Legal Blog

The Weekly Scenario: How Owing Back Taxes Can Affect Estates

Question:

Our son owes MD back taxes but now lives in Pennsylvania.  If we die in MD can the MD tax authorities seize his portion of the MD estate for the taxes?

Answer:

The answer is that without any additional planning, the Maryland tax authorities would likely be able to seize your son’s inheritance if there is still a tax liability that he owes after your death and the assets are bequeathed to him directly. However, if you were to do some planning, you could leave the assets in trust for your son and if the trust were properly drafted, doing so would very likely provide protection from his own creditors.  Part of what this would entail is designating someone, other than your son, to control the distribution of assets.  Your son, however, would have access to the property through a Trustee who you would appoint. Comment:  The type of trust that would potentially be established can be set up through your Will but how to do so would have to be thoroughly discussed. Estate PlanningAs always, if you have questions or would like to know more please contact Steven E. Shane at: sshane@offitkurman.com | 301.575.0313. Steve provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates. You can also connect with Offit Kurman via FacebookTwitterGoogle+YouTube, and LinkedIn.