Cash gift from a revocable trust


M

Mike

My wife just received a $26,000 gift from her late aunt
revocable trust fund. It was part of a distribution that was
divided amongst 9 of her cousins. Her Aunt died about 1 year
ago. Does she owe any federal or state tax on the
distribution? We live in California.

Thanks
 
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E

ed

It is an inheritance, not a gift. There is no Federal tax
on it. I think CA abolished its inheritance tax many years
ago, but I don't know that for sure.

ed
 
M

Mike

Mike said:
My wife just received a $26,000 gift from her late aunt
revocable trust fund. It was part of a distribution that was
divided amongst 9 of her cousins. Her Aunt died about 1 year
ago. Does she owe any federal or state tax on the
distribution? We live in California.
Ok, there are no guidleines in the referred website.
So what gives?
 
S

Stuart A. Bronstein

ed said:
It is an inheritance, not a gift. There is no Federal tax
on it. I think CA abolished its inheritance tax many years
ago, but I don't know that for sure.
Assuming that it is an inheritance, your statement is
correct but may be misleading if someone follows the advice
with respect to a much larger estate.

The trust has been around for a year. We don't know what
the principal is, we don't know what the terms of the trust
are. It is possible that the distribution is some or all
interest, not principal. In that case it would be subject
to income tax.

Stu
 
E

ed

Stu, you raise valid questions,If the distribution is
interest, it wil be on a K-1 from the trustee and indicate
the taxability of the distribution. As stated, it is a
*gift* which infers an inheritance.

ed

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B

baumgrenze

Ed, you are right, but it depends on how well informed the
trustee who made the distribution was. In '98 I did a
three-way distribution of my father's trust. It was
straight-forward, but quite time consuming. His tax advisor
checked the paperwork once I'd completed it.

Just for the record, the trust became irrevocable when the
aunt died.
 
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