If a Trust is terminated and the assets are rolled into a brokerage account, will money taken out by the owner (former beneficiary) then be taxable?

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If a Trust is terminated and the assets are rolled into a brokerage account, will money taken out by the owner (former beneficiary) then be taxable?

I know that under a Trust, payments to a beneficiary such as interest earned by the Trust and support payments, are non-taxable.

Asked on August 20, 2013 under Estate Planning, Florida

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Generally speaking, trust income retained but he trust is taxed to the trust and trust income distributed to the beneficiaries is taxed to the beneficiaries.  Trusts file taxes and are subject tot he same tax rules as individuals.  But they are not subject to double taxation. How the assets are categorized will also play on the taxation issue and you really need to speak with a trust accountant here to determine what is what.  Good luck.


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