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#1 optician11

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Posted 15 January 2013 - 07:23 PM

Does the beneficiary of a living trust pay estate taxes for real estate received

#2 adjusterjack

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Posted 15 January 2013 - 08:35 PM

Does the beneficiary of a living trust pay estate taxes for real estate received


No.

But I suggest you consult a trust attorney and a CPA to make sure you understand how trusts and estate taxes work.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#3 pg1067

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Posted 16 January 2013 - 08:21 AM

Does the beneficiary of a living trust pay estate taxes for real estate received


Estate taxes? No. Only the estate would pay estate taxes (if applicable, and I believe federal estate taxes only kick in when the estate is valued in excess of $1 million or $2 million -- whether there is an estate tax at the state level varies from state to state).

However, the beneficiary of a trust (which is a different thing from an estate and may exist completely independently from an estate) who has received assets from the trust might be liable for other types of taxes. It depends on the particular facts.

If you received a distribution from a trust in 2012, you should inquire of the trustee whether you will or are likely to receive any sort of tax reporting document (e.g., a K-1) from the trust. You should do this before you file your own income taxes for 2012. Often, trusts do not send out these reporting documents until shortly before personal income taxes are due (e.g., in March), after the trust's tax return has been prepared. If you will or are likely to receive such a document, you should consult with a tax professional to discuss the impact on your personal taxes.

#4 FindLaw_Amir

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Posted 16 January 2013 - 09:38 AM

You may want to discuss this with a local Tax Lawyer for clarification on this matter.
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#5 Tax_Counsel

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Posted 16 January 2013 - 01:53 PM

Estate taxes? No. Only the estate would pay estate taxes (if applicable, and I believe federal estate taxes only kick in when the estate is valued in excess of $1 million or $2 million -- whether there is an estate tax at the state level varies from state to state).


I generally agree with your comments but have one correction to make. The federal estate and gift tax credit now effectively shelters $5 million of assets. This was effective for the estates of persons dying on or after January 1, 2011 due to legislation enacted at the end of 2010. That was change due to expire at the end of 2012, but the so called "fiscal cliff" legislation enacted earlier this month made that change permanent by eliminating the sunset provision that had previously applied to the Bush tax cuts, and that had also applied to the 2010 changes.




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