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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7191
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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QSST Trust was a revocable trust set up per Dad's will after

Customer Question

QSST Trust was a revocable trust set up per Dad’s will after his death, so I assume it to be a testimonial trust. All estate taxes were paid. The stock owned by trust was dissolved in 2002. The trust is marked as a simple trust with IRS. This was a living trust where income went to my Dad’s wife, who died 3-13-2014 and the remainder beneficiaries were my brother and myself. All the funds from my Dad’s wife trust was moved into Trustee & his Wife’s name personally 4-14-2014, I found out 10 months later, with no mention of me with the brokerage firm. Trustee’s wife withdrew $60,000 personally 4-29-2014. To date I have received no money. Since Trustee died, the funds have now been moved into Trustee wife’s name, where she signed affidavit that this money belongs to her at the brokerage firm. Trustee wife’s states the trust will be closed in 2015. Not sure how since the funds were moved to a different EIN/SS, and she so far hasn’t given me any clues upon repeated requests. What is my tax liability? It appears to me that if I claim proceeds due from my father’s death and since the funds were moved to a different EIN/SS, I am liable for taxes from the value of the stock at the time of my Dad’s death and the Estate tax would also have to be paid again.
Submitted: 2 years ago.
Category: Tax
Expert:  Stephen G. replied 2 years ago.
Hello, my name is***** & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.
Who is the Trustee?
Where does your brother stand in all this mess? Was he named as the Successor Trustee?
You should not be subject to any estate related to any interest you have in the trust.
You are not subject to any income tax, if any tax is due at all, unless you receive a distribution from the trust.
It sounds to me that what you really need is an attorney who can determine what, out of many alternatives, legal action needs to be initiated.
Customer: replied 2 years ago.
My brother is /was only trustee. No successor trustee named. Court end of June. Trustee's wife trying to make distribution to close trust. Don't have $50,000 plus for attorney. Disabled. Attorney not CPA. Need tax advise. By law, money inside the trust has already been gifted to beneficiaries but money is not in trust but in personal names.
Expert:  Stephen G. replied 2 years ago.
I understand, the tax advice that I gave you is the same. There's no estate tax involved. There's never any gift tax to the donee. There's no income tax unless the trust has net income after expenses and makes distributions to the beneficiaries during the tax year or within 65 days after year end. Since there were no distributions to you, even if the trust had any NET income, the trust would have had to pay the tax because those are the rules when there is no distribution.
Usually, when there's no successor trustee named in the trust, either the trustee is given the power to appoint a successor (which may be the case since it appears that his wife is now a trustee). If the money has been distributed, (which sounds like the case if it has been moved into accounts in personal names), & you haven't received your share, then clearly their is some type of impropriety involved.
There simply aren't any tax issues for you, which is why I focused on what does seem to be a problem, namely the administration of the trust.
Is it possible that the terms of the trust continued your interest in the trust in another trust for your benefit when the existing trust is terminated? This often happens when one of the beneficiaries is the initial trustee and the other beneficiary is not.
As far as any taxes are concerned at this point, as I stated previously, if there were any taxes to be paid, they would have had to have been paid by the trust or by whomever received distributions. So, I see where you have to be concerned about income or estate taxes personally.
Once a trust has been funded, there are no beneficiary taxes to be paid unless income is generated and passed through to the beneficiaries. There are never any taxes due on principal distributions.
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Customer: replied 2 years ago.
You still have not answered my question. Only given me information I already know. I've been dealing with this for 25 years.
The money is being distributed in 2015 to me (last week if I could get a tax answer) that was in the trust and now in Trustee's wife personal name. Different EIN/SS. What are my tax liabilities for 2015 since the money was moved to a different EIN/SS (not a trust) instead of directly to me.
Expert:  Stephen G. replied 2 years ago.
There is no tax liability to you.
As I've said, the tax would have had to be paid by the Trust. By the way, this is the first time that you indicated that any funds would be distributed to you.
Without the trust document and an analysis of the specific provisions that apply when the trustee dies, it is impossible to determine what exactly would have been appropriate in terms of trustee fees & expenses; who is properly authorized to handle the trust, etc. I suspect that your brother had the power to appoint a successor trustee and used that power to either appoint his wife as a trustee or set up a POD account or authorized her to obtain the trust funds should he die or become unable to serve.
I've read your question/answer exchange with one of our attorney experts back in 2013 and understand some of the additional background of your circumstances in regards ***** ***** QSST. At this point, I don't know of any circumstances where there could be any income taxes due from you because the trust has not made distributions to you and the S-Corp stock is long gone. The trust would have had to pay any unpaid income taxes because you did not receive any distributions in years when any income taxes would have been due.
Moving the money (a distribution no matter what it's called) to a different individual, a different account, a different ID/SS number will not trigger any tax to you. Subsequent transfer to you, no matter how it is characterized, is simply not taxable to you in any case.
The fact that the funds were transferred to your brother's wife does not trigger any tax to you.