Dickson, TN asked in Tax Law for Tennessee

Q: Cash "distribution" to beneficiary while grantor of living trust is still alive

Grantor of living trust want to give more than $15,000 in a single year to a beneficiary. Is this a gift subject to the annual gift tax exemption and the excess part of the lifetime estate tax exemption or an early distribution (since the principal will at some time belong to the beneficiary) while the grantor is still alive?

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1 Lawyer Answer
D. Mathew Blackburn
D. Mathew Blackburn
Answered
  • Tax Law Lawyer
  • Englewood, CO

A: Assuming it's revocable the gift occurs as if there was no trust. Reduced by $15k for annual exemption and then reduces lifetime exemption of grantor.

If it's irrevocable I'd need more information.

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