will not incur that liability. Secondly, the IRS can't "levy" and asset per say;they normally seize bank account,wages,IRA's or Social Security Benefits. If the vehicle is financed, the IRS isn't going to levy (seize) it. The bank is holding the title and is listed as the first lien holder on that title. If the IRS tried to take it, the bank would just assert their position as the senior secured creditor and take the car themselves. The Internal Revenue Code says that the IRS cannot levy / seize an asset if there would be no net proceeds to the IRS from the seizure. They would get nothing in this case, therefore they will not seize the car.

Yes. ------------------- They certainly can. If you have liens filed against you by any government agency (especially IRS) or there are court orders for you to pay certain obligations, they can, and will, lien any inheritance and/or insurance money.

Yes, SS benefits are not exempted from collection of tax arrearages. The IRS has been known to seize the entire amount of SS benefits, but that is unusual, generally they will try to work with the tax payer to establish a payment amount/plan that is feasible. Never, ignore any type of IRS correspondence.

Sure. Death benefits do not enjoy any preference when the beneficiary owes back taxes. They can also garnish your wages and/or Social Security Benefits. You best bet is to set up a payment plan with then and get the back taxes paid.

An IRS Lien attaches to all property that you own, and it also attaches to "after-acquired" property (property that you acquired after the filing of the lien).Even though the house was quit-claimed to you after the filing of the lien, the lien has now properly attached to it. This means that the IRS could, technically, seize the home. It should be noted that if this house is your primary residence, the IRS cannot seize a primary residence without the order of the courts (which almost never happens).If you are in contact with the IRS and make a plan for resolution of the debt, the IRS will generally not seize property. The only time that IRS seizes real estate these days is in cases of blatant evasion or fraud. Your best course is to get in contact with them and work with them to take care of the taxes.

That is one of the purposes of life insurance. The answer however is no, it would come out of the parents estate. If there is no estate than the gov could be SOL. BUT!!! It may behoove a child (depending on age) to settle the tab with all creditors and the IRS on behalf of the parent settling the estate with the insurance money rather than relying on a "fire sale" of the estate, and reaping the benefits of the estate at it's market value rather than a forced sale value....depending on the situation tho... 4lifeguild

yes if you owe them money and refuse to pay the can sieze just about everything

As a rule of thumb you should never report anything to the IRS

No, it's not mandatory. The IRS is allowing employers to deduct the costs of providing Group Life Insurance, up to $50,000 per individual, and construing this benefit as non-taxable to the employees. Group Life insurance is non-portable, you can't take it with you, and ceases when you leave your workplace.

Typically they can seize liquid assets if there are taxes owed.

There are little to no benefits if you draw from your 401k early, this is meant for you to save for later on in life. If you do not go through the proper withdrawal procedures, you can also be charged a penalty by the IRS.

401k and IRAs are "Assets", the IRS can levy assets and seize them if you do not resolve your tax matters.You can resolve your back taxes through different avenues, negotiated payment plans and negotiated tax settlements.Added:If you have unresolved tax debt, IRS is authorized to seize any property and assets, even they are held by someone else. So it means, they can levy your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions. Usually levy is the last tool that IRS would use to get back taxes. So if you get a letter called "Final Notice of Intent to Levy", you should be careful.

There really is no way to determine when or if the IRS will seize a tax refund in such a situation. If there is outstanding arrearages the IRS can without due process seize the amount of the return and relay it to the state CSE agency of jurisdiction. In such cases the IRS will notify the person in writing of the act and the reason for such. It might be possible to find out the status of a return by calling the IRS toll free number (1-800-829-3676) or contacting them directly. A simpler method would be to check the IRS website.

No, creditors, including the IRS cannot garnish government benefits.

If you surrender a whole life insurance policy, you may have to claim the money on your income tax. The IRS states the amount you receive that is above the amount paid for premiums is considered taxable.

I am sorry for your loss. It would seem the IRS made a mistake as this shouldn't be taxable.....however, if they (actually the Insurance Co) "withheld" that from payment, likely because of a missing form or such....then it is actually at the IRS in an account...that when reflected on your return...(both the income as exempt and the credit for the payment withheld), should see your money refunded. But contact the IRS - by phone - and get an exact excplanation. Do not accept that it is taxable.

Nothing I can imagine they would ever consider. Other than certain prohibited types of fairly complex arrangements that involve corporations paying deductible premiums and providing benefits to certain beneficiaries - I don't believe there is any way an insurance policy can be a tax shelter.Anyone implying that life insurance is a good investment and as such becomes a tax shelter or such, should be disregarded.

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