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Trust Fund Question?

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Googled
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Trust Fund Question?  Reply with quote  

So here is the deal. I am 24 and my grandparents have each been putting money into an irrevocable trust for a number of years now. When I turn 25 I am able to get half and then the other half when I turn 30. My question is has my money been getting taxed every year or am I just going to get taxed when I take out money or when the trust dissolves at 30? The trust is managed by Wells Fargo. Also should I take out half next year and do something else with it or leave it in? With the economy the "total account value" has gone down quite a bit, it did make some of that up this last quarter though. Any advice would be helpful thanks.

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Post Wed Aug 19, 2009 10:52 pm
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coaster
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I don't think your question can really be answered without knowing how your trust is structured and in what kind of plan the funds are invested. Here's a Wikipedia article on private trusts:

http://en.wikipedia.org/wiki/Trust_law

but I suspect the best way to get a definitive answer to your question is to just call Wells Fargo. Wink

~Tim~
Post Thu Aug 20, 2009 3:39 pm
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oldguy
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quote:
and do something else with it or leave it in? With the economy the "total account value" has gone down quite a bit, it did make some of that up this last quarter though.


That would indicate that a large percentage of the Trust is invested in stocks - and that is where it should be between age 20 and 50. So the answer to part 1 is 'leave it where it is if you want to'.

As WF buys/sells within the trust, they have been paying capital gains tax (and harvesting the capital losses) on an annual basis. But there is probably a group of stocks that WF has held for many years and allowed to grow tax-deferred (hopefully). So you will owe 15% capital gains tax on the profit if you sell some of them. (And that's what you hope for - lots of profit). Whenever you have to pay taxes that means that you are making money!
Post Thu Aug 20, 2009 6:34 pm
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azbryanw
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Irrevocable Trusts are generally taxed every year as if they were a business. Assets within the trust get taxed when sold at a gain, pay an income, etc. just like normal.

You should be able to request as a beneficiary a schedule of current holdings and cost basis.
Post Sun Jan 10, 2010 9:26 pm
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coaster
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A post in this thread was moved to its own thread found here: http://www.money-talk.org/thread14001.html

~Tim~
Post Sun Jan 10, 2010 9:46 pm
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