It has long been an idea that if you have debts, especially IRS debts, and you are about to receive an inheritance, one way to protect it is to disclaim. Well as of 2014 that is no longer the case. Based on a case (Est.of Deinlein, D.C., Ky.) which held that the since the tax debtor had the ‘right’ to the inheritance, the IRS claim is valid and they can still reach the money.
From an Asset Protection standpoint, this is just a plain failure to plan. The solution would have been for the parents to provide for the inheritance in a Trust which contained spendthrift provisions in it which would have specifically excluded the creditors of their son from accessing the money. These provisions would have changed the son’s access, or as the court stated his ‘right to’ the assets, and then changed the outcome of the case.
The solution is planning. As is virtually always the case with Asset Protection, planning ahead is a huge benefit, and waiting and attempting to plan from behind almost always fails!
Isn’t excluding creditors from accessing funds in a trust fairly standard?