Legal Question in Wills and Trusts in California

It depends. What is the tax year of the trust? Is the trust simple or complex? What are the tax brackets of beneficiaries? Has a special election been filed on the trustee's return to treat early distributions as taxable in prior years? How long since the trust became irrevocable? Does the trust explicitly allow the trustee to accumulate income? Are any deductions available to the trust?

Another important issue is whether there is distributable net income (DNI) .The Internal Revenue Code will treat a trust as either "complex" or "simple." If the trust is "simple," all of distributable net income (DNI) is taxable to the beneficiaries whether or not actual distributions are made. If you want to distribute this income, it still depends on the tax brackets of the beneficiaries and what the trust will allow. But beware-- not all trust income is DNI.

Your best bet is to talk to a trust attorney in your area.

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