Can the IRS reclaim aninheritance already paid out because of a debt of the deceased?

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Can the IRS reclaim aninheritance already paid out because of a debt of the deceased?

Three years ago the trustee of my father’s estate distributed inheritance money to my siblings and I. We recently found out that these funds might have been misappropriated, as my father’s tax debt to the IRS was greater than the amount of money paid out to us. And as the IRS is usually first in line, we probably shouldn’t have received that money. We were in the dark about the IRS situation at the time. Is the trustee solely responsible to the IRS for their actions, or can the IRS come after us eventually to recover those funds? The money was spent long ago.

Asked on March 12, 2012 under Estate Planning, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The Internal Revenue Service can seek monies owed it by your father from those that received the proceeds from the Estate, meaning you and other beneficiaries. The Internal Revenue Service can come after you for the money claimed owed it that was distributed to the heirs assuming you are an heir.

Given the gravity of the situation you and other beneficiaries are in, I recommend that you consult with a tax attorney and have him or her review the estate's tax return and the claim by the Internal Revenue Service.


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