inheritance tax scams, avoid inheritance tax scam, what is an inheritance tax scam?

What Is an Inheritance Tax Scam?

Identifying estate planning scams isn’t always easy. The people behind the scams are often sophisticated and practiced in the art of deceit. At Phelps LaClair, we want to arm you against attacks like inheritance tax scams by educating you about them and giving you the tools you need to recognize scams if you encounter them. 

For starters, did you know that the federal government does not impose an inheritance tax unless the amount received is over $13.61 million? The good news is that most people won’t have to worry about paying inheritance tax. This article will familiarize you with inheritance tax scams, how they work, and what your rights are when it comes to actually inheriting an estate.

How to Avoid Inheritance Tax Scams

An inheritance tax scam is a falsified situation imposed on unsuspecting people in order to steal money from them. If you’re in the process of inheriting an estate, you could be targeted by scammers. Even though they might sound knowledgeable, beware of anyone who presses you with urgency. Scammers often use legal jargon and intimidation tactics to scare people into paying them. 

Being aware of scammers’ tactics and staying cautious can keep you from falling victim to an inheritance tax scam. 

It’s essential to:

    1. Verify the legitimacy of any requests.
    2. Never rush into making payments. 
    3. Never share sensitive information (like your social security number) over the phone, in an email, or in a social media message. 
    4. Never enter your bank account information into a website you don’t fully trust.
    5. Always fact-check, and if you feel uneasy, trust your gut.

Three Common Inheritance Tax Scams and How to Spot Red Flags

1: Impersonation of Tax Authorities or Lawyers

Scenario: You get a phone call or an email from someone claiming to be a tax authority, lawyer, or executor of an estate. Everything seems legitimate—they inform you of a loved one’s recent passing, and may even name an elderly relative in your real family tree. They go on to tell you that you’re receiving an inheritance.

Method: The scammer informs you of the substantial amount you’re inheriting, and how you’ll need to pay inheritance taxes or processing fees up front before the inheritance can be released.

Red Flags: The agent asks you to send them a payment using specific methods such as wire transfers or prepaid cards, or they use pressure tactics like payment deadlines to urge you to make decisions quickly.

2: Phishing Text Messages

Scenario: An individual receives a text message that seems to be from a bank or tax authority.

Method: The message claims that taxes need to be paid on an inheritance, or that there is a refund due. It provides a link to a website that looks legitimate, but is actually designed to steal personal information or install malware.

Red Flags: Unexpected requests for personal information like bank account numbers is a big red flag. Poor grammar or spelling can also indicate when a website isn’t a real government site. Another warning sign is when the URL (website address in the bar) doesn’t match the official website of the organization (like—this is definitely an indicator of a phishing attempt. Click away, and don’t enter your info!

3: Fake Inheritance

Scenario: You get a social media message from a relative of yours on Facebook or a similar platform. The person is a verified friend, and the account looks real. In the message they tell you how you’re entitled to inherit a large sum of money from a distant relative or unknown benefactor.

Method: The scammer asks you to send a check to cover the taxes or administrative fees up front, before the inheritance can be processed and released to you.

Red Flags: Communications about a legitimate inheritance would never be done over social media. If anyone ever DMs you about inheritance, it’s likely a scammer impersonating a family member or friend.

Stay Informed and Prepared with Phelps LaClair

As a second-generation law firm that has been around since 1980, Phelps LaClair is uniquely equipped to help you understand all the ins and outs of estate planning, from taxes to trusts. We can help you identify estate planning scams and protect your assets from scammers. The best way to educate yourself on important estate planning topics is to attend one of our free webinars. Register now by clicking here.


Image by Andrew Martin from Pixabay on 6.19.2024 | used under the creative commons license  

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