Tax Liability for being gifted the sale of my Father's home.

[MCbluelake]

In December 2024 my Dad said he is moving out of his home into a Senior Living community and is selling the house.  He wants me to have the money. He has a living trust and is the sole trustee. My mom had passed away in October 2024. I am the successor trustee. I am an only child (no siblings). I told him his house is part of his estate and that I consider to sale of the house part of his estate. I would not do anything with this money until his passing or he needs greater long term care (such as an Assisted Living Home).  I discussed this with my broker of my Mutual Funds and IRA and he said he could set up a fixed annuity. Will this help me avoid any taxable income for this sale of his house?

[RobertB4444]

That depends.  When you inherit money that was taxed while the person who passed was alive then they already paid taxes on that money.  So it is not taxable to the heirs.  But if they did not pay taxes on the money (money earned after they died, like interest, and retirement accounts, etc.) then it is taxable to the heirs.

In your case all of the property appears to have been transferred into the trust including the money from the sale of the house.  Since you are the sole beneficiary of the trust, when it starts distributing money to you there may be some earnings from investments that is taxable but the main amount of money that was deposited there by your father will not be taxable as it is distributed.  If the trust does well and earns a lot there may be taxes due.  But it sounds like a purchased annuity might be a good way to go.

@MCbluelake