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Who pays taxes on an irrevocable trust?

Tequesta, FL |

Uncle has Altzheimers and his elderly wife is caring for him with a little help. He is 50'000 over the total assets he can have but the money is going quickly. Interested in knowing about an irrevocable trust and who would pay taxes on it

Attorney Answers 3


  1. It appears that there are a number of legal issues that may need to be addressed in this situation, but in terms of your specific question, it depends. If the trust is designed as a grantor trust, the person who established the trust (the grantor) must report the income in the trust and pay tax on it. Otherwise, the income is generally taxed to the trust itself unless it is distributed to a beneficiary, in which case it is taxed to the beneficiary.


  2. I agree with Mr. Herman-Giddens. You have other issues that you need to be concerned about regarding the irrevocable trust and the transfer of assets for purposes of qualification for certain benefits. An Elder Law Attorney would be able to guide you properly to the goals that you are seeking.

    As for the specific question, the prior attorney is correct. This would be taxed to the Trust itself and paid out of Trust assets. The exception would be a grantor trust, in which case the grantor (your uncle here) would be responsible for reporting all items of g/l as his own (on his own return).

    marcos@martinezanda.com Office tel: (561)245-4723 Website: www.martinezanda.com. The answer provided does not create an attorney-client relationship, nor is the answer provided intended to be relied upon as legal advice. The information provided by the questioner is insufficient to serve as the basis for meaningful legal analysis. It is the questioner's responsibility to seek legal advice from an attorney who has had the opportunity to familiarize herself with the full details of the questioner's case. By providing these answers, I am not obligated to respond to any subsequent communication from the questioner. If the questioner would like me to serve as their legal counsel and render legal advice, they will have to sign a retainer agreement. The questioner is free to contact my office for a complimentary 30 minute consultation.


  3. An irrevocable trust would not be the answer because it would lead to a disqualification period of time.
    You should meet with an Elder Law attorney and discuss a Personal Services Contract along with other strategies.

    The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.

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