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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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My grandmother has a irrevocable trust. She now resides in

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My grandmother has a irrevocable trust. She now resides in a retirement home. I have durable power of attorney. I am permanently disabled. I need to sell property to ensure her stay at retirement home. Do we need to do anything with regards ***** ***** deed prior to sale. Los Angeles, California
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!As that is an irrevocable trust - it is treated as a separated legal entity.If the property was contributed to the irrevocable trust more than five years ago - your grandmother still will be eligible for Medicaid - and any income realized inside that irrevocable trust woudl not affect your grandmother's income unless that income is distributed (or must be distributed) to her according to trust's documents.When the property is sold - that sale transaction will be reported on the income tax return for the trust - form 1041.That income will be either taxable for the trust OR for the beneficiary - when distributed to the beneficiary.If your grandmother is a beneficiary of the irrevocable trust - and receives that distribution - it will be reported as her income on form K1 - and in this case her eligibility for Medicaid might be affected.
Expert:  Lev replied 1 year ago.
When the property is sold - that sale transaction will be reported on the income tax return for the trust - form 1041.
That income will be either taxable for the trust OR for the beneficiary - when distributed to the beneficiary.
If your grandmother is a beneficiary of the irrevocable trust - and receives that distribution - it will be reported as her income on form K1 - and in this case her eligibility for Medicaid might be affected.
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