My Dad Died And Owed The Irs 50,000 Dollars And Was In Bankruptcy Also. Can Our Life Insurance Money Be Taken?
Posted November 8, 2009 – 10:18 am in: structured settlements FAQHe was only a few months into his chapter 13 bankruptcy and he had all of the attorneys fees to pay yet too. Can any of his attorneys or the IRS take our life insurance benefit
Tags: $50000, Also, Bankruptcy, Died, Dollars, Insurance, Life, Money, Owed, Taken
6 Comments
WHOSE life insurance money? If the life insurance pays YOU, then it’s YOUR money, and not the IRS’s.
If the life insurance pays his estate, then it stands good for all of his debt, and there won’t be anything left for you to inherit.
I am sorry for your loss. Without knowing the full situation it is hard to tell what might happen. For example, if your mom is still alive and filed joint tax returns with your dad it is much more complicated.
Get a good estate lawyer. If Dad named you as the beneficiary of the insurance, then probably not. If he named the beneficiary “his estate” and his will says to pay all debts out of his estate, then maybe. If he named your mom, then it depends on how the taxes were filed.
If he named his wife, and she is jointly liable for the IRS debt, she may be in a situation where she needs to disclaim any inheritance so it can pass to her children.
This is really something you want to spend money on a good tax attorney and estate attorney and maybe a certified personal financial planner. Also, if your dad had a retirement account (401k, IRA, etc.) the choices with those accounts have very serious tax consequences, so make sure to get expert advice before doing anything with them.
Unless the life insurance was payable to his estate, in most states, only burial expenses can be taken from the beneficiary if they are not otherwise paid.
However, if your dad filed a joint return, the person on that return will now owe the IRS debt.
Right. So long as it doesn’t go through the estate you’re fine. The contract is with the insurance company to pay you the beneficiary. Nobody can attach it. Even while you’re living.
If you are the named beneficiary, the life insurance benefit is paid directly to you. It does not become part of his estate.
I’m sorry for your loss. Please do yourself a favor and hire an attorney experienced in handling these types of cases.
I do know that filing bankruptcy does NOT wipe out tax debt.