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The trust retains the grantor’s capital gains tax exclusion under 26 U.S.C. § 121, which would not be available if the residence was gifted directly to the beneficiaries during the lifetime of the owner.
So there's no capital gains TO the trust, and for the tax year that the money is distributed, the trust or the beneficiaries will pay income tax on the INTEREST the proceeds may have generated, depending on when the money is distribute during the respective tax years of the trust and the beneficiaries
Here's an excellent article on this:http://www.foxbusiness.com/personal-finance/2013/04/29/why-irrevocable-trust-can-be-superior-to-gifting/
This was probably set up this way JUST for this reason .. a very efficient way to be sure is to speak with the attorney that set up the trust
I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
OK, question was sent at 12:02 today and it's not 12:31 and I still don't see you ... I'll move us to the Question and answer mode now.
Again we can still go back and forth until you are satisfied, but if this HAS helped, I would appreciate a feedback rating of 3 (OK) or better (excellent, is ideal)… That's the only way they will pay us here.
HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question
Remember that the terms of the trust and the way it set up, grantor or not, etc will affect this ... if you'd like to provide more details, I'd bew glad to haelp you work through this
Let me know
I had to step away from the computer. Thanks for your help.
It says it includes a Residence Trust (his home - the grantor part?) and a Nongrantor Trust, however the Nongrantor Trust contains only $10.00, and I think that is a placeholder for his bank accounts which the lawyer thought we might put in the trust at a future date.