Tax laws pertaining to a living trust?

Question

My father owes the IRS $80,000 in back taxes. My grandmother wants to leave her house to him in her living trust. In the event of her death, the house will go to him. Can the IRS seize it because of his back taxes? Is there any way for her to leave it to him without the IRS being able to take it? Thank you for your time.

Answer 1

I doubt it.  It is almost impossible to avoid taxes in anyway with the IRS.  I suggest your grandmother change her trust (providing it is revocable which it probably is) and leave the money to you or your mother or sister which would avoid the IRS problem. You or the or the newly named beneficiary could then give part or all the money to your grandfather.  Remember, however, depending on the state you are in there are also taxes on the inheritance.