IRS and Life Insurance?

Question

My husband and I owe IRS, we are making installment payments and will be for the next 8 years! We both picked up Life insurance for our 2 sons, they are the beneficiaries. Can IRS take the money we leave to them on the policy?

Answer 1

For you situation, it sounds like they won't.........however check to see if your policy is a MEC, aka a Modified Endowment Contract.......those gains may be taxable should you take them out as a payment......otherwise you should be safe.

Answer 2

No, the IRS can't take money you leave to someone else.  They can only take the assets of your estate.

Answer 3

The life insurance proceeds are not taxed. The IRS cannot take the beneficiaries' insurance money because they are not the debtors. the IRS would have to collect its money from your estate.