Scenario: Person "A" will be inheriting $100,000. After receiving the inheritance a trust is established for the benefit of Person "A" and the trust will be funded with the inherited $100,000.
Questions: 1). Is the initial funding of the trust a taxable event? If the answer depends on the type of trust, then what types of trusts would not invoke a taxable event (for initial funding) under this scenario?
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Person "A" will be inheriting $100,000.
An inheritance of less than $11.4M is not taxable or reportable on any tax return. Numerous exceptions apply. Since you give no further details, I'm not going into further detail on any possible or probable exceptions.
Is the initial funding of the trust a taxable event?
No more than depositing the money in a bank savings account is a taxable event. (It's not)
Before making "ANY" type of investment, you should consult with a qualified financial/tax advisor anyway. Laws differ quite significantly state to state.
You need to provide more details and should also seek tax (and possibly legal) guidance from a local professional.
However, the initial funding of a trust, particularly from the corpus of an estate, is rarely a taxable event.
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