How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard Your Own Question
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 54021
Experience:  29 years of experience as a tax, real estate, and business attorney.
17027240
Type Your Tax Question Here...
Richard is online now
A new question is answered every 9 seconds

I gave my son $300,000 which was in a trust . What is the

Customer Question

I gave my son $300,000 which was in a trust . What is the tax
Submitted: 7 months ago.
Category: Tax
Expert:  Richard replied 7 months ago.
Good morning. My name is ***** ***** I look forward to helping you. A gift is not income under Section 102 of the Internal Revenue Code. Also, there should be no gift tax consequences. Recipients of gifts are not subject to gift tax. And, there should also be no gift tax due from the donor. Each donor can give $14,000 per year per person under the annual gift exclusion. In addition to that, for any amounts in excess of the $14,000 in a year, each person has a $5,450,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,450,000 in gifts over and above the $14,000 annual gift exclusion amount without incurring gift tax....the donor must file a gift tax return to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative additional gifts have exceeded the $5,450,000. Thank you so much for allowing me to help you with your questions. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as OK, Good or Excellent (hopefully Good or Excellent). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!
Customer: replied 7 months ago.
the oney was in a trust . what exactly is the amount my son has to pay
Expert:  Richard replied 7 months ago.
What kind of trust is this? Are you the grantor? The beneficiary? Is it a revocable living trust? An irrevocable trust? Thanks.
Customer: replied 7 months ago.
it is an irrevocable trust with the agent as the trustee
Expert:  Richard replied 7 months ago.
And, are you the beneficiary of the trust?
Customer: replied 7 months ago.
I don't know
Expert:  Richard replied 7 months ago.
I'm a bit confused. If the trust is irrevocable, and you are not the trustee, how was it that you had the authority to give someone money from the trust?
Customer: replied 7 months ago.
The insurance agent gave them the money
Expert:  Richard replied 7 months ago.
What do you mean the insurance agent "gave them the money?" Was this a life insurance trust that funded due to the death of someone? And, your son was a beneficiary of the trust?
Customer: replied 7 months ago.
it was a term policy on a second to die
Expert:  Richard replied 7 months ago.
Gotcha. There is no tax involved with this. Life insurance proceeds payable upon death are not taxable to the recipient. Nor are there any reporting requirements. So, your son need do nothing..he owes no tax on this money and is not required to report the receipt of this money.
Customer: replied 7 months ago.
but we cashed in the policy before we died
Expert:  Richard replied 7 months ago.
Thanks for the clarification. Did you simply cash it out for no particular reason? Or, is the second to die suffering from an illness that allowed for an accelerated death benefit?
Customer: replied 7 months ago.
just to give them the money
Expert:  Richard replied 7 months ago.
Thanks. Then, this is simply a gift of money from you to your son? And, the original information would apply. The trust may have income to the extent the amount cashed out exceeded the premiums paid, but since you controlled this and gave the money to your son, it's simply a gift to him.

Related Tax Questions