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socrateaser
socrateaser, Lawyer
Category: Tax
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Experience:  Retired (mostly)
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I am in California and am about to receive some monies from

Resolved Question:

I am in California and am about to receive some monies from our family trust. I am one of two children. Is there federal and/or state tax on these funds when distributed and if so approximately how much.
Submitted: 2 years ago.
Category: Tax
Expert:  socrateaser replied 2 years ago.
If the distribution is from the property of your parents' who are now deceased, then there is no federal or state tax on the value of the property which remained in the trust on the date of the last parent's death. However, if the trust property earned any income (interest, dividends, rents, royalties, etc.), after the date of death, then that income is taxable to you as what is called "distributed net income" (DNI) and the other beneficiaries in proportion to the amount received.

Hope this helps.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation. If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!

Customer: replied 2 years ago.

So anything in the family trust that were monies from my father's Social Security, military pension and state pension would be taxable but the sale of his mobile home is not when the final distribution occurs. Am I understanding correctly. And is this both true for federal and state.

Expert:  socrateaser replied 2 years ago.
If you mean money from SS and pensions remaining in a bank account, then that's not taxable. The sale of the mobilehome is only taxable if you were to get more than what it was worth on the date of your father's death.

The only thing that is taxable is interest, dividends, rents or royalties on assets that generate income.

Examples:

Savings accounts. The amount in the account on the date of death is not taxable. Any interest earned on the account after date of death is taxable.

Mobilehome. If the sale proceeds of the home is more than the fair market value on the date of death, then the difference is taxable income (capital gain). Otherwise, not taxable. However, if the mobilehome was rented to a tenant, then any rent received after the date of death is taxable.

Hope this helps.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!

Customer: replied 2 years ago.

Right after his death he had a checking account and money market account. Is this the taxable part.


 


Then we sold his car and mobile home. Is the amount for the car taxable. I believe I understand about the sale of the mobile home.


 


Sorry, I know nothing about these things. Would my bank be also helpful in answering this questions. Thank you very much.

Expert:  socrateaser replied 2 years ago.
The amounts in the checking and money market accounts which were in the account at the date of death is not taxable. If the accounts have accrued interest or dividends since the date of death, then the interest or dividends are taxable. That's the only part of the account that's taxable.

If the proceeds of the car sale was more then the fair market value of the car on the date of death, then the difference is taxable. Otherwise, no tax.

Hope this helps.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!

Customer: replied 2 years ago.
One more question. Is this the case both for federal tax and CA state tax?
Expert:  socrateaser replied 2 years ago.
Yes. No differences.
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 34857
Experience: Retired (mostly)
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