My father died last September and the family trust split into Trust A (mother's trust) and B (father's trust). The net value of their estate at the time of his death was about $330,000. Their house just sold and we are splittling the proceeds equally into each of the trusts (the title was 50% A and 50% B), we will be funding the remaining balance from Trust A into Trust B so Trust B will have $165,000 (50% of the net estate value at time of death). We plan on investing the Trust A money into income producing assests which will grow in value over time. At the time of his death, the lifetime exemption per person was 1.5 million, so he was way under that. My question is, when the estate eventually passes to the children after my mother dies, what will be the exemption from trust A? Will it be only the initial $165K or will it be up to the 1.5M that was the exemption at his time of death? All of this of course assumes there will still be an estate when the estate passes to the heirs - there may not be. thanks very much.
-tim