My mother passed away and left a living trust, to be split between my sisters and myself (3 of us). I am the executor of the trust, What kind of state and federal taxes would we have to pay on $200,000?

ANSWER

The BIDaWIZ Team's Answer:

Income from a revocable living trust after the death of the primary person is considered taxable income. However if the trust is irrevocable some income may be taxable and some may not be. Normally the distribution of the trust assets should be treated as inheritance and will not be taxable income for you as the estate and inheritance tax exemptions are $5.12 million for single filers and $10.24 million for joint filers. There is currently no estate tax in California. However, the income that the trust generated and the distribution from a tax deferred account (401k, IRA etc) will be taxable income. The trust should issue a schedule K-1 for each beneficiary and this form will indicate types and amounts of taxable income. In essence, it depends on what is in the trust.