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Hi everyone : My Mom passed away last month. I am to receive a lump sum $ amount listed in her revocable trust as a specific request. I asked the law firm handling trust: 1. Will my lump sum be taxable? 2. Will any expenses related to trust including legal be taken out of my bequest? This is what I got back: Generally speaking, distributions of trust assets upon death of the grantor are not taxable as income. The cost of trust administration is born by the residuary beneficiaries of the trust. My questions for forum is : Will my lump sum amount be taxable? I live in NJ. Am I a residuary beneficiary? The remaining assets are being left to my niece and nephew. Mine is lump sum amount. Thanks!! Adam
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You are a class A beneficiary and a direct lineal descendant, so you will not pay inheritance tax. If the total value of your mom's estate is over $675,000 the estate may be liable for estate tax. You will not be taxed on any amount that you receive from the trust as income tax. The trust is revocable, then you can revoke the trust at any time and get the entire amount paid to you. If the will contains a provision that states a specific amount was to go to you in a trust, then you are a specific bequest beneficiary, not a residuary beneficiary. The residuary beneficiaries are the ones that get the rest (or residue) of the estate after all of the expenses, taxes, and specific bequests are paid.
Answered on Aug 27th, 2014 at 5:09 AM
Diana L. Anderson, Certified Elder Law Attorney This response is not legal advice and does not establish any form of attorney/client relationship