My wife's grandfather created a trust upon his death that was used by his daughter (my mother-in-law) for medical expenses. Now my MIL has passed which causes the trust to be disolved and the remaining assets to be distributed to my wife and her sisters. Will this distribution be taxable for my wife and myself?
Thanks, Mark
How was the trust income earned, distributed, and taxed throughout the prior history of the trust (assuming the trust dictates were followed)?
-Mark Bole
You get the assets at DOD value (step up or down) and they are not taxable to you. If there are any IRA's, 401ks etc they are income taxable as you withdraw them. You will hvae some interest from DOD to distribution that are taxable.
ed
P.S. Depending on the wording of the trust the DOD value may be of either your wife's grandfather, or your mother-in-law that might result in LongTerm Capital Gains when the trust or your wife sells the assets.
ed.
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