Don't trust Son-In-Law - Spendthrift trust?

[Teacher Terry]

G, so sorry it worked out that way.

 

[pacergal]

We have a trust, but we do gift money to our kids occasionally. They do not know our full financials, but know our priority is to take care of ourselves first, and only give if we are able and it does not affect our long term plan.

 

[wolf]

You mentioned the negative tax aspects of the trust. The trust earnings can be distributed to "X" person and taxed as a K1 form distribution at the normal 1040 form rates.

Can you please expand on this explanation. I heard and have seen "tax rates" for Trusts. Extremely high! Could not understand the explanations.

Some where I read, if income from Trusts is distributed, Taxed at recipients rate. But if not distributed, taxed at Trust rate.

Can you or someone explain. Thanks in advance.

 

[ERD50]

Can you please expand on this explanation. I heard and have seen "tax rates" for Trusts. Extremely high! Could not understand the explanations.

Some where I read, if income from Trusts is distributed, Taxed at recipients rate. But if not distributed, taxed at Trust rate.

Can you or someone explain. Thanks in advance.

You've got it. The K-1 form is generated by the trust's tax preparer, and sent to the recipients, who are then responsible for any taxes at their own personal rates.

-ERD50