Beneficiary Inheritance and IRS
Hi Terry, A little bit of info before my question. I recently retired, am single and have sizeable assets that I named my only grown adult child as beneficiary upon my death. My child hasn’t filed tax returns for decades and I know he owes the IRS from when he did file. My question is- upon my death can the IRS garnish my child’s inheritance? Thank you for your thoughts.
Terry Says
Yep — once the money is in his name, they certainly can garnish his accounts.
Sounds like you need a better inheritance plan, something more sophisticated such as setting up a trust for his benefit — but one that does not belong to him. The trustee could be told to distribute a fixed amount every month, or a percentage of the assets.
The obvious issue here is that you’d need a trustee to handle this — either a bank or trust company. But dumping your hard-earned live savings on an irresponsible “adult” child is definitely not the appropriate answer.
You might also want to investigate certain charities to which you’d like to contribute, since you say you have sizeable assets. Of course, there is the possibility that you might need this money for your own care, so those charitable bequests would come after your death.
Depending on where you are, you can search for an attorney at www.search-attorneys.org, or in the Chicago area, I could give you some names if you are interested.
