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Home » Tenants by Entireties » What Happens To IRS Lien on Entireties Asset After Death?

What Happens To IRS Lien on Entireties Asset After Death?

ByJon Alper October 2, 2018May 22, 2020

Tenants by entireties assets are not protected from either spouse’s IRS debts. If the IRS acquires an income tax lien on one spouse who had filed separately the IRS lien attaches to the delinquent spouse’s interest in tenants by entireties property. The U.S. Supreme Court held that tenants by entireties property may not be immune from IRS liens regardless of state property law. The IRS may, but seldom does, force the liquidation of entireties assets in which event, the non-delinquent spouse gets half of the liquidation proceeds. If the IRS choose not to force the sale of an entireties assets the lien attaches to the entireties asset, and any sale or title transfer of the debtor’s entireties assets would be subject to the x lien during the taxpayer’s life.  The tax debtor  may not transfer good title  to an entireties asset to a third party without paying off the IRS.

What happens to the tax lien when the tax debtor spouse dies?  Upon the first death all entireties property becomes property in the name of the surviving spouse by operation of law. No transfer documents, such as a deed or assignment, are required. Does the tax debtor’s interest in entireties property extinguish when his interest is inherited by the surviving spouse by operation of law, or does the IRS lien still attach to the entireties asset when the asset becomes automatically owned by the spouse?

The IRS tax collection guidelines state that when the IRS has a lien against property owned tenants by entireties, or any other form of joint tenancy with rights of survivorship, the tax lien ceases to attach to the joint property after the death of tax debtor if the tax debtor is survived by the non-delinquent co-owner. If a non-delinquent spouse dies first any tax lien on entireties property will attach to the tax debtor and his estate after death (provided the lien does not first expire after 10 years).

 

 

 

 

Last updated on May 22, 2020

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Jon Alper

About the Author

Jon Alper is an expert in asset protection planning for individuals and small businesses.

Book a consultation with Jon.
Jon Alper

About the Author

Jon Alper is an expert in asset protection planning for individuals and small businesses.

Book a consultation with Jon.

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    • Asset Protection
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      • Strategies
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      • UTMA Accounts
    • Business Planning
      • Business Entities
      • LLCs
      • LLC Operating Agreement
      • Real Estate Investors
    • Offshore Planning
      • Nevis LLC
      • Offshore Bank Accounts
      • Offshore Planning
      • Offshore Trusts
    • Judgment Collection
      • Judgment Collection
      • Bitcoin and Cryptocurrency
      • Deficiency Judgments
      • Fact Information Sheet
      • Head of Household
      • IRS Tax Debt
      • Not Paying Judgments
      • Statute of Limitations
      • Wage Garnishment
      • Writ of Garnishment
    • Wills and Trusts
      • Avoiding Probate
      • Estate Planning
      • Gun Trusts
      • Inheritance Tax
      • Irrevocable Trusts
      • Last Will and Testament
      • Living Trusts
      • Living Will
      • LGBT Estate Planning
      • Power of Attorney
      • Probate
      • Special Needs Trust
      • Trust Administration
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      • Chapter 7 Bankruptcy
      • Chapter 13 Bankruptcy
      • Dealing With Creditors
      • Involuntary Bankruptcy
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