What is the tax liability regarding inheriting property via an irrevocable Trust?
Question Details: My father, a widower, recently passed. He set up an irrevocable Trust and transferred his home into the Trust in order for my mother to qualify for Medicaid when she was put into a nursing home. She passed last year. I am the trustee and the sole beneficiary. Will I be liable for any taxes (federal, state, inheritance or estate) when I sell the property? He was a resident of PA and I live in NJ.
When ever you, as trustee, take the money out of the trust and distribute it to you, as beneficiary, you be taxed on it as if you received it at that time. Before then, while the house (pre-selling) or money from the house (post-selling) is in the trust, it is not yours and you will not be taxed on it.
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