If you owe back child support, the state in which you owe can absolutely take your inheritance to pay the debt. It doesn't matter if the inheritance comes in the form of cash or property. It's possible for the state to take your inheritance for child support even if it is placed in a trust fund rather than given to you directly.
In some inheritance cases, the state will step in and claim your inheritance before you receive it. In other states, property in probate is considered to belong to the deceased until probate ends. In these instances, the state must wait until you actually receive your money before seizing it, as doing otherwise would be tantamount to seizing the deceased's property rather than yours.
Your inheritance can be taken away if you owe back child support. Your state's rules determine if this can happen before or after you actually receive the inheritance.
Seizure of Inherited Property
With a cash inheritance, state interception is fairly straightforward. In some states, the child support collection agency files a petition requesting your inheritance while the will is in probate. In other areas, the agency obtains a court order demanding that you hand your inheritance check over to them.
Property is a bit more complicated. If you inherit property, the state may place a lien on it, meaning that you cannot sell or otherwise dispose of the property without the state's permission. When you do, the proceeds will go to the state rather than to you. In some instances, the state can force you to sell the property rather than waiting for you to do so.
Note that joint ownership is not a defense against property seizure. Your parents may, for example, will their vacation home to you and your brother, giving both of you a 50 percent stake. While the state may have no claim on your brother's share of the property, they can still place a lien on yours. If they do and you sell the property, your brother will get his half of the money, and the state will get yours.
The Truth About Trusts
In some cases, decedents mistakenly attempted to protect inheritances from creditors by placing it in a trust. People often wrongly believe that the state can't take money from a trust to pay back child support, but this is not the case. The state may place a lien on the trust and demand that you turn over any payments you get from the trust.
If the trust allows you to request money whenever you want, the state can compel you to do so and then hand over the cash. If you owe enough, the state may force you to sell your trust for a lump sum and then use that money to satisfy your child support debt.
Spendthrift trusts experience the same problem, as these trusts adhere to very specific parameters. A spendthrift trust makes periodic disbursements, and that's it. As the beneficiary of the trust, you are not allowed to request more frequent payments, and you're also prohibited from selling the trust for a lump sum. This arrangement can protect the inheritance from creditors, but not in the case of back child support; the state can still legally seize the trust.
Inheritance as Income
In most states, an inheritance does not count as income for child support purposes. Any interest your inheritance earns counts as income, but the inheritance itself does not.
It is important to understand how your state views an inheritance, however. If the state does view the money as income, the state can use it when determining how much child support you must pay. Pennsylvania and New Jersey, for instance, have both allowed an inheritance to modify support orders and increase the amount of child support payments.
This ultimately means that you could lose part of your inheritance to back child support and have to pay a higher monthly support amount going forward. In this instance, you may wish to retain a lawyer as soon as you know an inheritance is coming your way.