This trust started its life as a grantor trust by my Dad. That trust owned the house. When my father died, the trust specified creation of a successor trust for my brother with my brother's share of the inheritance. One of the assets moved into the successor trust was the house. My brother is a successor trustee and has power to control or direct the successor trust's income and assets. The successor trust has never paid income tax because it distributed all the income. Are you saying the successor trust is not a grantor trust? If it's not a grantor trust, he should probably distribute the house as principal to himself and then own it for two years before selling it. Or he could put the house title in a newly created grantor trust in his own name and sell it from there after two years. Key is that he would need two more years ownership to qualify for cap gains exemption as a primary residence.
