How to Keep the IRS Out of Your Inheritance | EREI 342

How to Keep the IRS Out of Your Inheritance | EREI 342

Tax Hacker Tuesday is back once again to show you how to keep the IRS out of your inheritance. Learn why you should plan ahead and be very careful with your language to avoid losing your inherited assets to the IRS. We’ve got every strategy available under current tax codes and we are sharing it all with you on Tax Hacker Tuesdays.

Avoid paying unnecessary taxes. Create your winning estate plan with Epic Real Estate Investing and Tim Berry on Tax Hacker Tuesday!

Avoid paying unnecessary taxes. Create your winning estate plan with Epic Real Estate Investing and Tim Berry on Tax Hacker Tuesday!

What You Will Learn About How to Keep The IRS Out of Your Inheritance:

  • How to avoid paying taxes unnecessarily

  • Preparing for trillions in assets that will be passed along to the next generation

  • How to prevent the IRS from taking more of your inheritance than required

  • The remedies for keeping liens away from your inheritance

  • Using trusts to manage your inheritance

  • How to keep the bad guys from taking your assets

  • Creating an estate plan to see the IRS out of your inheritance

  • More ways to keep the IRS out of your inheritance

Recommended Resources:

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  • Need training? The ultimate training environment for real estate investors: Version 3.0 of The Epic Pro Academy!  New look, new lessons & new content – we’ve got everything you need to know to get your first paycheck!
  • Need someone to do it all for you? If you’re an Accredited Investor, you can diversify your portfolio by hitching your wagon to our train and share in the profits. Go to to download the executive summary.


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How to Keep the IRS Out of Your Inheritance


Speaker 1: This is Theriault Media.

Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn’t it about time you play on a level playing field with the wealthiest 1%?

Now, you can. Tim Berry, attorney-at-law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code. Protect your assets and keep what’s rightfully yours. It’s time for Tax Hacker Tuesday.

Bernie Garland: Well, I think that you’d be surprised that the IRS loves it when you get in trouble and have assets. How much is gonna change hands from older people… Older people over the next few years?

Tim Berry: I don’t know. How much you gonna give me, Bernie?

Bernie: I think abou … How much am I gonna give you? Hey, let me ask you a question… Close your eyes. What do you see? Okay.

So, how much is gonna exchange hands through the auspices of older people that the IRS is sitting there saying, “Yes. I hope their children have a tax problem.”

Tim: Well, you know, here’s the amazing thing, is they have all these analytics, you know, about the … What is it – not Generation X and Y. What’s the Woodstock generation called? I’ve already forgotten it. Oh, the baby boomers.

Bernie: The baby boomers.

Tim: See, my mind’s going, everybody. They have something called The Age Wave. All the baby boomers are getting older, and now, as they’re starting to pass away, they’re passing on assets to the next generation. It’s trillions upon trillions of dollars of assets are being passed on to the next generation.

Bernie: So, I finally got you to say how many assets. We went through all around and you’re telling finally trillions, and trillions-

Tim: I’m an attorney. I go by the word.

So, why is the IRS ectatic about this?

Bernie: Because they’re sitting there and they’re filing liens on the offspring that have tax problems. They’re sitting there going, “I can’t wait ‘till they get their inheritance.”

Tim: So what happens whenever little Johnny, little Susie – they owe the IRS $100,000, $200,000… And it isn’t even just the IRS. They might owe a spouse, a bad spouse, a predatory spouse. They got involved in a bad relationship and they get a judgment against them from the spouse. Or, whatever – it could be anything out there. Whenever little Johnny, little Susie inherit assets, what happens with those assets, Bernie?

Bernie: Well, according to the trust or the will, if there’s not any special language, it goes directly to the children that the grandparents, or the parents, designate who gets that asset.

Tim: So, mom and dad-

Bernie: I said, if there isn’t special language-

Tim: Okay.

Bernie: That happens.

Tim: So, little Johnny, little Susie. They have some IRS debts, let’s say. And now Mom and Dad have built up an estate of a couple hundred thousand bucks, and little Johnny is supposed to inherit – let’s say, $50,000. Now, whenever Mom and Dad pass away and that money goes down to little Johnny because they don’t have the right language in the will and or the trust, what happens to that money?

Bernie: With the IRS lien on it?

Tim: Yeah.

Bernie: It doesn’t go to Johnny.

Tim: The IRS takes it.

Bernie: It goes right to the IRS.

Tim: Now, we read a court case that came out just last week, and in that court case, little Johnny, same fact pattern. He was inheriting 1/3 of a condo, the condo was worth about $80,000. Now, everybody out there is very crafty. So, what they said is, oh. Little Johnny said, “I know I owe you, IRS, money. But I’m gonna enter into a settlement with my brothers and sisters where in return for me releasing of all claims against the estate, I agree to give up my ownership interest inside the condo.” Was that effective, Mr. Garland?

Bernie: No, it wasn’t. Because in the person’s trust or will – in this case it was a will – that she… The mother was distributing to all the children in equal shares.

Tim: Yeah.

Bernie: At that point. So, at the instant that she passed on, the instant she passed on, he had a right at that time to the property.

Tim: And so, the IRS lien, boom, attaches to that, right?

Bernie: To the right.

Tim: And little Johnny was out of luck. 1/3 of mom’s estate got given to – that’s proper English I believe – was taken away by the IRS. Now, Bernie, what are the remedies for this disaster? Should I ramble on about the remedies?

Bernie: Well-

Tim: Do you want to ramble on?

Bernie: Incoherently, or coherently? Okay.

Here’s the thing, you have to have special… First of all, you have to understand this that at the time that you have a right or an interest in something, a lien can attach to that right or interest. So, you have to have special language either in a will or a trust. Is that correct?

Tim: That’s correct. And here’s the thing: I’m gonna make a statement I’ll probably get in trouble for. The IRS probably loves Legal Zoom. The IRS probably loves these online will-drafting software because typically inside those documents, it says little Johnny shall inherit at the age of 25, 50%, and at the age of 35, the other 50%.

Well, guess what? That means the IRS can take away 50% whenever Johnny turns 25, and the other 50% whenever Johnny turns 35. The better thing to do is Johnny never inherits a thing in his personal name. Rather, Johnny or Susie inherits in the form of a trust. The IRS lien only attaches to assets Johnny or Susie inherit outright. So, if they inherit in the form of the trust, and they can control that trust, the IRS lien doesn’t attach. The bad guys don’t take the assets away.

Bernie: So, it’s all in the wording. You need… What happens is, is that moms and dads and grandparents aren’t educated in the use of word that mean something of whether or not their hard earned money’s gonna go to where they want, or it’s gonna go to the government.

Tim: Absolutely. Here’s another dirty little secret. These aren’t the subjects people talk about over Thanksgiving dinner. They don’t talk about, “Oh, gosh, the IRS is levying me again. What do I do, Mom and Dad?”

Bernie: Right.

Tim: So, you may not know little Johnny, little Susie have these issues, and now you set up this estate plan and you give the assets to them and it’s a recipe for disaster. Plan ahead. Don’t expect them to tell you their issues. You need to plan in your estate plan about providing for them and wiping out the concern of the IRS taking away those assets.

Speaker 1: That’s it for today, as we dream of a tax system that works just for you. But until then, you have Tim Berry. See you next Tuesday for another episode of Tax Hacker Tuesday.

Matt Theriault

Real estate investor and educator.