there has been so much arguing back and forth, that i am not sure anyone is aware of the original post, so i am gonna repost it
"Trust was created in CA. Some beneficiaries are in CA, some in NC.
I am the trustee for my mothers estate and she passed last year. She had two checking accounts, one personal and one for her small business. The personal account had cash she had put away from selling her home several years ago. My accountant said that I could go ahead and do a partial distribution of the personal account to the beneficiaries (her grandchildren) and that there would be no taxes owed. She did say there would be taxes owed on the business account and the proceeds from the sale of the business. I just want to confirm that is correct. "
here are some thoughts
1) the words "trustee for my mothers estate" are of course incorrect. and when issued, there can be confusion as to whether there is a trust or not. but the op refers to a trust, so at least we know there is one. it is not at all clear to me what (estate or trust) owns any of the 3 assets (personal bank account, business bank account, business) that were mentioned.
2) taxes on the proceeds of the sale of the business - i interpret this to most likely mean that the benes have decided to sell the business. and the taxes will be based upon the gain (sale price less basis). i have never inherited a business, so i dont know for sure what sort of stepped up value it receives, but the death occurred a year or so ago, so that business today could have a different value than when mother passed.
3) i suspect that accountant knows that at least some of the money can be distributed now without any effect, and is allowing a partial distribution. to be safe, i would ask the accountant how much could be safely distributed. as ldij mentioned, you want to make sure you have plenty left to pay whatever is necessary, without having to get it back from benes.