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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4544
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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This concerns a revocable trust of which I am the trustee.

Customer Question

This concerns a revocable trust of which I am the trustee. The trust was started in 1990 by my mother who passed on in June. The total figure, ( in three account ), is under 47K
The text directs a four-was distribution among siblings. My questions: 1) How should I proceed with distribution? and 2) what will be the state/fed tax requirements?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Customer:

Hi, if the trust is revocable, then it isn't considered a "taxable entity," itself ... in other words, the grantor of the trust has been paying any income taxes on income or capitals gains from selling the assets personally..... so ....

Customer:

Has someone passed away? If so the heirs will get a step up in basis when, and if, they sell the assets of the trust .... Distributing it to them now is not a taxable event

Customer:

... meaning, that anyone inheriting assets gets a step up in basis to the Fair Market Value of the asset at the time of death... and there won't be a taxable event until they sell that asset for either a gain or a loss .... so if they liquidate or sell right away, there will likely be not gain (no tax) at all

Customer:

I still don't see you coming into the chat, so I'll move us to the "Q&A' mode ... Maybe that will help .... DO be sure to let me know if you have more questions (We can still continue our conversation there, just not in real-time as we can here)

Expert:  Lane replied 1 year ago.

 

Hi Patrick,

 

... just checking back in here, as I never saw you come into the chat.

 

Let me know if you have further questions,

 

Lane

 

Expert:  Lane replied 1 year ago.



Again, Pat, everything above applies if the trust is Revocable.

If the trust is IRRevocable, however, (and therefore pays its own taxes like an estate or a corporation), then the trust or estate will pay taxes on income before the distribution and the beneficiaries will pay taxes on an income generated from the assets AFter it is distributed.

But, again, the distribution to the beneficiaries, itself, is not a taxable event (unless we're talking about IRAs or qualified retirement plans, where no tax has yet been paid)

Again, let me know f you have questions

Lane

Expert:  Lane replied 1 year ago.
Hi Patrick,


I'm just following up with you to see how everything is going. Did my answer help?


Let me know,
Lane

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Lane
Lane
JD, MBA, CFP, CRPS
3669 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986