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My son is 17 and going to college. My exhusband left a will…

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my son is 17 and...
my son is 17 and going to college. My exhusband left a will and his sister as trustee. There was a legal loophole and I could have taken the trust for my sons care at any time, I didn't. The will states the money can be used for school etc his aunt does not want to give him the money until he is 18. We could use the money for college. He will be 18 in November and graduated high school before 18. It is not a great deal of money. The aunt has set up a trust. I am going to fund the college until he is 18 and then his aunt will give him 25% of his money. In a will inherted money is tax free does my son have to pay taxes on the money he receives each year
Submitted: 3 years ago.Category: Tax
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6/21/2015
Tax Professional: Tax.appeal.168, Tax Accountant replied 3 years ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Welcome. Thank you for choosing us to assist you. My name is ***** ***** my goal is to help make your life, a little... less taxing.
Whether the money that your son receives yearly will depend on the type of trust that it is. You must first find out what type of trust it is. SEE BELOW:
If you inherit from a simple trust, you must report and pay taxes on the money. By definition, anything you receive from a simple trust is income earned by it during that tax year. The trustee must issue you a Schedule K-1 for the income distributed to you, which you must submit with your tax return. If you inherit money from a complex trust, however, the funds might represent either income or capital gains. The portion representative of the trust's income is ordinary income and is reportable by you on your tax return. You'll receive a Schedule K-1 for the amount. Any portion of the money that derives from the trust's capital gains is capital income, and this is taxable to the trust. This is typically the case when the trust's distributions for the year exceed the amount of income it took in.
REFERENCE SOURCE:
http://finance.zacks.com/money-revocable-trust-inheritance-taxable-8028.html
Let me know if I can be of further assistance to you regarding this matter.
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