Can the IRS SEIZE Life Insurance Policy?

Technically, the cash surrender value of a life insurance policy is included in your collection potential calculation. So this implies that they can force you to sell the asset and give them the cash surrender value. They cannot get the full amount unless somebody dies, which is why they use the cash surrender value. Christopher Larson Insight Law Tax Attorney Tax Attorney - Bellevue Tax Attorney - Everett Tax Attorney - Renton Tax Attorney - Redmond Seattle IRS Address Bankruptcy Attorney Seattle Chapter 7 Bankruptcy Attorney Seattle Chapter 13 Bankruptcy Attorney Estate Planning Attorney Seattle Wills Lawyer Seattle Trusts Attorney Seattle Probate Lawyer

The will does not affect the distribution of life insurance proceeds - these are non-probate assets, governed by the contract (policy) with the insurance company. Since your dad was the only named beneficiary, all the proceeds go to him, and the IRS can seize them all. Even if he signs over the proceeds to you, the IRS could still levy them, if they can show that he transferred the assets to avoid seizure. (If you spend the money before the IRS does this, they could place a levy on your personal assets for the missing funds.) This could all have been avoided if the policyholder had just changed his/her beneficiaries with the insurance company, rather than trying to do so through a will. I am guessing that the will was not drafted by an attorney - any competent estate planning attorney would have known this. This illustrates why you should avoid "do-it-yourself" wills, without attorney review or assistance - a couple of hundred dollars in attorney fees could have saved thousands of dollars from being seized by the IRS! Good luck to you both!

Unfortunately, the life insurance policy beneficiary designation controls over the will so the assets will go to your father and if the IRS does attach bank accounts then they will be able to reach it. It's very unlikely they'll be able to get to the insurance proceeds before that point. Much better to make arrangements with the IRS. And even better to re-evaluate the source of the amount owed. We often find that the original filings understated available deductions. Evan A. Nielsen 1255 W. Colton Ave., #506 | Redlands, CA 92374 Main: 909.363.4658 | Fax: 480.304.3211 [email protected] www.NielsenLawGroup.net Mention this Post for a free consultation.