Can The IRS Seize Life Insurance Benefits?
10968 POINTSview profileTim WilhoitOwner, Your Friend 4 Life, Brentwood TNYou will be very happy to know that the IRS cannot make you pay any of the deceased debt to them or any other creditors unless you feel compelled involuntarily. By law the life insurance proceeds were created by a death claim. No creditor nor the IRS can force a beneficiary to pay any debts going forward. Most life insurance policies have this language written in them. The only exception to this law is if the beneficiary is a cosigner on a loan or mortgage. In this case the loan would roll in full to the cosigning beneficiary.Answered on April 23, 2014flag this answer
21750 POINTSview profileJim WinklerCEO/Owner, Winkler Financial Group, Houston, TexasGreat question! The death benefit is safe, in nearly all cases, but if you are being pursued by the IRS for some reason, it would be my bet that while they may not be able to seize your money from the payment, they will probably seize whatever asset you put it in. Meaning if you buy a car with the money, and they are busy trying to get money you owe them, I'd expect to see your car disappear eventually. (probably sooner than later) Good luck! Thanks for asking!Answered on April 23, 2014flag this answer
11498 POINTSview profileJason GoldenzweigCo-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, NevadaLife insurance proceeds are income tax free meaning the IRS cannot take money out of the death benefit paid out to the beneficiary. There are situations where the value of the death benefit can be included in the calculations of the estate for estate tax purposes. People generally use life insurance trusts when setting up the policy for estate planning purposes.Answered on April 28, 2014flag this answer
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