What would the tax ramifications be if my son gifted me $200,000 from his trust account? The money is going into a home that we are purchasing together.
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Is your son an adult?
If so, your son would need to file a gift tax return, but there would be no tax due assuming that your son has not made gifts in the aggregate in excess of $5,000,000. (in excess of the annual gift tax exclusion) during his lifetime.
There would be no tax implications to you.
He is 23 and his dad passed away in March. He is trustee of the trust. The $200,000 came from the recent sale of the home he inherited.
If he is the trustee and the beneficiary, then there really is no trust & he can do whatever he wants with the money. So he is your step-son?
Does he has to file the gift tax return now when he files the tax returns for the trust in 2012?
He is my son. He father and I divorced.
Ok, I was thinking you were a male; sorry; don't know why I thought that. Sorry.
Tell me about this "trust"; are there any restrictions as to what he can do with the money?
No as long as he uses the money for living expenses he can do what he wants with it.
To clarify does he have to file the gift tax return now or when he files the taxes for the trust in 2012. Does paper work have to take place prior to him gifting the money for the down payment on the house?
If you & your son are purchasing a home together, there would be no need for him to gift anything to you except the house when it is built; if there is a restriction as to using it for living expenses, actually giving you the money wouldn't really meet that restriction; the real issue is that if he is the sole trustee & the sole beneficiary, there is nobody to enforce any restrictions, so in reality, there is no trust.
Trust's don't file gift tax returns.
The house was built in 1999. We are going to put both our names on the title. I am contributing $100,000 to the purchase also.
Individuals would file their gift tax returns at the same time their income tax returns are filed.
If there is a total of $300,000. going into the house, then your son's gift to you would be $50,000.
Why $50,000 when he is contributing $200,000?
Because, if you are both going on the deed 50 - 50, then his contribution would be 150,000 & so would yours; thus requiring $50,000. of his equity being credited to you.
Is you son his own trustee or does he have a co-trustee?
A restriction as to use for "living expenses" is an unusually broad restriction; almost anything could be deemed to be a "living expense".
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