Can a trustee and beneficiary of a irrevocable trust gift money to the same trust, if so how much is allowed and does the trust have to pay taxes on such a gift ?

[fordescort12]

I have 3 questions pertaining to gifting money to a irrevocable trust I would like to get answers  to which are as follows:

1) Can a trustee and beneficiary of a irrevocable trust gift their very own personal money to the same trust ?

2) If so what is the maximum dollar amount that the trustee and beneficiary is allowed to gift per year?

3) Does the trust have to pay income taxes on  any money it receives as a gift from the trustee and beneficiary ?

Thank you

[M-MTax]

"Irrevocable trust" is vague....there are differing types and terms but usually:

1. Gifts to trusts are gifts to the beneficiaries.

2. No maximum dollar amount but over $18k to each beneficiary and a 709 needs to be filed.

3. Trusts do not have to pay taxes on gifts to the trusts.....which are gifts to beneficiaries........unless the donors exceed their lifetime exclusion of over $13 million.

[fordescort12]

I appreciate your reply to my questions and your answers.

So just to confirm,  its also ok for  both a trustee and beneficiary to make such a gift to the same trust ?

Thank you

[M-MTax]

So just to confirm,  its also ok for  both a trustee and beneficiary to make such a gift to the same trust ?

It's technically OK but it's not a gift at all if the settlor, trustee, and beneficiary is the same person and beneficiaries cannot give gifts to themselves. Also any gift to a trust is not a gift to the trust but a gift to the beneficiaries for federal tax purposes.

[fordescort12]

I appreciate the reply again greatly.

My apologies though  I am kinda confused when you said its technically ok for a trustee and beneficiary to make gifts to the same trust, but not if the trustee and beneficiary are all the same person ??

To confirm the settlor who setup the irrevocable trust is is a parent and the trustee and beneficiary to the trust is is the parents child. 

With that said can you clarify and confirm if the  trustee and beneficiary here, is allowed to gift money to the  same trust,  as you described in your initial answer. 

Thank you

[VolvoGirl]

Is the trustee and beneficiary the same person?  Why do you want to gift or put money into the Trust?  What kind of money?  Are you trying to move personal income to the Trust?  

[M-MTax]

With that said can you clarify and confirm if the  trustee and beneficiary here, is allowed to gift money to the  same trust,  as you described in your initial answer. 

     I think I was misquoted because you described a situation which might involve a beneficiary adding money to the trust and that cannot be a gift in any sense.......you can't give yourself a gift. 

     Whether a trustee or beneficiary can add funds to an irrevocable trust set up by another party would depend on the terms of the trust.....and it's either likely that can't be done or would not be advisable.

    You need to find a local attorney who can review the terms of the trust.

[fordescort12]

In reply to your questions:

Yes as previously  mentioned the trustee and beneficiary is the same person,

The cash gift from the beneficiary would be gifting the trust  via personal funds.

The gift is to provide the trust with additional funds to help pay expenses for rental property the trust owns, which has had issues being rented , thus making the trust sort of a property rich  but not as cash rich to pay for expenses of maintaining property owned by it ?

With this said can you clarify and confirm are you saying in your previous response  a person who is both a trustee and beneficiary of a irrevocable trust is NOT allowed to make gifts to that same trust?

Thank you

[Mike9241]

while the trust may be "irrevocable" in the title or a provision, certain provisions in the Trust agreement may mean that the IRS regards this as a grantor trust.  you need to confer with a trust attorney

[M-MTax]

Mike9241 is right....this could be a grantor trust.....a trust that is disregarded in the sense that the trustee/beneficiary owns the assets in the trust. If this is a grantor trust then you could add money since the assets the trust owns are your assets. 

[fordescort12]

In reply to your previous post may I ask and can you please clarify the following;

As mentioned previously the grantor  who setup the irrevocable trust is is a parent and the trustee and beneficiary to the trust is is the parents child.

1) With the above said do you mean this trust is considered a grantor trust?

2) If so,  to confirm you are saying the trustee and beneficiary (again same person) is allowed to and can make money cash gifts to the trust?

THANK  YOU

[M-MTax]

1) With the above said do you mean this trust is considered a grantor trust?

Depends on the terms of the trust......what powers the beneficiary has, etc, and that can only be determined by reading the trust doc....which none of us here have in front of us.

BTW, how old is the "child"?

[M-MTax]

2) If so,  to confirm you are saying the trustee and beneficiary (again same person) is allowed to and can make money cash gifts to the trust?

If it's a grantor trust it would be hard to think of any term that would prevent the trustee-bene from adding money to the trust.....also, btw, it still isn't a gift.

[fordescort12]

In reply the child of the grantor is  adult

[fordescort12]

In reply and my final questions  when you say

"if it's a grantor trust it would be hard to think of any term that would prevent the trustee-bene from adding money to the trust.....also, btw, it still isn't a gift"

1) Again if this is a grantors trust , are you saying YES the trustee and beneficiary of the trust can add money to the trust?

2) If so to the above question,  you say this is would not be considered  a gift , can you elaborate why not and if so what is it called ?

THANK YOU  for all your responses , time on my questions and input.