My parents have a modest trust in which they are leaving their 3 adult children some money. I am one of those and am just about to start on a pay-back program with the IRS for some back income taxes I owe. Seeing as how I owe back taxes, can the IRS attach any of this inheritance when it becomes available? Should I have my parents change their will & trust to remove me from the trust and put my share in a siblings name. Thank You, Mark
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"mtb6748" wrote
Yes, they can, but generally won't if you are making your payments. They may strongly suggest that you use those funds to pay the tax debt.
You could do that, or when the time comes, you can disclaim the inheritance. It'll flow down the same lines as-if you had predeceased your parents. Talk to their attorney who pulled the trust together about that, as well as your tax problems.
-- Paul A. Thomas, CPA Athens, Georgia
Is that also true if it qualifies as a spendthrift trust under local state law?
To disclaim you must execute a qualified disclaimer within nine months (or at least that's what it was the last time I checked). Stu
yes, talk with an attorney. I don't know if you can do that to avoid existing creditors. Also, "putting my share in a siblings name" sounds different than "disclaiming the inheritance". Sounds like you want your money, but to have it held by a sibling in order to cheat your creditors.
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