My friends mom’s name is Mary. Mary creates and funds a revocable trust. She names her son to receive the income for life and her grandson to receive the property upon her son’s death. What are Mary’s powers with respect to the trust and how will the trust be treated in her estate?
hrblockerrolquinn said:
Jun 27, 09 at 4:12 pmDear N: A revocable trust is one that can be modified and changed at will. Mary has complete control and can cnx the trust at any time. Her son will enjoy the income for life and will pay tax on it. Her grandson unfortunately is in the (GST) area. Generation skipping tax and depending on the value of the trust could pay significant taxes upon his dad’s death.
This advice was prepared based on our understanding of the facts that you provided as it applies to the tax law in effect at that time. Click on my profile to read more. Errol Quinn Enrolled Agent Master Tax Advisor
Truth_B said:
Jun 27, 09 at 5:08 pmMary hopefully spoke with an attorney. The reason is Mary should place her property in a irrevocable trust for estate planning. The power of how the estate is treated is specifically written into the trust. The trust will state that Mary lives in the property, she pays the bills, she receives the income and her Son can be the trustee. My understanding of protecting an estate is that this irrevocable trust allows the everything in the trust to move to her Son with estate tax. This is State specific law so see an attorney. Mary’s will can dictate that the property is intended for her grandsons.