Panama City, FL asked in Estate Planning for Florida

Q: is a distribution from a revocable grantor trust considered a "gift " and not taxable?

not sure if it is considered a gift or if you would issue a k1 or 1099. And if a 1041 needs to be filed. The grantor put in 15,500 and distributed 12,000 to one person.

the grantor does not want it to be considered a gift.

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1 Lawyer Answer
Lauren Nagel Richardson
Lauren Nagel Richardson
  • Estate Planning Lawyer
  • Gainesville, FL
  • Licensed in Florida

A: If the grantor is still alive and the trust is revocable, the grantor can withdraw some of all of the funds from their own revocable trust and make a gift. If it is under the annual gift tax exclusion amount, then there is nothing to file whatsoever, except that the grantor may wish to write a gift letter to go with the check and keep a copy.

1041 returns are only filed for irrevocable trusts (for example, once a grantor dies and a revocable trust becomes irrevocable) when the irrevocable trust has income to report.

1099s are also only for income. A gift is not income.

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