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My wife and I want a retirement home. We have a home now in Florida and have homestead. My son needs a home also. My father-in-law has a trust and my wife is the trustee along with him. My father-in-law will give us $100,000 to buy the house or to my son to buy the house (he would get homestead) if we choose. Do we, the trust or my son have to pay taxes of the $100,000?
ANSWER
Expert Mark Anderson's Answer:
If you are a beneficiary of the trust and receive a distribution, then you will need to pay taxes on the distribution. Typically, the trust will file a tax return and issue K-1s to the beneficiary. The K-1 will show the distribution that will need to be reported on your taxes.
