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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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how is a blind trust taxed?

Resolved Question:

how is a blind trust taxed?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

Hi,

NPVAdvisor :

A blind trust is where an executor or someone given a POA (power of attorney) have full discretion over the assets, and the beneficiaries have no knowledge of the holdings of the trust

NPVAdvisor :

For tax purposes, the "blind" part isn't relevant

NPVAdvisor :

Trusts considered grantor trusts (where the grantor of the trust can revoke, change, control the trust, etc) are pass-throughs and are taxed to the grantor as if the trust wasn't there

NPVAdvisor :

Irrevocable trusts, where the grantor of the trust has truly given away, sold or otherwise conveyed assets to a trust and completed that transaction, are taxed on the trusts 1041 tax return at trust tax rates

NPVAdvisor :

What it really comes down to is whether the assets really belong to the grantor or to the trust

NPVAdvisor :

The grantor (trust maker) DOES control things in a way (by dictating in the terms of the trust, the charity, people, companies, etc that will be the beneficiaries) BUT the grantor cannot be the beneficiary him/her self or you are back to a non- completed transaction, and it would then be back to a pass through status

NPVAdvisor :

Questions?

Customer:

Hi, if you put money in with taxes paid up front, are there any taxes when you take out?

NPVAdvisor :

The Trust will any taxes on earnings all along the way

NPVAdvisor :

And then once distributed ou will start to pay taxes on interest, etc.

NPVAdvisor :

Distributing them back out to you, however, is not a taxable event ... it just changes who ( the trust or then beneficiary) owns the assets, hence pays the taxes

Customer:

I think thats it,

Customer:

Thank you

NPVAdvisor :

Thank you as well ... let me know if you have further questions

NPVAdvisor :

 


If this HAS given you enough to make an informed decision, I would appreciate a rating of 3 (OK) or better. (That’s the only way they pay us here).


 


HOWEVER, again, if you need clarification, or want to discuss this further, be sure to come back here, so you won’t have to pay for an additional question.

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4544
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 2 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks for the rating!

If you’d like to work with me again, say “For Lane only …” at the beginning of your question.

Thanks again,
Lane

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