Does IRS seize death benefits before or after the death benefit is paid to a beneficiary who has outstanding tax debt?

If a beneficiary of a life insurance policy owes taxes, the IRS may attempt to collect the debt from the death benefit payout. However, the IRS generally can't seize the death benefit before it is paid to the beneficiary. After the death benefit is paid to the beneficiary, the IRS may attempt to collect the outstanding tax debt by placing a lien on the funds. This means that the beneficiary may not have immediate access to the full amount of the death benefit. Instead, the IRS may take a portion of the payout to satisfy the tax debt owed. It's important to note that the IRS can only collect the amount of tax debt owed, plus any interest and penalties. The beneficiary will still receive the remainder of the death benefit after the tax debt is paid. It's also worth mentioning that not all life insurance policies are subject to tax, as some policies may be structured in a way that the death benefit is not considered taxable income. If you are a beneficiary of a life insurance policy and have outstanding tax debt, it's recommended that you speak with a tax professional or financial advisor to understand your options and how the debt may impact your death benefit payout.