Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I am the trustee of an irrevocable trust for my sister. I recently made a $22k loan to her from the trust's funds to help her get out of credit card debt. The terms of the loan (which are memorialized in a signed note) are 15 years at 5 percent interest with payments due monthly. I did this in the form of a loan rather than just making a straight distribution because I did not want her to have a huge tax bill and I wanted the monthly payments to be a constant reminder of the perils of unsecured debt. Will these admittedly favorable loan terms pass muster with the IRS or will the $22k be considered a distribution to her which she must claim as income? If this will be considered income to her, what can I do to fix it?
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.