Legal Question in Wills and Trusts in California
I have been asked to be a trustee of an irrevocable trust worth a substantial amount of money. The settlor is a friend and the beneficiary is the settlor's niece.
I realize that there will be income tax issues but I would like to know if there will be gift tax issues as well.
For example, if I give $20k to the beneficiary by the end of this year, does that cut into my lifetime gift tax exclusion of $1M? Please advise, thank you.
2 Answers from Attorneys
before the trust is finalized and you agree to be trustee, you should retain a qualified attorney to provide you with advice regarding the trust and your duties and responsibilities as a fiduciary.
the trustee of an irrevocable trust is not subject to gift tax for distributions to beneficiaries. it is the trustor/settlor who is potentially subject to gift tax upon funding of the trust. if the trustor/settlor has retained a qualified attorney, this issue and the many other aspects of establishing an irrevocable trust will presumably be explained.
As the trustee, you are not subject to tax, as stated by co-counsel, only the trust itself is subject to any tax. Alternatively, you can always just give $11,000 each year and avoid any tax issue at all.
If you would like to discuss this matter further in a more private forum, please feel free to contact me directly at the email address provided by LawGuru or through my website located at PasadenaEstatePlanning.com
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