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Thomas McJD
Thomas McJD, Attorney
Category: Estate Law
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Experience:  Wills, Trusts, Probate & other Estate Matters
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I am trustee for a trust under will created for my niece by

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I am trustee for a trust under will created for my niece by my deceased mother. My niece is an adult but had demonstrated difficulties managing her bills during my mother's lifetime: thus, the trust under will. My question is if the trust can receive current gifts to it by me--under "gifting " gudelines- from my own assests, also and if I can name that current trust under will as a named beneficary of some of my assets when I pass. Since the terms of the current Trust make sense, is what I propose legal without me having to create another trust for my assets to be passed on to her?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Thomas McJD replied 1 year ago.

TMcJD :

Hi, I will be happy to assist you, and it is my goal to make you a very satisfied customer! This may take a few minutes, so thanks for your patience.

TMcJD :

Unfortunately, unless the trust allows her to withdrawal the gifts made without discretion of anyone else, which I doubt would be the case given the purpose of the trust to begin with, then your gift is not considered to be made to an individual for purposes of the annual gift tax exclusion. Thus, the gifts would be gift tax taxable. However, you could still make the gifts and then file a gift tax return using part of you unified $5.25 million gift/estate tax exclusion amount. Thus, while you could certainly make gifts, they would be taxable and you would have to file a gift tax return for each year in which you make gifts and use part of your unified credit. While use of the unified credit may not be a big deal, depending on the size of your estate, filing the gift tax return each year adds a layer of difficulty and expense in having that return prepared. If the gifts are small, it may not be justified because a return will cost probably around $500 for most preparers to get ready for you.

Customer:

How about the second part. Can the Trust under will be named a beneficiary of money I want to leave to her?

TMcJD :

Yes, sorry I wasn't clear in my answer but that is what I was saying when I noted you could make the gifts. Yes, you can make the trust the beneficiary of the gifts but because it's an irrevocable trust that's why it won't qualify for the annual gift tax exclusion.

TMcJD :

Or perhaps I misunderstood. You can also make that trust the beneficiary of anything you want to leave her onyour own death (inheritance and not a gift).

Customer:

But if I gifted the trust no more than annual mazximum, thehn no forms need filing if i understand correctly.

TMcJD :

No, that is not correct. There is no annual maximum when gifting to an irrevocable trust. The annual exclusion only applies when the gifts are to an individual. An irrevocable trust is not considered an individual so the annual exclusion doesn't apply. Thus, every gift to the trust -- even $1 -- is a gift tax taxable gift and you would have to file a gift tax return to avoid paying gift taxes.

Customer:

Yes, your were correct when you clarified that I could make the Trust a beneficiary.

Customer:

Thanks so much for the other answer that a "gift is a gift is a gift" and taxable no matter how small. Very helpful!! Sorry about the typos!!

TMcJD :

No problem. You're very welcome. Thank you. I would be grateful if you could leave me a positive rating for my assistance. Have a great day!

Thomas McJD, Attorney
Category: Estate Law
Satisfied Customers: 6514
Experience: Wills, Trusts, Probate & other Estate Matters
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