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Chad! On the note of collections from IRS ... Let's say they

Hi Chad !On the note...
Hi Chad !On the note of collections from IRS ...Let's say they avoid putting a lien on our investment property because child supp is being paid from it so they'd have to get in a long line before they could collect on it.But - and here is my question. Could or would it be possible that IRS may want to collect from Andrews inheritance ?
He has been put in his parents trust that divides up what they are getting . ( he and his 2 brothers ). He is receiving 33.3% of their assets when they pass but he is already inside of the trust as an owner bc he's hidden some of our assets inside of it .
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Answered in 12 hours by:
8/7/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12,858
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi Justine. My name's Lane. Chad's not online.

...

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice on three continents since 1986.

Bear with me a moment and I’ll provide my initial response, and then we can go from there if you have further questions on this

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The trust will become irrevocable when the grantor(s) die, thereby making it a separate taxable entity. If the trustee does the job well and keeps the asset in the trust IRS cannot touch them.

...

However, when the trust begins to distribute funds TO Andrew, IRS can then levy any accounts holding the funds OUTSIDE the trust, or put liens other assets purchased with those funds.

...

If he has the discretion to use the funds (as opposed to a pure irrevocable trust) IRS considers the funds his. The federal tax lien and the federal tax levy regularly pierce boilerplate spendthrift provisions on trusts AND Discretionary trusts don't fare much better.

...

Section 6321 says that the tax lien attaches to all “property and rights to property.” The trickiest part about understanding the scope of the tax lien is understanding how courts decide what constitutes “property and rights to property” to which the federal tax lien attaches. The federal statute itself “[c]reates no property rights but merely attaches consequences, federally defined, to rights created under state law (United States v. Bess, 357 U.S. 51, 55 (1958)).

...

Shifting executory interests will effectively protect trust assets from the federal tax lien of a GRANTOR. In order for the federal tax lien to attach, there must be “property or rights to property” within the meaning of § 6121, and courts start with state law to determine what interests state law gives the taxpayer in the property at issue at the time the tax lien arises.

...

BUT for the BENEFICIARY of the trust (Andrew here), he will at some point have a right to the property (depending on the specific terms of the trust).

...

How aggressively they pursue, how much attention they pay (locate the trust, watch for a payout) and whether 10 year statute of limitations may have run out by that time, will dictate what actually happens at that time IF the trust is irrevocable.

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Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

I hope that you’ll rate me based on my accuracy and thoroughness, rather than any good news/bad news content.

That’s the only way JustAnswer.com will compensate me for the work here.

Thanks,

Lane

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Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 755
Experience: Managing Director
Verified

Hi Justine,

As Lane indicated, trusts may be created in a variety of ways and without reading the trust documents themselves it would be impossible to give you an accurate answer.

Also, trusts are not public information and therefore an IRS agent would have to put considerable time and effort into discovering the assets. Would and could it be possible.... Yes, it definitely is possible that if Andrew owes outstanding debt to the IRS, they will attempt to recover the amount due.

Regarding your previous question concerning itemizing.

If you are legally married at the end of the year but separated for six months by the end of the year then you may file as single or head of house hold. This will allow you to use the standard deduction or itemize.

Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 755
Experience: Managing Director
Verified
Chad CFP ® and 87 other Tax Specialists are ready to help you
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Customer reply replied 3 months ago
Chad .... yes thank you on the itemizing question
Customer reply replied 3 months ago
I'm still processing Lanes answer
Customer reply replied 3 months ago
I know I'll have more to ask
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Chad CFP ®
Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 755
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