My grandparents estate was recently finalized and the money was distributed to the beneficiaries listed on the trust. Before they passed away, my grandparents requested that their sons (the listed beneficiaries) provide a portion of their part of the inheritance to each of their children. This is turning out to be a fairly substantial amount of money for each grandchild. As the grandchildren are not listed on the trust, does this now need to be reported as income for individual taxes (the estate already paid taxes on this money)? Or does this end up falling into the gift category and more taxes need to be paid by our parents? Or are the grandchildren free and clear with this money? We have an appointment with a tax advisor, but figured it wouldn't hurt to ask, as I imagine there are others who have faced this or similar scenarios.
