Grandkids withdrawal from trust
A trust was set up by the grandparents for the benefit of her children and grandchildren, The grand children are of adult age and are considering withdrawal of a certain amount to buy a house. ITs a rather considerable amount, and was wondering what might be best way to tap into the trusts money considering the tax consequences and treatment of that withdrawal……….Lets assume a withdrawal of approx 200K..I appreciate all responses.thank you in advance Michael
Permalink Submitted by mk foss on Sat, 2010-09-25 20:32
The primary direction will be based on the trust agreement and whether it’s possible to take a large distribution. You may also want to check when the trust terminates – i’ve seen instances where the trust is supposed to end when the beneficiary reaches a certain age but it just keeps going on an on.
So if the trust agreement allows the distribution, in most cases the only tax cost will be the current year’s income. So if the trust had earned say 12,000 so far this year and the 200k distribution was the only distribution this year, the beneficiary would pay tax on the 12k only.