Taxes on Cash inheritance from trust

[SammyJo]

California

My mother recently passed away and I am to receive a cash benefit inheritance from her trust. Do I have to pay taxes on it or does the trust pay the taxes before it is distributed?

Thanks

 

[anteater]

She would have to have a fairly large estate to have any estate taxes due. If there are any estate taxes due, generally the trustee or the personal representative of the probate estate, if there is a probate estate in addition to the trust, would pay from the trust or estate assets before any distributions.

As for income taxes... Generally the distribution that you receive will not be subject to income tax. If the trust realizes enough income - interest, dividends, capital gains, royalties, etc. - while the trust is being administered, there is a possibility that some part of what you receive will be income. Even if there is some income, it is usually a small part of the distribution. But the trustee should be able to give you more information.

 

[SammyJo]

Thank you, anteater! It is a fairly small amount. Then I don't have to list the amount received when I file my federal taxes?

 

[anteater]

The amount that you receive probably won't be the determining factor. The size and composition of the trust and how long it takes to administer and distribute is the more likely determining factor.

If there is income as part of your distribution that you would have to declare, you should receive a Schedule K-1 from the trustee.

Chances are that you won't have any taxable income from the trust. But, again, the trustee should be able to tell you if it is a possibility.

 

[SammyJo]

Thanks again, anteater!