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Christopher B, Esq
Christopher B, Esq, Attorney
Category: Estate Law
Satisfied Customers: 2677
Experience:  Litigation Attorney with education focus on estate planning and tax
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How much tax does a child pay on a trust left to them by their

Customer Question

How much tax does a child pay on a trust left to them by their parent in California
Submitted: 1 year ago.
Category: Estate Law
Expert:  Christopher B, Esq replied 1 year ago.
My name is***** and I will be helping you with your question today. This is for informational purposes only and does not establish an attorney client relationship.
California residents have the highest state income tax in the country. The top marginal income tax rate reaches 13.3%, given the additional 1% tax on income over $1 million. The California income tax brackets that apply to irrevocable trusts are the same as those for single taxpayers. The result is that high tax brackets are reached with surprisingly modest trust income. For example, a 9.3% tax rate applies to taxable income between $49,774 and $254,249.
There are ways to try to move irrevocable trusts out of California in order to reduce taxes but that is beyond the scope of this question. Of course federal tax must be paid as well on the income distrusted from a trust and there are complicated rules regarding the types of income from different trusts and when favorable income with lower tax rates can be declared as opposed to higher taxed income. This is again beyond the scope of this question without more information. So the answer to the question is that California taxes trust income at the highest rate in the country and federal taxes on trusts are taxed at whatever tax bracket you are in taking into account long and short term capital gains, etc.
Please let me know if you have any further questions or require any additional guidance. Please do not forget to positively rate my answer as this is the only way that I am compensated for my work.
Expert:  Christopher B, Esq replied 1 year ago.
I see you have reviewed my answer. Do you have any further questions? If not, please positively rate my answer as that is the only way I am compensated for my work.
Expert:  Christopher B, Esq replied 1 year ago.
Please let me know if you have any further questions. If you could positively rate my answer, I would appreciate it. There should be smiley faces or a 1-5 ranking on my answer. I would appreciate a good or excellent so I could be compensated for my work from this site.
Expert:  Christopher B, Esq replied 1 year ago.
Any chance for a positive rating?